<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 31, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AVIS RENT A CAR, INC.
And the subsidiaries listed on Table 1 hereto
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7514 11-3347585
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification No.)
of incorporation or organization) Classification Code Number)
</TABLE>
------------------------
900 OLD COUNTRY ROAD
GARDEN CITY, NEW YORK 11530
(516) 222-3000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------------
KAREN C. SCLAFANI, ESQ., VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
AVIS RENT A CAR, INC.
900 OLD COUNTRY ROAD
GARDEN CITY, NY 11530
(516) 222-3000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
------------------------------
COPIES TO:
SEAN J. GEARY, ESQ.
TIMOTHY B. GOODELL, ESQ.
WHITE & CASE LLP
1155 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 819-8200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective. If any of the
securities being registered on this form are to be offered in connection with
the formation of holding company and there is compliance with General
Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier registration
statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE(1)
<S> <C> <C> <C> <C>
11% Senior Subordinated Exchange Notes due
2009........................................... $500,000,000 100% $500,000,000 $139,000
Guarantees of Senior Subordinated Exchange Notes
Due 2009(2).................................... -- -- -- --
Total............................................ $500,000,000 100% $500,000,000 $139,000
</TABLE>
(1) Determined in accordance with Rule 457(f) promulgated under the Securities
Act of 1933, as amended.
(2) No separate consideration will be received for the Guarantees, and,
therefore, no additional registration fee is required.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE 1 TO REGISTRATION STATEMENT: CO-REGISTRANT SUBSIDIARY GUARANTORS
<TABLE>
<CAPTION>
PRIMARY STANDARD IRS EMPLOYER
SUBSIDIARY GUARANTOR STATE OF ORGANIZATION INDUSTRIAL CODE NUMBER IDENTIFICATION NUMBER
- ------------------------------------------------------ --------------------- ------------------------- ---------------------
<S> <C> <C> <C>
Avis Rent A Car System, Inc. ......................... Delaware 7510 11-1998661
Avis International, Ltd. ............................. Delaware 6700 11-2411667
Avis Management Services, Ltd. ....................... Delaware 7389 11-2160100
Avis Caribbean, Limited............................... Delaware 6700 11-2850374
Avis Asia and Pacific, Limited........................ Delaware 6700 11-2850373
Avis Enterprises, Inc. ............................... Delaware 6700 11-2631886
Avis Service, Inc. ................................... Delaware 7389 11-2811732
Avis Lube, Inc. ...................................... Delaware 7549 11-2811733
Avis Leasing Corporation.............................. Delaware 7350 11-3102377
Rent-A-Car Company, Incorporated...................... Virginia 7510 54-0601449
Reserve Claims Management Corp. ...................... Delaware 8741 11-2520537
Avis Fleet Leasing and Management Corp. .............. Texas 6700 11-3494799
PHH Vehicle Management Services LLC................... Delaware 8741 11-3494799*
Dealer Holdings, Inc. ................................ Maryland 6700 52-1286342
Williamsburg Motors, Inc. ............................ Maryland 5511 52-1286341
Edenton Motors, Inc. ................................. Maryland 5511 52-1386917
Wright Express LLC.................................... Delaware 7549 11-3494799*
PHH Canadian Holdings, Inc. .......................... Delaware 6700 52-2174391
PHH Deutschland, Inc. ................................ Maryland 6700 52-1392716
PHH/Paymentech LLC.................................... Delaware 8999 11-3494799*
FAH Company, Inc. .................................... Delaware 6700 04-3393483
</TABLE>
*ID # IS SAME AS AVIS FLEET LEASING AND MANAGEMENT CORP. (THE PARENT COMPANY)
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER AND SALE IS NOT PERMITTED.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS WILL BE AMENDED OR COMPLETED;
DATED AUGUST 31, 1999
PROSPECTUS
OFFER TO EXCHANGE ALL 11% SENIOR SUBORDINATED NOTES DUE 2009
FOR 11% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2009
OF
AVIS RENT A CAR, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON [ ], 1999, UNLESS EXTENDED
---------------------
Terms of the exchange offer
- We will issue up to $500,000,000 aggregate principal amount of new notes.
- We will exchange new notes for all outstanding old notes that are validly
tendered and not withdrawn prior to the expiration of the exchange offer.
- You may withdraw tenders of old notes at any time prior to the expiration
of the exchange offer.
- The exchange of old notes for new notes will not be a taxable transaction
for U.S. federal income tax purposes, but you should see the discussion
under the heading "Certain United States Federal Income Tax Consequences"
on page 187 for more information.
- We will not receive any cash proceeds from the exchange offer.
- The terms of the new notes are substantially identical to those of the
outstanding old notes, except that the transfer restrictions and
registration rights relating to the old notes do not apply to the new
notes.
- The old notes are, and the new notes will be, unconditionally guaranteed
by some of Avis Rent A Car, Inc.'s subsidiaries.
- The exchange offer is the initial public offering of the new notes.
- There is no established trading market for the new notes or the old notes.
- We do not intend to apply for listing of the new notes on any national
securities exchange or for quotation through the NASDAQ National Market.
------------------------
SEE RISK FACTORS BEGINNING ON PAGE 23 FOR A DISCUSSION OF RISKS YOU SHOULD
CONSIDER BEFORE TENDERING YOUR OLD NOTES.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR HAS PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
EACH BROKER-DEALER THAT RECEIVES NEW NOTES FOR ITS OWN ACCOUNT PURSUANT TO THIS
EXCHANGE OFFER MUST ACKNOWLEDGE THAT IT WILL DELIVER A PROSPECTUS IN CONNECTION
WITH ANY RESALE OF NEW NOTES. THE LETTER OF TRANSMITTAL STATES THAT BY SO
ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, A BROKER-DEALER WILL NOT BE DEEMED
TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT.
THIS PROSPECTUS, AS IT MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, MAY BE
USED BY A BROKER-DEALER IN CONNECTION WITH RESALES OF NEW NOTES RECEIVED IN
EXCHANGE FOR OLD NOTES WHERE SUCH OLD NOTES WERE ACQUIRED BY SUCH BROKER-DEALER
AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES. WE HAVE
AGREED THAT, FOR A PERIOD OF 180 DAYS AFTER THIS REGISTRATION STATEMENT BECOMES
EFFECTIVE, WE WILL MAKE THIS PROSPECTUS AVAILABLE TO ANY BROKER-DEALER FOR USE
IN CONNECTION WITH ANY SUCH RESALE. SEE "PLAN OF DISTRIBUTION".
------------------------
The date of this prospectus is [ ], 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Summary........................................ 1
Risk Factors................................... 23
The VMS Acquisition............................ 39
Use of Proceeds................................ 42
The Exchange Offer............................. 43
Capitalization................................. 52
Unaudited Pro Forma Consolidated Financial
Data......................................... 54
Selected Historical Consolidated Financial Data
(Avis)....................................... 59
Selected Historical Combined Financial Data
(VMS)........................................ 62
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 65
Company Background............................. 83
<CAPTION>
PAGE
-----
<S> <C>
Business....................................... 86
Management..................................... 112
Ownership of Capital Stock..................... 121
Certain Relationships and Related Party
Transactions................................. 123
Description of Avis Fleet Preferred Stock and
Class B Common Stock......................... 131
Description of Other Indebtedness.............. 135
Description of Notes........................... 139
Certain United States Federal Income Tax
Consequences................................. 187
Book-Entry; Delivery and Form.................. 187
Registration Rights............................ 190
Plan of Distribution........................... 193
Legal Matters.................................. 193
Experts........................................ 193
Available Information.......................... 194
Index to Consolidated and Combined Financial
Statements................................... F-1
</TABLE>
ii
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements, including, in
particular, statements about our plans, strategies and prospects under the
captions "Summary", "Management's Discussion and Analysis of Financial Condition
and Results of Operations" (particularly under the subheading "Liquidity and
capital resources"), and "Business". Statements that are included in this
prospectus that are prefaced with the heading "may", "will", "anticipate",
"expect", "continue", "estimate", "project", "intend", "designed", and similar
expressions are intended to identify forward-looking statements regarding
events, conditions and financial trends that may affect our future plans of
operations, business strategy, results of operations and financial condition. We
have based these forward-looking statements on our current assumptions,
expectations and projections about future events. Since it is not possible to
predict every factor that may emerge, forward-looking statements should not be
relied upon as a prediction of our actual future financial condition or
operating results. We caution you that a variety of factors could cause business
conditions and results to differ materially from these forward-looking
statements. The forward-looking statements are subject to risks, uncertainties
and assumptions about us, including, among other things:
- our substantial debt and significant debt service obligations;
- our ability to integrate VMS into our operations;
- developments in, or changes to, the laws and regulations governing our
business;
- our ability to finance vehicle purchases in the asset-backed market;
- the increasingly competitive nature of the industries in which we are
operating;
- changes in interest rates, foreign currency exchange rates and other
domestic and international market and industry conditions;
- the cyclicality and seasonality of the car rental industry;
- changes in our relationships with our major suppliers;
- changes in government policy;
- changes in technology;
- developments regarding environmental and tort liability;
- our ability to keep key personnel required to operate the business; and
- the potential effect of Year 2000 compliance issues.
iii
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. THIS SUMMARY IS NOT COMPLETE AND MAY NOT CONTAIN ALL OF THE
INFORMATION THAT YOU SHOULD CONSIDER BEFORE PARTICIPATING IN THE EXCHANGE OFFER
OR INVESTING IN THE NOTES, AND YOU ARE ENCOURAGED TO READ THIS PROSPECTUS IN ITS
ENTIRETY.
UNLESS THE CONTEXT OTHERWISE REQUIRES, EACH REFERENCE IN THIS PROSPECTUS TO
- "NEW AVIS", "WE", "OUR" OR "US" REFERS TO THE BUSINESS OF AVIS, AFTER
GIVING EFFECT TO THE ACQUISITION OF VMS (THE "VMS ACQUISITION"),
- "AVIS" REFERS TO AVIS RENT A CAR AND ITS OPERATING SUBSIDIARIES AND
PREDECESSORS OTHER THAN VMS,
- "VMS" REFERS TO THE VEHICLE MANAGEMENT AND FUEL CARD BUSINESSES WHICH,
PRIOR TO THE VMS ACQUISITION, WERE OPERATED BY CENDANT CORPORATION THROUGH
ITS PHH SUBSIDIARIES IN THE UNITED STATES AND CANADA ("PHH NORTH
AMERICA"), ITS PHH SUBSIDIARIES IN EUROPE ("PHH EUROPE") AND WRIGHT
EXPRESS CORPORATION ("WEX"),
- "AVIS RENT A CAR" REFERS TO AVIS RENT A CAR, INC.,
- "AVIS FLEET" REFERS TO AVIS FLEET LEASING AND MANAGEMENT CORPORATION, THE
WHOLLY-OWNED SUBSIDIARY OF AVIS RENT A CAR THAT ACQUIRED VMS,
- "CENDANT" REFERS TO CENDANT CORPORATION AND ITS SUBSIDIARIES,
- THE "AVIS SYSTEM" REFERS TO THE AVIS WORLDWIDE VEHICLE RENTAL SYSTEM
INCLUDING RELATED TRADEMARKS, TRADE NAMES AND COMPUTER SYSTEMS, INCLUDING
THE WIZARD-REGISTERED TRADEMARK- SYSTEM, ALL OF WHICH ARE OWNED BY
CENDANT,
- "NOTES" REFERS TO BOTH THE OLD NOTES THAT WERE ISSUED IN CONNECTION WITH
THE VMS ACQUISITION AND THE NEW NOTES THAT WE ARE OFFERING TO EXCHANGE FOR
THE OLD NOTES, AND
- "VEHICLES" INCLUDE CARS, LIGHT TRUCKS AND VANS.
UNLESS OTHERWISE SPECIFIED HEREIN,
- CONSOLIDATED REVENUES OF EACH OF NEW AVIS, AVIS AND VMS ARE PRESENTED
BEFORE DEDUCTING THE INTEREST AND DEPRECIATION ASSOCIATED WITH THE VEHICLE
FLEETS ("FLEET COSTS") OF EACH ENTITY AND
- CONSOLIDATED EBITDA AFTER FLEET COSTS (AS DEFINED ON PAGE 61) OF EACH OF
NEW AVIS, AVIS AND VMS ARE PRESENTED AFTER DEDUCTING THE FLEET COSTS OF
EACH ENTITY.
THE STATISTICAL INFORMATION IN THIS PROSPECTUS REGARDING THE DOMESTIC AND
INTERNATIONAL CAR RENTAL INDUSTRY, THE DOMESTIC OR INTERNATIONAL VEHICLE LEASING
MARKETS AND THE DOMESTIC OR INTERNATIONAL FUEL CARD MARKETS CONSISTS OF
MANAGEMENT ESTIMATES OR HAS BEEN DERIVED FROM PUBLICLY AVAILABLE SOURCES,
INCLUDING TRADE PUBLICATIONS, WHICH WE HAVE NOT INDEPENDENTLY VERIFIED BUT WE
BELIEVE TO BE RELIABLE.
THE EXCHANGE OFFER
<TABLE>
<S> <C>
Old notes....................... 11% Senior Subordinated Notes due 2009, which were issued
on June 30, 1999.
New notes....................... 11% Senior Subordinated Exchange Notes due 2009. The terms
of the new notes are substantially identical to those of
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
the outstanding old notes, except that the transfer
restrictions and registration rights relating to the old
notes do not apply to the new notes.
Exchange offer.................. We are offering to issue up to $500,000,000 aggregate
principal amount of the new notes in exchange for a like
principal amount of the old notes to satisfy our
obligations under the registration rights agreement that
we entered into when the old notes were sold in
transactions under Rule 144A and Regulation S under the
Securities Act of 1933, as amended (the "Securities Act").
Expiration date; Tenders........ The exchange offer will expire at 5:00 p.m., New York City
time, on [ ], 1999, unless extended. By tendering
your old notes, you represent to us:
- that you are not an "affiliate" of ours, as defined
in Rule 405 under the Securities Act;
- that any new notes you receive in the exchange offer
are being acquired by you in the ordinary course of
your business;
- that, at the time of commencement of the exchange
offer, neither you nor, to your knowledge, anyone
receiving new notes from you, has any arrangement or
understanding with any person to participate in the
"distribution" of the new notes, as defined in the
Securities Act, in violation of the Securities Act;
- if you are not a participating broker-dealer, that
you are not engaged in, and do not intend to engage
in, the "distribution" of the new notes, as defined
in the Securities Act; and
- if you are a broker-dealer, that you will receive
the new notes for your own account in exchange for old
notes that were acquired by you as a result of your
market-making or other trading activities and that
you will deliver a prospectus in connection with any
resale of the new notes you receive. For further
information regarding resales of the new notes by
participating broker-dealers, see the discussion
below under the caption "Plan of Distribution" on
page 193.
Withdrawal; Non-acceptance...... You may withdraw any old notes tendered in the exchange
offer at any time prior to 5:00 p.m., New York City time,
on [ ], 1999. If we decide for any reason not to
accept any old notes tendered for exchange, the old notes
will be returned to the registered holder at our expense
promptly after the expiration or termination of the
exchange offer. In the case of old notes tendered by
book-entry transfer into the exchange agent's account at
The Depository Trust Company, any withdrawn or unaccepted
old notes will be credited to the
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
tendering holder's account at The Depository Trust
Company. For further information regarding the withdrawal
of tendered old notes, see "The Exchange Offer--Terms of
the exchange offer; period for tendering old notes" on
pages 43 to 44 and "--Withdrawal rights" on page 48.
Conditions to the exchange
offer......................... The exchange offer is subject to customary conditions,
which we may waive. See the discussion below under the
caption "The Exchange Offer--Conditions to the exchange
offer" on pages 48 to 49 for more information regarding
the conditions to the exchange offer.
Procedures for tendering old
notes......................... Unless you comply with the procedure described below under
the caption "The Exchange Offer--Guaranteed delivery
procedures" on page 47, you must do one of the following
on or prior to the expiration of the exchange offer to
participate in the exchange offer:
- tender your old notes by sending the certificates
for your old notes, in proper form for transfer, a
properly completed and duly executed letter of
transmittal, with any required signature guarantees,
and all other documents required by the letter of
transmittal, to The Bank of New York, as exchange
agent, at one of the addresses listed below under
the caption "The Exchange Offer--Exchange agent" on
page 49; or
- tender your old notes by using the book-entry
transfer procedures described below and transmitting a
properly completed and duly executed letter of
transmittal, with any required signature guarantees,
or an agent's message instead of the letter of
transmittal, to the exchange agent. In order for a
book-entry transfer to constitute a valid tender of
your old notes in the exchange offer, The Bank of
New York, as exchange agent, must receive a
confirmation of book-entry transfer of your old
notes into the exchange agent's account at The
Depository Trust Company prior to the expiration of
the exchange offer. For more information regarding
the use of book-entry transfer procedures, including
a description of the required agent's message, see
the discussion below under the caption "The Exchange
Offer--Book-entry transfer" on page 47.
Guaranteed delivery procedures.. If you are a registered holder of the old notes and wish
to tender your old notes in the exchange offer, but
- the old notes are not immediately available,
- time will not permit your old notes or other
required documents to reach the exchange agent before
the expiration of the exchange offer, or
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
- the procedure for book-entry transfer cannot be
completed prior to the expiration of the exchange
offer,
you may tender old notes by following the procedures
described below under the caption "The Exchange Offer--
Guaranteed delivery procedures" on page 47.
Special procedures for
beneficial owners............. If you are a beneficial owner whose old notes are
registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and you wish to
tender your old notes in the exchange offer, you should
promptly contact the person in whose name the old notes
are registered and instruct that person to tender on your
behalf.
If you wish to tender in the exchange offer on your own
behalf, prior to completing and executing the letter of
transmittal and delivering your old notes, you must either
make appropriate arrangements to register ownership of the
old notes in your name or obtain a properly completed bond
power from the person in whose name the old notes are
registered.
Certain federal tax
considerations................ The exchange of old notes for new notes in the exchange
offer will not be a taxable transaction for United States
federal income tax purposes. See the discussion below
under the caption "Certain United States Federal Income
Tax Consequences" on page 187 for more information
regarding the tax consequences to you of the exchange
offer.
Use of proceeds................. We will not receive any cash proceeds from the exchange
offer.
Exchange agent.................. The Bank of New York is the exchange agent for the
exchange offer. The addresses and telephone number of the
exchange agent can be found below under the caption "The
Exchange Offer--Exchange agent" on page 49.
Resales......................... Based on interpretations by the staff of the Securities
and Exchange Commission (the "Commission"), as set forth
in no-action letters issued to third parties, we believe
that the new notes you receive in the exchange offer may
be offered for resale, resold or otherwise transferred
without compliance with the registration and prospectus
delivery provisions of the Securities Act. However, you
will not be able to freely transfer the new notes if:
- you are an "affiliate" of ours, as defined in Rule
405 under the Securities Act;
- you are not acquiring the new notes in the exchange
offer in the ordinary course of your business;
- you have any arrangement or understanding with any
person to participate in the distribution of the new
notes, as defined in the Securities Act, you will
receive in the exchange offer; or
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
- you are a participating broker-dealer that receives
new notes for its own account in the exchange offer in
exchange for old notes that were acquired as a
result of market-making or other trading activities.
If you fall within one of the exceptions listed above, you
must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any
resale transaction involving the new notes.
</TABLE>
CONSEQUENCES OF NOT EXCHANGING OLD NOTES
If you do not exchange your old notes in the exchange offer, your old notes
will continue to be subject to the restrictions on transfer described in the
legend on the certificate for your old notes. In general, you may offer or sell
your old notes only:
- if they are registered under the Securities Act and applicable state
securities laws;
- if they are offered or sold under an exemption from registration under the
Securities Act and applicable state securities laws; or
- if they are offered or sold in a transaction not subject to the Securities
Act and applicable state securities laws.
We do not currently intend to register the old notes under the Securities
Act. Under some circumstances, however, holders of the old notes--including
holders who are not permitted to participate in the exchange offer or who may
not freely resell new notes received in the exchange offer--may require us to
file, and cause to become effective, a shelf registration statement which would
cover resales of old notes by these holders. For more information regarding the
consequences of not tendering your old notes and our obligation to file a shelf
registration statement, see "The Exchange Offer--Consequences of exchanging or
failing to exchange old notes" on page 50 and "Registration Rights" on pages 190
to 192.
5
<PAGE>
OUR COMPANY
OVERVIEW
Avis operates the second largest general-use car rental business in the
world, based on total revenue. As the largest Avis System franchisee, Avis rents
vehicles and provides ancillary products and services to business and leisure
travelers through approximately 670 airport and non-airport (downtown or
suburban) locations in the United States, Canada, Puerto Rico, the U.S. Virgin
Islands, Argentina, Australia and New Zealand as of June 30, 1999. During 1998,
Avis completed over 15 million transactions for approximately 56 million rental
days with a fleet that averaged approximately 206,000 vehicles. Avis has
corporate operations at the 50 top domestic airports which accounted for
approximately 92% of all domestic rental transactions processed through the Avis
System based on 1998 revenue. Avis provides its services to a broad range of
retail and corporate customers including both domestic and multinational
corporations, among which Avis has many long-standing relationships. For model
year 1999, Avis purchased over 90% of its vehicles from the "Big 3" U.S. auto
makers, primarily General Motors. Through repurchase and other agreements with
these and other auto makers, Avis bears the residual risk with respect to less
than 2% of its fleet. For the six month period ended June 30, 1999, Avis
generated total revenues of approximately $1.2 billion.
On June 30, 1999, Avis acquired VMS from Cendant for approximately $1.8
billion, plus the refinancing of approximately $3.5 billion of indebtedness. A
subsidiary of Cendant Corporation received $362.0 million of the acquisition
consideration in the form of Avis Fleet Preferred Stock (as defined on page 12),
$2.0 million of which was transferred to a third party. The VMS Acquisition has
established us as a leading worldwide provider of comprehensive automotive
transportation and vehicle management solutions. We expect that the VMS
Acquisition will allow Avis to diversify its revenue base, create significant
revenue growth and cost savings opportunities, expand its car rental business,
and bring together a senior management team that has extensive knowledge of the
car rental and vehicle management and financing industries.
VMS provides integrated card payment, vehicle leasing and value-added
vehicle management services in North America and Europe, with leading market
shares across many of its product lines. VMS provides comprehensive vehicle
management solutions to its customers which include over 19,000 companies and
government agencies in North America and Europe, including nearly one-third of
the Fortune 500 and approximately one-half of the FTSE 100 companies. VMS'
services consist of vehicle leasing and related asset-based services and a broad
range of fee-based services which include fuel and maintenance cards, accident
management, and various other vehicle-related services, all of which are
designed to allow clients to effectively manage costs and enhance productivity.
In 1998, asset-based products and services accounted for 39% of VMS' total
revenues (after Fleet Costs), while fee-based products and services accounted
for the remaining 61%. At December 31, 1998, VMS had approximately 780,000
vehicles under management and over 3.6 million fuel and maintenance cards
outstanding (accounting for over $5.4 billion of fuel and maintenance purchases
in 1998). At December 31, 1998, VMS' automotive fleet consisted of approximately
354,000 leased vehicles worldwide, 85% of which were leased subject to
open-ended leases under which the customer bears substantially all of the
vehicle residual risk. VMS' lease and card portfolios have experienced low
historical default rates as a result of the strong credit quality of its
customer base and VMS' credit underwriting procedures. For the six month period
ended June 30, 1999, VMS generated total revenues of $808.1 million.
6
<PAGE>
As a result of the VMS Acquisition, we are a leading worldwide provider of
automotive transportation and vehicle management solutions. After giving effect
to the VMS Acquisition, we believe that we hold the following market positions,
based on reported units:
GENERAL-USE CAR RENTALS
- #2 worldwide
- #2 in the United States
- #1 in Australia and New Zealand
VEHICLES UNDER MANAGEMENT(1)
- #2 in the United States
- #1 in the United Kingdom
FUEL AND MAINTENANCE CARDS(2)
- #1 in the United States
- #1 in the United Kingdom
- ------------------------
(1) Includes leased vehicles and vehicles for which third-party vehicle-related
services are provided, which are comparable to those provided by VMS.
(2) Includes cards for third parties for which VMS acts as processor.
For the six months ended June 30, 1999, pro forma for the Transactions (as
defined on page 11), we would have generated total revenues of $2.0 billion.
OUR INDUSTRY
U.S. CAR RENTAL INDUSTRY. The U.S. car rental industry, which includes
short-term car and truck rentals for business and retail customers at both
airport and non-airport locations, was a $17.2 billion industry in 1998 based on
revenues, and has grown at a compound annual growth rate, or CAGR, of 11.1% from
1985 to 1998. The U.S. airport market accounted for $6.3 billion of these
revenues. Ancillary products offered in addition to vehicle rentals include
refueling services, loss damage waivers and used vehicle sales. Industry sources
estimate that the U.S. car rental industry will continue to grow, principally
due to continued increases in airline passenger traffic, the trend toward
shorter, more frequent vacations resulting from the increased number of
households with two wage earners, the demographic trend toward older, more
affluent Americans who travel more frequently, and increased business travel.
VEHICLE LEASING INDUSTRY. We estimate that corporations in the United
States, Canada, the United Kingdom and Germany (the markets in which VMS
currently competes) made expenditures of over $125 billion in 1998 with respect
to their vehicle fleets for depreciation and interest, management and
operations. These expenditures are driven by growth in the number of vehicles
operated by these companies. The U.S., Canadian, U.K. and German vehicle leasing
markets are highly fragmented. We estimate that in 1998, approximately 61% of
the combined U.S. and Canadian and a significant portion of the U.K. and German
vehicle leasing markets were unserved by third-party fleet management companies,
which we believe indicates a significant market opportunity. We believe that
growth in the third-party vehicle leasing industry is principally driven by a
general trend toward outsourcing. As companies focus on their core competencies
and competition drives corporate cost reduction efforts, we believe that they
are more likely to rely on third-party fleet management companies.
FUEL CARD INDUSTRY. We estimate that corporate vehicle fleets in the United
States, Canada, the United Kingdom and Germany (the markets in which VMS
currently competes) made fuel
7
<PAGE>
expenditures of over $85 billion in 1998. The growth of the fuel card industry
has been driven by corporations seeking to control costs and monitor corporate
credit card usage. Technological advances have enabled fuel card providers to
penetrate this market with point-of-sale networks, information management
products and enhanced customer services. With increased competition, major oil
companies are further driving growth in the industry by accepting independent
fuel cards in addition to their own private label cards. We believe that
significant expansion opportunities remain, as management estimates that
approximately 45% of both the U.S. and U.K. fueling markets remain unpenetrated
by fuel card providers. In addition, many major oil companies outsource their
private label fuel card processing services to third-party processors.
COMPETITIVE STRENGTHS
We believe our principal competitive strengths are:
- LEADING MARKET POSITIONS. We have leading market shares in each of our
principal markets. Avis operates the second largest general-use car rental
business in the world, based on total revenue. VMS is the largest vehicle
leasing company in the United Kingdom and the second largest in the United
States, and it maintains one of the largest fuel and maintenance
cardholder bases in the world with over 3.6 million cards in use
(including approximately 800,000 third-party cards for which VMS acts as
processor). These cards accounted for approximately $5.4 billion of fuel
and maintenance expenditures in 1998. With approximately 780,000 vehicles
under management at VMS and with Avis' car rental franchise, we are a
leading worldwide provider of integrated vehicle management solutions.
- DIVERSIFIED REVENUE STREAMS AND STRONG HISTORICAL GROWTH. We have several
sources of asset-based and fee-based revenues, each of which has
demonstrated strong historical growth. Avis' total revenues have grown
from $1.9 billion in 1996 to $2.3 billion in 1998, as a result of
acquisitions and internal growth. Moreover, Avis' revenues have increased
every year over the past 25 years. VMS' total revenues have grown from
$1.2 billion in 1994 to $1.6 billion in 1998. In addition, VMS' operations
have not been subject to the same seasonal fluctuations that have
historically affected the car rental industry. Accordingly, we expect that
the combination of New Avis' diversified revenue streams will reduce
fluctuations in our overall earnings and will provide us with a
competitive advantage over traditional car rental companies.
- LEADING TECHNOLOGY PLATFORMS. We believe that Avis has one of the most
sophisticated information management and data processing systems in the
car rental industry, including the Wizard System and certain other
management information systems. The addition of VMS' advanced
technological client server platform should further increase our strengths
in technology. VMS has invested heavily to become an industry leader in
technology-based services, having developed a technologically advanced
interactive Internet tool called "PHH Interactive(sm)" and a data
warehouse called Strategic PHH Information Network or
"SPIN-Registered Trademark-", in which transaction-level information is
collected in a central repository that permits detailed and customized
"real-time" deliveries of proprietary information to its U.S. customers.
Our ability to deliver such information across our various lines of
business in a variety of customized report formats to corporations of all
sizes on a worldwide basis should provide us with a significant
competitive advantage.
- ESTABLISHED CUSTOMER BASE WITH STRONG CREDIT QUALITY. Avis has succeeded
in cultivating relationships with over 100,000 small and medium-sized
corporate customers by focusing on airport locations and providing
high-quality customer service to business travelers. Similarly, as a
result of its own emphasis on customer service and enhanced product
offerings, VMS has developed and maintains relationships with over 19,000
corporate and governmental
8
<PAGE>
customers in North America and Europe. Within North America, VMS' client
base is comprised of nearly 3,300 corporate customers spanning a variety
of industries, including nearly one-third of the Fortune 500 companies.
Over 550 of these corporations have been VMS customers for more than ten
years. Within Europe, VMS' client base is comprised of nearly 16,000
customers, including approximately one-half of the FTSE 100 companies. The
combination of Avis' and VMS' established relationships with many of the
world's leading corporations and the continuation of VMS' conservative
underwriting procedures is expected to result in low default rates across
both our lease and card portfolios, where default rates totalled
approximately 0.06% of total billings during 1998.
- STRONG MANAGEMENT TEAM. Avis' senior management team has successfully led
Avis through the recent consolidation of the car rental industry and
related changes in industry dynamics. This management team has focused on
solidifying Avis' position as a leading car rental franchise, and we
believe it is well positioned to work with VMS' senior management team in
the future. VMS' management team has extensive experience in, and
knowledge of, the vehicle leasing business including vehicle acquisition,
remarketing and financing, as well as vehicle management consulting. VMS'
23 senior managers have an average of 10 years of experience in the
vehicle management and card service industries.
BUSINESS STRATEGY
Our strategy is to be the world's leading provider of comprehensive
automotive transportation and vehicle management solutions by concentrating on
the following key elements:
- INTEGRATE VMS AND AVIS AND CAPITALIZE ON SYNERGIES AND CROSS-SELLING
OPPORTUNITIES. The combination of the strong rental car franchise of Avis,
with its strength in the corporate market, and the vehicle leasing and
management expertise of VMS should result in significant opportunities to
expand the complementary businesses of Avis and VMS across their
respective customer bases. Avis' and VMS' common strengths should provide
a significant opportunity to provide a one-stop shop of comprehensive
automotive transportation and vehicle management solutions that can be
cross-sold. As an example, the integration of Avis' Small Account
Telesales efforts with VMS' fuel card operations will permit New Avis to
more efficiently penetrate the highly profitable small-fleet fuel card
market. The combination of Avis' small and medium-sized company
relationships and VMS' technology platform should enable New Avis to
penetrate the profitable, yet largely unpenetrated, smaller-fleet leasing
market. We expect to develop additional synergies in the areas of
information technology, sales, insurance, fleet purchasing and
disposition, operations, human resources, marketing and administration.
- CAPITALIZE ON ADDITIONAL EXPANSION OPPORTUNITIES. Historically, Avis has
capitalized on its network of airport locations by focusing its sales and
marketing resources principally on business travelers. We believe that
Avis' established presence at the leading airports in the United States
provides us with an opportunity to capture a greater share of the leisure
market. Moreover, Avis is expanding its presence in the suburban market
and intends to enter the vehicle replacement market (which Avis will be
permitted to enter on a nationwide basis after expiration of a non-compete
agreement in June 2000). In addition, management estimates that in 1998,
approximately 61% of the combined U.S. and Canadian and a significant
portion of the U.K. and German vehicle leasing markets were unserved by
third-party vehicle management companies, providing a significant
opportunity to capture share in unpenetrated markets. In addition,
approximately 45% of the U.S. and U.K. fueling markets remain unpenetrated
by fuel card providers. Management believes that the foregoing will
provide New Avis with strong opportunities to capture additional share in
each of its target
9
<PAGE>
markets as a leading provider of automotive transportation and vehicle
management solutions.
- LEVERAGE STRENGTHS IN TECHNOLOGY. We intend to apply our extensive
technology and information processing capabilities to take advantage of
current trends in the car rental and vehicle management industries. We
believe that customers in the domestic car rental industry are focusing
increasingly on brand loyalty, while at the same time our customer base
has become increasingly diverse. We plan to use the Avis System's
proprietary management information applications, enhanced by VMS'
capabilities in real-time data access, to provide customers with
customized information and services. We also plan to use our technology to
identify key operating characteristics among our customers in order to
optimize our business mix. Additionally, as corporations of all sizes in
North America and Europe continue to outsource vehicle management, we will
leverage our strong technological capabilities to increase our array of
services, improve customer service and develop products and services at
reduced costs to appeal to smaller fleet owners that previously could not
justify the cost of outsourcing their vehicle management needs. In
addition, we expect to increase customer loyalty as our technology-based
services become an integral part of our customers' operations.
- DEVELOP NEW PRODUCTS AND SERVICES FOR TARGET MARKETS. In addition to our
existing asset-based and fee-based products and services, we will seek to
develop a broad range of new products and services designed to further
penetrate our existing customer base, expand our presence in international
markets, and penetrate other, previously underserved, markets such as
smaller corporate fleets and leisure travelers. Among the new products and
services that we will consider offering are: (i) a customized leisure pass
which combines Avis' rental cars with VMS' value-added services marketed
to the leisure traveler; (ii) expanding VMS into Australia and New Zealand
by leveraging Avis' existing infrastructure; and (iii) offering prepaid
fuel cards to retail and corporate customers.
- CONTINUE TO DEVELOP CORE BUSINESS OPPORTUNITIES AT AVIS AND VMS. While
seeking to realize revenue enhancing and cost saving synergies between
Avis and VMS, management of New Avis intends to continue focusing on the
development of each business' core market opportunities.
- Within Avis, such opportunities include: (i) capitalizing on changing
rental car industry dynamics; (ii) improving business mix and fleet
utilization; (iii) increasing brand loyalty through target marketing;
and (iv) developing Avis' suburban program.
- Within VMS, such opportunities include: (i) cross-selling PHH North
America and PHH Europe non-card products to VMS' extensive base of fuel
and maintenance cardholders; (ii) further developing the "One Card"
co-branded corporate card program to capture a greater share of
corporate travel and entertainment expenditures; (iii) further
penetrating both the small and large vehicle leasing markets; (iv)
expanding into underserved markets in Europe; and (v) developing new
revenue opportunities based on enhancements to the services provided by
VMS' technology platform.
OUR RELATIONSHIP WITH CENDANT
Cendant is a major publicly-traded international provider of consumer and
business services. Prior to 1997, Avis was owned by Cendant Car Rental, Inc.
(the "Franchisor"), a wholly-owned indirect subsidiary of Cendant Corporation.
Until the completion of the VMS Acquisition, VMS was indirectly owned by Cendant
Corporation. The Franchisor owns the Avis System, of which Avis is a franchisee,
as well as the Avis trademarks, tradenames and the Wizard System. In connection
with Avis Rent A Car's 1997 initial public offering (the "IPO"), its operating
subsidiary, Avis Rent A Car
10
<PAGE>
System, Inc. ("ARACS"), entered into a 50-year master license agreement with the
Franchisor to participate in the Avis System (the "Master License Agreement")
and a 50-year computer services agreement for use of the Wizard System. The
Master License Agreement provides for certain base and supplemental royalties to
be paid to Cendant based on ARACS's gross revenue, while Cendant provides
services under the computer services agreement at cost. These agreements are
unaffected by the VMS Acquisition. There are, however, certain transition and
computer-related agreements resulting from the VMS Acquisition. See "The VMS
Acquisition" and "Certain Relationships and Related Party Transactions".
Since the IPO, as a result of a secondary stock offering and a share
repurchase program instituted by Avis Rent A Car, Cendant's ownership of Avis
Rent A Car's common stock has been reduced to approximately 19% as of June 30,
1999. Assuming that, subject to certain conditions, Cendant converted all of the
Avis Fleet Preferred Stock that it received in the VMS Acquisition into Class B
common stock of Avis Rent A Car (the "Class B Common Stock") as of June 30,
1999, Cendant's ownership of Avis Rent A Car would have been approximately 34%.
Class B Common Stock is non-voting but is convertible into shares of Class A
common stock of Avis Rent A Car (the "Class A Common Stock") under certain
circumstances. The Class A Common Stock is voting stock. See "Description of
Avis Fleet Preferred Stock and Class B Common Stock" and "Certain Relationships
and Related Party Transactions".
New Avis has no additional obligations to Cendant as a result of the VMS
Acquisition, other than with regard to the Avis Fleet Preferred Stock, customary
indemnities and certain expenses arising from the computer-related and
transitional services to be provided to New Avis by Cendant as described under
"The VMS Acquisition". In connection with the VMS Acquisition, Avis Rent A Car's
Board of Directors, as well as a special committee of the Board of Directors
consisting of independent directors, each received fairness opinions from
nationally recognized investment banking firms.
THE TRANSACTIONS
On June 30, 1999, Avis acquired VMS from Cendant for $1.8 billion
(consisting of approximately $1.4 billion of cash and $362.0 million in Avis
Fleet Preferred Stock), plus the refinancing of approximately $3.5 billion of
debt. Avis financed the cash portion of the acquisition costs (including
repayment of the assumed debt) and refinanced the $3.5 billion of existing VMS
debt with $32.6 million of unrestricted cash as well as (i) borrowings under a
$1.35 billion senior secured credit facility consisting of three tranches of
term loans in an aggregate principal amount of $1.0 billion (the "Term Loans")
and $350.0 million of revolving credit commitments, which replaced Avis'
existing bank credit facility, (the "Revolving Credit Facility", together with
the Term Loans, the "New Credit Facility"), (ii) the issuance of $500.0 million
of old notes, and (iii) the issuance of $3.5 billion of asset-backed securities
under the $3.6 billion Interim VMS ABS Facility (as defined on page 12). The New
Credit Facility, the notes and the Interim VMS ABS Facility, together with the
Avis Fleet Preferred Stock, are collectively referred to as the "Financings".
The VMS Acquisition, the Financings and related refinancings of certain
indebtedness, including to Cendant, are collectively referred to as the
"Transactions". The existing $3.75 billion Avis ABS Facility (as defined on page
77) was unaffected by the VMS Acquisition.
In connection with the VMS Acquisition, Avis Rent A Car formed Avis Fleet to
acquire from PHH Holdings Corporation ("PHH Holdings"), an indirect subsidiary
of Cendant and a direct subsidiary of PHH Corporation ("PHH Corporation"), all
of the outstanding capital stock of the subsidiaries that comprise VMS (the "VMS
Subsidiaries"). The VMS Acquisition was effected by a merger under Texas law.
Upon consummation of the merger, (i) Avis Fleet owned, directly or indirectly,
all of the outstanding capital stock of the VMS Subsidiaries, (ii) PHH
Corporation owned $360.0 million of Series A Cumulative Participating Redeemable
Convertible Preferred Stock (the "Series A
11
<PAGE>
Preferred") of Avis Fleet, (iii) an additional $2.0 million of Series C
Cumulative Redeemable Preferred Stock (the "Series C Preferred") of Avis Fleet
initially issued to PHH Corporation was transferred to a third party (the Series
A Preferred and the Series C Preferred are collectively referred to as the "Avis
Fleet Preferred Stock") and (iv) Avis Fleet assumed and repaid approximately
$1.4 billion of indebtedness of PHH Holdings.
The following chart illustrates part of our corporate structure after giving
effect to the Transactions:
[LOGO]
In connection with the VMS Acquisition, New Avis received a perpetual,
royalty-free license from PHH Corporation to use certain trademarks and
tradenames in connection with the VMS business, including the "PHH" name. In
addition, PHH Corporation and PHH Holdings entered into a five-year
non-competition agreement with Avis Rent A Car.
In order to refinance the $3.5 billion of existing VMS fleet debt and
achieve an efficient asset-backed financing in connection with the VMS
Acquisition, securitization or other vehicle financing subsidiaries of New Avis
issued $3.5 billion in asset-backed securities (the "Interim VMS ABS Offering")
under a facility (the "Interim VMS ABS Facility") that permits the issuance of
(i) up to $2.5 billion of variable funding asset-backed notes, supported by U.S.
leases and vehicles ("Domestic VFNs"), (ii) up to $236 million of asset-backed
preferred membership interests supported by U.S. leases and vehicles ("Preferred
Membership Interests", and together with the Domestic VFNs, the "Domestic
Asset-Backed Securities") and (iii) an advance of up to $829 million under an
asset-backed facility to PHH Europe, which advance is guaranteed by various PHH
Europe entities and is supported by substantially all of the assets of such
entities (the "U.K. Advances"). Each of the foregoing securities have been
placed with one or more multi-seller commercial paper conduits. See "Description
of Other Indebtedness".
12
<PAGE>
The following table outlines the sources and uses of funds in connection
with the VMS Acquisition as of June 30, 1999:
<TABLE>
<CAPTION>
AMOUNT
-------------------
<S> <C>
(DOLLARS IN
MILLIONS)
SOURCES OF FUNDS:
Unrestricted Cash........................................................ $ 32.6
Revolving Credit Facility(1)(2).......................................... 73.0
Term Loan A.............................................................. 250.0
Term Loan B.............................................................. 375.0
Term Loan C.............................................................. 375.0
Senior Subordinated Notes................................................ 500.0
Avis Fleet Preferred Stock(3)............................................ 362.0
Interim VMS ABS Facility(4).............................................. 3,455.5
--------
Total Sources............................................................ $ 5,423.1
--------
--------
USES OF FUNDS:
VMS Acquisition consideration............................................ $ 1,800.0
Refinancing of VMS non-vehicle debt...................................... 14.9
Refinancing of VMS existing fleet debt(5)................................ 3,486.7
Fees and expenses(6)..................................................... 63.4
Escrow Deposits.......................................................... 58.1
--------
Total Uses............................................................... $ 5,423.1
--------
--------
</TABLE>
- ------------------------
(1) The Revolving Credit Facility permits borrowings of up to an aggregate
principal amount of $350.0 million. Approximately $92.2 million was
available under the New Credit Facility on June 30, 1999 to fund our
liquidity requirements after giving effect to the Transactions. See
"Capitalization" for a description of anticipated unrestricted cash balances
as of June 30, 1999.
(2) Does not include $184.8 million in letters of credit that were outstanding
in connection with the Avis ABS Facility and support airport concession
agreements, insurance matters and foreign debt.
(3) Comprised of $360.0 million liquidation preference of Series A Preferred and
$2.0 million liquidation preference of Series C Preferred to be issued by
Avis Fleet. Until the fifth anniversary of the issue date of the Avis Fleet
Preferred Stock, dividends on the Series A Preferred may be paid in shares
of Series B Cumulative PIK Preferred of Avis Fleet which has terms
substantially similar to the terms of the Series A Preferred. Dividends on
the Series C Preferred are payable in cash. See "Description of Avis Fleet
Preferred Stock and Class B Common Stock".
(4) See "Description of Other Indebtedness-Interim VMS ABS Facility".
(5) Consists of the following: approximately (i) $283.0 million of intercompany
debt; (ii) $103.0 million of current taxes; (iii) $2,121.6 million of North
American Vehicle Related Debt; (iv) $53.3 million of Canadian Vehicle
Related Debt; and (v) $925.8 million of European Vehicle Related Debt.
(6) Consists of fees and expenses incurred in connection with the Transactions.
13
<PAGE>
SUMMARY DESCRIPTION OF NOTES
THE FOLLOWING SUMMARY IS PROVIDED SOLELY FOR YOUR CONVENIENCE. THIS SUMMARY
IS NOT INTENDED TO BE COMPLETE AND CONTAINS ONLY BASIC INFORMATION ABOUT THE
NOTES. IT DOES NOT CONTAIN ALL THE INFORMATION THAT IS IMPORTANT TO YOU. FOR A
MORE DETAILED DESCRIPTION OF THE NOTES, YOU SHOULD REFER TO THE SECTION ENTITLED
"DESCRIPTION OF NOTES".
<TABLE>
<S> <C>
Issuer............................ Avis Rent A Car, Inc.
Notes offered..................... $500,000,000 aggregate principal amount of 11% Senior
Subordinated Exchange Notes due 2009 to be issued in
exchange for 11% Senior Subordinated Notes due 2009.
Maturity.......................... May 1, 2009.
Sinking fund...................... None.
Interest.......................... Annual rate: 11%. Payment frequency: every six months on
May 1 and November 1.
First payment: November 1, 1999.
Optional redemption............... On or after May 1, 2004, Avis Rent A Car may redeem some
or all of the notes at the redemption prices listed in
the section entitled "Description of Notes-Optional
redemption". Prior to May 1, 2002, Avis Rent A Car may
redeem up to 35% of the principal amount of the notes
with the proceeds of certain equity offerings at a
redemption price equal to 111.000% of the principal
amount of the notes so redeemed plus accrued and unpaid
interest to the date of redemption, but only so long as
at least 65% of the original principal amount of the
notes remains outstanding after any such redemption.
Except as set forth in the preceding sentences, Avis
Rent A Car may not redeem the notes.
Change of Control................. Upon the occurrence of a change of control, you will
have the right to require Avis Rent A Car to purchase
all or a portion of your notes at a price equal to 101%
of their principal amount together with accrued and
unpaid interest, if any, to the date of purchase. See
"Description of Notes-Change of Control".
Guarantees........................ The old notes are, and the new notes will be, guaranteed
by each of Avis Rent A Car's existing and future U.S.
restricted subsidiaries other than banking subsidiaries,
insurance company subsidiaries and securitization or
other vehicle financing subsidiaries which have not
guaranteed senior indebtedness of Avis Rent A Car. The
notes and the guarantees are unsecured senior
subordinated debts.
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
Ranking........................... The notes will be subordinated in right of payment to
all of Avis Rent A Car's existing and future senior
indebtedness. The guarantees of the notes will be
subordinated in right of payment to all existing and
future senior indebtedness of the guarantor
subsidiaries. The notes will rank equally in right of
payment with all of Avis Rent A Car's future senior
subordinated debt and senior to all of Avis Rent A Car's
future subordinated debt. The guarantees of the notes
will rank equally in right of payment with all senior
subordinated debt of the guarantor subsidiaries and will
rank senior to all subordinated debt of the guarantor
subsidiaries. See "Description of Notes--Ranking and
subordination".
As of June 30, 1999, after giving effect to the
Transactions, Avis Rent A Car:
- had $8.5 billion of debt to which the notes would be
contractually or structurally subordinated (which
amount does not include an additional $92.2 million
available under the New Credit Facility after giving
effect to $184.8 million of outstanding but undrawn
letters of credit);
- had no senior subordinated debt with which the notes
would rank equally; and
- had no subordinated debt to which the notes would be
senior.
As of June 30, 1999, after giving effect to the
Transactions, Avis Rent A Car's guarantor subsidiaries:
- had $63.2 million of senior debt to which their
respective guarantees would be subordinated (which
amount does not include their guarantees in respect
of the New Credit Facility);
- had no senior subordinated debt with which their
respective guarantees would rank equally; and
- had no subordinated debt to which their respective
guarantees would be senior.
The indenture relating to the notes (the "Indenture")
permits Avis Rent A Car and its subsidiaries to incur a
significant amount of additional senior debt. In
addition, Avis Rent A Car's securitization or other
vehicle financing subsidiaries are not guaranteeing the
notes and are permitted under the Indenture to incur an
unlimited amount of vehicle financing indebtedness to
the extent supported by requisite vehicle, lease and
fleet receivables collateral and under certain customer
programs.
</TABLE>
15
<PAGE>
<TABLE>
<S> <C>
Certain covenants................. The Indenture, among other things, restricts Avis Rent A
Car's ability and the ability of its subsidiaries to:
- borrow money (although Avis Rent A Car's ability to
do asset-backed vehicle financing will not be restricted
to the extent supported by requisite vehicle and
fleet receivables collateral);
- pay dividends on stock, redeem stock or redeem
subordinated debt;
- make certain investments;
- use assets as security in other transactions;
- incur debt that is senior to the notes but junior to
senior debt;
- sell assets;
- sell capital stock of subsidiaries;
- guarantee other indebtedness;
- enter into agreements that restrict dividends from
subsidiaries;
- merge or consolidate;
- enter into transactions with our affiliates; and
- enter into new lines of business.
For more details, see "Description of Notes--Certain
covenants".
</TABLE>
RISK FACTORS
You should carefully consider the information set forth in the section
entitled "Risk Factors" beginning on page 23 as well as all other information in
this prospectus before investing in the notes.
------------------------
Our principal offices are located at 900 Old Country Road, Garden City, New
York 11530. Our telephone number is (516) 222-3000. Our common stock is listed
on the New York Stock Exchange under the symbol "AVI".
16
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA (AVIS)
The summary historical consolidated financial data for Avis as of and for
each of the years ended December 31, 1997 and 1998 and the periods ended October
16, 1996 and December 31, 1996, have been derived from Avis' consolidated
financial statements which have been audited by Deloitte & Touche LLP included
elsewhere in this prospectus (the "Avis Audited Consolidated Financial
Statements"). The summary historical consolidated financial data for Avis as of
and for the six months ended June 30, 1998 and June 30, 1999 have been derived
from Avis' unaudited condensed consolidated financial statements included
elsewhere in this prospectus (the "Avis Unaudited Consolidated Financial
Statements" and together with the Avis Audited Consolidated Financial
Statements, the "Avis Consolidated Financial Statements") which were prepared on
the same basis as Avis' Audited Consolidated Financial Statements and include,
in the opinion of Avis' management, all adjustments necessary to present fairly
the information presented for such interim period. The interim results for the
six months ended June 30, 1999 are not necessarily indicative of results that
can be expected for the full fiscal year. This information should be read in
conjunction with the Avis Audited Consolidated Financial Statements and notes
thereto, the Unaudited Pro Forma Combined Financial Data, Management's
Discussion and Analysis of Financial Condition and Results of Operations, and
the other financial information included elsewhere in this prospectus.
<TABLE>
<CAPTION>
PREDECESSOR OCTOBER 17, 1996 SIX MONTHS
COMPANIES(1) (DATE OF YEARS ENDED ENDED
JANUARY 1, 1996 TO ACQUISITION) COMBINED YEAR DECEMBER 31, JUNE 30,
OCTOBER 16, TO DECEMBER 31, ENDED DECEMBER 31, ------------------------ -----------
1996 1996 1996(2)(3) 1997 1998 1998
------------------ -------------------- -------------------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Revenue................ $ 1,504,673 $ 362,844 $ 1,867,517 $ 2,046,154 $ 2,297,582 $ 1,086,670
Costs and expenses:
Direct operating,
net(4)............. 650,750 167,682 818,432 863,839 939,986 440,684
Vehicle depreciation
and lease charges,
net................ 358,937 85,455 444,392 525,143 593,064 277,394
Selling, general and
administrative(5)... 283,180 68,215 351,395 415,728 438,724 213,114
Interest, net........ 138,225 38,205 176,430 184,261 201,726 96,818
Amortization of costs
in excess of net
assets acquired.... 3,782 1,026 4,808 6,860 11,854 5,521
------------------ -------------------- -------------------- ----------- ----------- -----------
Total operating
expenses......... 1,434,874 360,583 1,795,457 1,995,831 2,185,354 1,033,531
Income before provision
for income taxes..... 69,799 2,261 72,060 50,323 112,228 53,139
Provision for income
taxes.............. 31,198 1,040 32,238 22,850 48,707 23,381
------------------ -------------------- -------------------- ----------- ----------- -----------
Net income............. $ 38,601 $ 1,221 $ 39,822 $ 27,473 $ 63,521 $ 29,758
------------------ -------------------- -------------------- ----------- ----------- -----------
OTHER FINANCIAL DATA:
Vehicle depreciation
(Fleet Costs)........ $ 306,159 $ 71,343 $ 377,502 $ 466,799 $ 581,022 $ 268,944
Vehicle interest (Fleet
Costs)............... 135,577 38,087 173,664 178,213 187,773 92,628
Non-vehicle
depreciation and
amortization......... 18,538 3,238 21,776 23,022 36,750 16,646
Non-vehicle interest... 225 118 343 2,395 3,862 74
Ratio of earnings to
fixed charges(6)..... 1.4x 1.0x 1.3x 1.2x 1.4x 0.8x
<CAPTION>
1999
-----------
<S> <C>
STATEMENTS OF OPERATIONS
DATA:
Revenue................ $ 1,204,374
Costs and expenses:
Direct operating,
net(4)............. 476,938
Vehicle depreciation
and lease charges,
net................ 311,167
Selling, general and
administrative(5)... 231,182
Interest, net........ 104,362
Amortization of costs
in excess of net
assets acquired.... 6,351
-----------
Total operating
expenses......... 1,130,000
Income before provision
for income taxes..... 74,374
Provision for income
taxes.............. 31,906
-----------
Net income............. $ 42,468
-----------
OTHER FINANCIAL DATA:
Vehicle depreciation
(Fleet Costs)........ $ 297,697
Vehicle interest (Fleet
Costs)............... 98,699
Non-vehicle
depreciation and
amortization......... 18,926
Non-vehicle interest... 1,227
Ratio of earnings to
fixed charges(6)..... 0.8x
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
PREDECESSOR OCTOBER 17, 1996 SIX MONTHS
COMPANIES(1) (DATE OF YEARS ENDED ENDED
JANUARY 1, 1996 TO ACQUISITION) COMBINED YEAR DECEMBER 31, JUNE 30,
OCTOBER 16, TO DECEMBER 31, ENDED DECEMBER 31, ------------------------ -----------
1996 1996 1996(2)(3) 1997 1998 1998
------------------ -------------------- -------------------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF FINANCIAL
POSITION DATA (END OF
PERIOD):
Accounts receivable,
net of allowance for
doubtful
accounts(7).......... $ 269,848 $ 311,179 $ 311,179 $ 359,463 $ 360,574 $ 211,861
Vehicles, net(8)....... 2,404,275 2,243,492 2,243,492 3,018,856 3,164,816 3,587,834
Total assets........... 3,186,503 3,131,232 3,131,232 4,282,657 4,505,062 4,815,651
Total debt, including
amounts due within
one year(9).......... 2,645,095 2,542,974 2,542,974 2,826,422 3,014,712 3,278,619
Total non-vehicle
debt................. 4,138 3,976 3,976 2,914 1,777 2,237
Common stockholders'
equity(10)........... 740,113 76,415 76,415 453,722 622,614 635,196
OPERATING DATA:
Car rental data:
Number of rental
locations (end of
period)............ 550 546 546 612 660 636
Number of rental
transactions during
period (in
thousands)......... 10,272 2,534 12,806 13,667 15,296 7,425
Peak number of
vehicles during
period............. 196,077 177,839 196,077 212,104 231,086 216,118
Average number of
vehicles during
period(11)......... 174,813 172,461 174,226 186,317 205,685 198,160
Average monthly
revenue per vehicle
during
period(12)......... $ 906 $ 842 $ 893 $ 915 $ 931 $ 914
Average revenue per
rental transaction
during period...... $ 146 $ 143 $ 146 $ 150 $ 150 $ 148
<CAPTION>
1999
-----------
<S> <C>
STATEMENTS OF FINANCIAL
POSITION DATA (END OF
PERIOD):
Accounts receivable,
net of allowance for
doubtful
accounts(7).......... $ 910,311
Vehicles, net(8)....... 7,663,270
Total assets........... 11,588,627
Total debt, including
amounts due within
one year(9).......... 9,017,106
Total non-vehicle
debt................. 1,644,608
Common stockholders'
equity(10)........... 615,143
OPERATING DATA:
Car rental data:
Number of rental
locations (end of
period)............ 670
Number of rental
transactions during
period (in
thousands)......... 8,129
Peak number of
vehicles during
period............. 233,456
Average number of
vehicles during
period(11)......... 217,114
Average monthly
revenue per vehicle
during
period(12)......... $ 925
Average revenue per
rental transaction
during period...... $ 146
</TABLE>
18
<PAGE>
NOTES TO SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA (AVIS)
(1) On October 17, 1996, Cendant acquired the predecessors to Avis (such date,
the "Date of Acquisition"). See Note 1 to the Avis Audited Consolidated
Financial Statements.
(2) Excludes any purchase accounting adjustments for the period January 1, 1996
to October 16, 1996.
(3) Avis' results for 1996 are presented on a combined twelve month basis and
include the results of the predecessor companies of Avis ("Predecessor
Companies") for the period January 1, 1996 to October 16, 1996 and the
results of Avis Rent A Car for the period from the Date of Acquisition to
December 31, 1996. See Note 1 to the Avis Audited Consolidated Financial
Statements.
(4) Consist of expenses directly associated with Avis' rental vehicles,
including Fleet Costs, facility costs, salaries and benefits.
(5) Selling, general and administrative expenses includes a 4% royalty fee
payable to Cendant for the years ended December 31, 1997 and 1998 and
charges from Cendant for the period from the Date of Acquisition to December
31, 1996. See Note 5 to the Avis Audited Consolidated Financial Statements.
(6) Ratio of earnings to fixed charges consists of income from continuing
operations (before extraordinary items) before income taxes and fixed
charges (excluding capitalized interest), divided by fixed charges of
interest (including amounts capitalized and the interest factor in rental
expense) and amortization of deferred debt issuance costs.
(7) Includes manufacturers receivables (in thousands) of $134,315, $183,304,
$183,304, $219,391, $226,963, $53,517 and $116,975 at October 16, 1996;
December 31, 1996; December 31, 1996; December 31, 1997; December 31, 1998;
June 30, 1998 and June 30, 1999, respectively. Manufacturers receivables
arise from the sale of vehicles to manufacturers pursuant to guaranteed
Repurchase Programs and amounts due from incentives and allowances.
(8) Vehicles are presented net of accumulated vehicle depreciation.
(9) Includes vehicle financing notes-due to affiliates at October 16, 1996 and
December 31, 1996 of $1,289,500 and $247,500, respectively.
(10) Decrease in common stockholders' equity during the six months ended June
30, 1999, reflects a repurchase of Class A Common Stock by Avis.
(11) Average monthly revenue per vehicle for each period is calculated as
revenue divided by the average number of vehicles for the period divided by
the number of months in each period.
(12) Average rental revenue per rental transaction for each respective period is
calculated as revenue divided by the number of rental transactions during
the period.
19
<PAGE>
SUMMARY HISTORICAL COMBINED FINANCIAL DATA (VMS)
The summary historical combined financial data for VMS as of December 31,
1998 and 1997 and for each of the three years in the period ended December 31,
1998 have been derived from VMS' audited combined financial statements included
elsewhere in this prospectus (the "VMS Audited Combined Financial Statements").
The summary historical combined financial data for VMS as of and for the three
months ended March 31, 1999 and for the three months ended March 31, 1998, have
been derived from VMS' unaudited condensed combined financial statements
included elsewhere in this prospectus (the "VMS Unaudited Combined Financial
Statements" and, together with the VMS Audited Combined Financial Statements,
the "VMS Combined Financial Statements") which were prepared on the same basis
as VMS' Audited Combined Financial Statements and include, in the opinion of
VMS' management, all adjustments necessary to present fairly the information
presented for such interim periods. The interim results for the three months
ended March 31, 1999 are not necessarily indicative of results that can be
expected for the full fiscal year. This information should be read in
conjunction with the VMS Combined Financial Statements and notes thereto, the
Unaudited Pro Forma Combined Financial Data, Management's Discussion and
Analysis of Financial Condition and Results of Operations, and the other
financial information included elsewhere in this prospectus.
20
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------------------- --------------------------
<S> <C> <C> <C> <C> <C>
1996 1997 1998(1) 1998 1999
------------- ------------- ------------- ----------- -------------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenue:
Fleet leasing revenue................ $ 1,128,495 $ 1,187,193 $ 1,286,896 $ 312,126 $ 317,992
Fleet management services............ 167,512 184,047 182,356 49,689 50,694
Other................................ 61,032 81,455 135,811 29,490 31,567
------------- ------------- ------------- ----------- -------------
Total revenues....................... 1,357,039 1,452,695 1,605,063 391,305 400,253
Depreciation on vehicles............... 912,830 953,551 1,015,511 249,384 253,743
Interest expense....................... 167,687 177,149 183,560 43,183 46,457
Selling, general and administrative
expenses............................. 193,822 211,123 232,724 55,425 63,569
Depreciation and amortization on assets
other than vehicles.................. 16,585 14,943 25,680 6,341 7,332
Merger-related costs and other unusual
charges (credits)(2)................. -- 61,090 (1,280) -- --
------------- ------------- ------------- ----------- -------------
Total expenses....................... 1,290,924 1,417,856 1,456,195 354,333 371,101
------------- ------------- ------------- ----------- -------------
Income before provision for income
taxes................................ 66,115 34,839 148,868 36,972 29,152
Provision for income taxes............. 25,323 23,649 55,800 13,857 11,002
------------- ------------- ------------- ----------- -------------
Net income............................. $ 40,792 $ 11,190 $ 93,068 $ 23,115 $ 18,150
------------- ------------- ------------- ----------- -------------
------------- ------------- ------------- ----------- -------------
OTHER FINANCIAL DATA:
Vehicle depreciation (Fleet Costs)..... $ 912,830 $ 953,551 $ 1,015,511 $ 253,743
Vehicle interest (Fleet Costs)......... 165,466 173,891 179,729 45,706
Non-vehicle depreciation and
amortization......................... 16,585 14,943 25,680 7,332
Non-vehicle interest................... 2,221 3,258 3,831 751
STATEMENT OF FINANCIAL POSITION DATA
(END OF PERIOD):
Accounts and loans receivable, net of
allowance for doubtful accounts...... $ 383,830 $ 508,901 $ 506,325
Vehicles, net of accumulated
depreciation......................... 3,594,418 3,788,328 3,867,856
Total assets........................... 4,135,112 4,728,299 4,832,134
Total debt, including amounts due
within one year...................... 3,083,603 3,339,579 3,263,687
Total non-vehicle debt................. 46,123 62,489 56,070
Shareholders' equity................... 440,166 730,824 749,109
OPERATING DATA (END OF PERIOD):
Vehicle management data:
Vehicles under management(3)....... 642,000 664,000 779,000 761,000 767,000
Fuel and maintenance cards
outstanding(4)................... 2,314,000 2,726,000 3,629,000 3,688,000 4,390,000
</TABLE>
21
<PAGE>
NOTES TO SUMMARY HISTORICAL COMBINED FINANCIAL DATA (VMS)
(1) Includes the results of operations of the Harpur Group Limited from January
20, 1998, the date of acquisition. See Note 4 to the VMS Audited Combined
Financial Statements.
(2) For a discussion of merger-related costs and other unusual charges
(credits), see Note 3 to the VMS Audited Combined Financial Statements.
(3) Includes leased vehicles and vehicles for which third-party vehicle-related
services are provided.
(4) Includes fuel cards for third parties for which VMS acts as processor.
22
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING A
DECISION TO INVEST IN THE NOTES. THE RISKS DESCRIBED BELOW ARE NOT THE ONLY ONES
THAT WE WILL FACE. ADDITIONAL RISKS THAT WE DO NOT KNOW ABOUT OR THAT WE VIEW AS
IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS OPERATIONS AND OUR ABILITY TO REPAY THE
NOTES.
WE HAVE A SUBSTANTIAL AMOUNT OF INDEBTEDNESS
As of June 30, 1999, we had approximately $9.0 billion of indebtedness
outstanding, including approximately $7.2 billion under fleet financing
facilities (the "ABS Facilities"). In addition, we had approximately $145.5
million of additional credit availability under the ABS Facilities and
approximately $92.2 million available under the New Credit Facility (after
giving effect to $184.8 million of outstanding but undrawn letters of credit).
We had approximately $92.2 million available under the New Credit Facility on
June 30, 1999 to fund our liquidity requirements after giving effect to the
Transactions. See "Capitalization" for a description of anticipated unrestricted
cash balances as of June 30, 1999. Moreover, Avis Fleet had Avis Fleet Preferred
Stock outstanding with a $362.0 million aggregate liquidation preference. As a
result, we are highly leveraged. See "Capitalization" and "Unaudited Pro Forma
Combined Financial Data".
This high level of indebtedness could have important consequences to our
operations, including:
- we may have difficulty borrowing money in the future for working capital,
capital expenditures, acquisitions or other purposes;
- we will need to use a large portion of the money we earn to pay principal
and interest on the notes and our other debt, which will reduce the amount
of money available to finance our operations and other business
activities;
- some of our debt, including the New Credit Facility and the ABS
Facilities, has variable rates of interest, which exposes us to the risk
of increased interest rates;
- our debt under the New Credit Facility and the ABS Facilities will be
secured and will mature prior to the notes;
- we may have a much higher level of debt than certain of our competitors,
which may put us at a competitive disadvantage;
- our debt level will make us more vulnerable to economic downturns and
adverse developments in our businesses;
- our debt level will reduce our flexibility in responding to changing
business and economic conditions, including increased competition in our
industry; and
- our debt level will limit our ability to pursue other business
opportunities, borrow money for operations or capital in the future and
implement our business strategy.
In addition, under certain circumstances, we may not make payments on the
notes if certain senior indebtedness (including debt under the New Credit
Facility) is not paid when due or any other default on such senior indebtedness
exists.
We expect to obtain the money to pay our expenses and to pay principal and
interest on the notes, the New Credit Facility and other debt from our cash flow
and from additional loans under the New Credit Facility. Our ability to meet
these requirements will depend on our future financial performance, which will
be affected by financial, business, economic, competitive and other factors. We
will not be able to control many of these factors, such as economic conditions
in the markets in
23
<PAGE>
which we operate and initiatives undertaken by competitors. We cannot be certain
that our cash flow will be sufficient to allow us to pay principal and interest
on our debt (including the notes) and meet our other obligations. If we do not
have enough money to do so, we may be required to refinance all or part of our
existing debt, including the notes, sell assets or borrow more money. We cannot
assure you that we will be able to do so on commercially reasonable terms, if at
all. In addition, the terms of our existing or future debt agreements, including
the New Credit Facility and the Indenture, may restrict us from adopting any of
these alternatives.
THE NOTES AND THE SUBSIDIARY GUARANTEES OF THE NOTES WILL BE SUBORDINATE TO ALL
SENIOR DEBT
The right to payment on the notes is subordinate to all of our existing
senior debt and will be subordinate to all of our future senior debt. Similarly,
the subsidiary guarantees of the notes are subordinate to all existing senior
debt of the applicable guarantor subsidiaries and will be subordinate to the
future senior debt of the applicable guarantor subsidiaries. As of June 30,
1999:
- we had $8.5 billion of debt outstanding (in addition to $92.2 million
available under the New Credit Facility after giving effect to $184.8
million of outstanding but undrawn letters of credit), and the notes would
have been contractually or structurally subordinate to all of this
outstanding debt; and
- the guarantor subsidiaries had $63.2 million of senior debt outstanding
(in addition to their guarantees of Avis Rent A Car's borrowings under the
New Credit Facility), and their subsidiary guarantees of the notes would
have been subordinate to all of their outstanding senior debt.
In the event of a bankruptcy or similar proceeding with respect to Avis Rent
A Car or any guarantor subsidiary of the notes, the assets of Avis Rent A Car or
such guarantor subsidiary will be available to pay obligations on the notes or
the applicable subsidiary guarantee only after all outstanding senior
indebtedness has been paid in full. There may not be sufficient assets remaining
to make payment of amounts due on any or all of the notes then outstanding or on
the subsidiary guarantees.
In addition, all payments on the notes and the subsidiary guarantees of the
notes will be blocked in the event of a payment default on, or the acceleration
of, certain senior indebtedness, including the New Credit Facility, and may be
blocked for up to 179 days out of 360 days in the event of a nonpayment default
on certain senior indebtedness.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to Avis Rent A Car or our guarantor subsidiaries, holders of
the notes will participate on a PARI PASSU (equal) basis with certain trade
creditors, and all other holders of senior subordinated indebtedness of Avis
Rent A Car or our guarantor subsidiaries, as the case may be. However, because
the Indenture requires that amounts otherwise payable to holders of the notes in
a bankruptcy or similar proceeding be paid instead to holders of senior debt
until they are paid in full, holders of the notes may receive less, ratably,
than holders of such trade payables in any such proceeding. In addition, any
acceleration of the indebtedness under the New Credit Facility will, and
acceleration of our other indebtedness may, constitute an event of default under
the Indenture. If an event of default exists under the New Credit Facility or
certain other senior indebtedness, the Indenture may restrict payments on the
notes until holders of such other indebtedness are paid in full or such default
is cured or waived or has otherwise ceased to exist. In any of these cases, Avis
Rent A Car and our guarantor subsidiaries may not have sufficient funds to pay
all of our creditors and holders of the notes may receive less, ratably, than
the holders of trade payables.
24
<PAGE>
WE MAY NOT BE ABLE TO SATISFY OUR OBLIGATIONS TO HOLDERS OF THE NOTES UPON A
CHANGE OF CONTROL
Upon the occurrence of a "change of control" (as defined in the Indenture),
each holder of the notes will have the right to require Avis Rent A Car to
purchase such holder's notes at a price equal to 101% of the principal amount
thereof, together with accrued and unpaid interest, if any, to the date of
purchase; but,
- the New Credit Facility will effectively prevent the purchase of the notes
by Avis Rent A Car in the event of a change of control (absent the consent
of the required lenders), unless all amounts outstanding under the New
Credit Facility are repaid in full;
- failure to purchase, or give notice of purchase of, the notes would be a
default under the Indenture, which would in turn be a default under the
New Credit Facility; and
- failure to repay all amounts outstanding under the New Credit Facility
upon a default would (absent a waiver of such default by the required
lenders) be a default under the Indenture.
In addition, a change of control may constitute an event of default under
the New Credit Facility. A default under the New Credit Facility would result in
an event of default under the Indenture if the lenders were to accelerate the
debt thereunder, in which case the subordination provisions of the notes would
require payment in full of the New Credit Facility before purchase of the notes.
Any future credit agreements or other agreements to which we become a party may
contain similar restrictions and provisions.
In the event of a change of control, Avis Rent A Car may not have sufficient
assets to satisfy all obligations under the New Credit Facility and the
Indenture. The source of funds for any purchase of notes would be available cash
or cash generated from other sources. We cannot be sure that any such cash would
be available. Upon the occurrence of a change of control, we could seek to
refinance the indebtedness under the New Credit Facility and the notes or obtain
a waiver from the lenders, but it is possible that we would not be able to
obtain such a waiver or refinance such indebtedness on commercially reasonable
terms, if at all. Failure to purchase tendered notes at a time when such
purchase is required by the Indenture would constitute an event of default
which, in turn, would constitute a default under the New Credit Facility. In
such circumstances, the subordination provisions would restrict payment to you
until all senior debt has been repaid. Moreover, the provisions in the Indenture
regarding a change of control could increase the difficulty of a potential
acquiror obtaining control of us.
OUR DEBT AGREEMENTS RESTRICT OUR ABILITY TO TAKE SOME ACTIONS
The New Credit Facility and the Indenture as well as certain of our other
agreements with other lenders, include a number of significant covenants that,
among other things, will restrict our ability to:
- incur debt;
- pay dividends on stock or purchase stock;
- make certain types of investments;
- use the proceeds of the sale of certain assets or stock of certain
subsidiaries;
- engage in certain transactions with affiliates;
- engage in mergers, consolidations and certain sales of assets;
- engage in business activities unrelated to our current businesses; and
25
<PAGE>
- permit restrictions on the ability of certain of our subsidiaries to pay
dividends and make other distributions.
Certain of these agreements also require us to maintain specified financial
ratios. A breach of any of these covenants or our inability to maintain the
required financial ratios could result in a default in respect of the related
indebtedness. In the event of a default, the relevant lenders could elect, among
other options, to declare the indebtedness, together with accrued interest and
other fees, to be immediately due and payable, and proceed against any
collateral securing that indebtedness. If, as a result of such a failure, a
default occurs with respect to senior debt, the subordination provisions in the
Indenture would likely restrict payments to the holders of the notes.
THE NOTES ARE UNSECURED
The notes are not secured by any of our assets. The ABS Facilities will be
secured by our vehicle fleet, related manufacturers' repurchase obligations,
leases and receivables arising under fleet service contracts (fleet maintenance
contracts, fuel card contracts, and any other service contracts, the fees for
which are billed together with leases) and restricted cash, and the New Credit
Facility will be secured by a pledge of the capital stock of a substantial
portion of our subsidiaries and certain other tangible and intangible assets
that do not secure the ABS Facilities. If we become insolvent or are liquidated,
or if payment under any of these facilities is accelerated, our lenders would be
entitled to exercise the remedies available to a secured lender under applicable
law and will have a claim on such assets before the holders of the notes. We
cannot be sure that the liquidation value of our assets would be sufficient to
repay in full the indebtedness under the ABS Facilities, the New Credit Facility
and our other indebtedness, including the notes.
WE WILL RELY ON ASSET-BACKED FINANCING TO PURCHASE VEHICLES
We will rely heavily on asset-backed financing to purchase vehicles. If our
access to asset-backed financing were reduced, we cannot be sure that we would
be able to obtain replacement financing on favorable terms. As a result, any
disruption in the market for asset-backed securities or in our ability to access
that market would have a material adverse effect on our financial condition and
results of operations. In addition, if defaults under leases increase or if
leases do not yield a return equivalent to the cost of the Interim VMS ABS
Facility, then receivables collections that would have been used for our working
capital requirements could instead be required to be used to pay amounts owing
in respect of the Interim VMS ABS Facility. If we are successful in our strategy
of penetrating the small fleet market, defaults are likely to increase. In
addition, we may elect to accept lower returns on leases in the future to
successfully sell additional fee services. Both events may increase the amounts
required to support the Interim VMS ABS Facility, through the contribution of
cash to the relevant financing subsidiaries. On the closing date of the Interim
VMS ABS Offering, approximately $205 million of receivables were used to support
the obligations under the Interim VMS ABS Facility, providing liquidity to make
related interest and dividend payments.
AVIS RENT A CAR IS A HOLDING COMPANY AND IT DEPENDS ON ITS SUBSIDIARIES FOR CASH
FLOW
Avis Rent A Car, the issuer of the notes, is a holding company and as such
conducts substantially all of its operations through its subsidiaries. As a
holding company, Avis Rent A Car depends on dividends or other intercompany
transfers of funds from its subsidiaries to meet its debt service and other
obligations. Although the notes are guaranteed by the guarantors, each guarantee
is subordinated to all senior debt of the relevant guarantor. Moreover, many of
Avis Rent A Car's subsidiaries are not guarantors. See "--Not all subsidiaries
are guarantors and assets of the non-guarantor subsidiaries may not be available
to make payments on the notes".
In addition, the ability of Avis Rent A Car's subsidiaries to pay dividends
and make other payments to it may be restricted by, among other things,
applicable corporate and other laws and
26
<PAGE>
regulations and agreements of the subsidiaries. Although the Indenture will
limit the ability of such subsidiaries to enter into consensual restrictions on
their ability to pay dividends and make other payments, such limitations are
subject to a number of significant qualifications and exceptions.
NOT ALL SUBSIDIARIES ARE GUARANTORS AND ASSETS OF THE NON-GUARANTOR SUBSIDIARIES
MAY NOT BE AVAILABLE TO MAKE PAYMENTS ON THE NOTES
Our present and future foreign subsidiaries, banking subsidiaries and
insurance subsidiaries, as well as the financing subsidiaries under the ABS
Facilities or other vehicle financing structures, will not be guarantors of the
notes unless those entities guarantee our senior debt. Payments on the notes are
only required to be made by Avis Rent A Car and the subsidiary guarantors. As a
result, no payments are required to be made from assets of subsidiaries which do
not guarantee the notes unless those assets are transferred (by dividend or
otherwise) to Avis Rent A Car or a subsidiary guarantor.
In the event of a bankruptcy, liquidation or reorganization of any of the
non-guarantor subsidiaries, holders of their indebtedness (including their trade
creditors) would generally be entitled to payment of their claims from the
assets of those subsidiaries before any assets are made available for
distribution to us. As a result, the notes are effectively subordinated to the
indebtedness of the non-guarantor subsidiaries. As of June 30, 1999 such
indebtedness included $839.9 million of indebtedness of foreign subsidiaries,
$71.6 million of indebtedness of the banking subsidiary and $6.5 billion under
the domestic ABS Facilities.
Together, the non-guarantor subsidiaries accounted for 81% of total assets
at June 30, 1999. The Avis non-guarantor subsidiaries accounted for 10% of
Avis's revenue and 19% of Avis's pre-tax income for the six month period ending
June 30, 1999. The VMS non-guarantor subsidiaries accounted for 64% of VMS's
revenue and 61% of VMS's pre-tax income for the three months ended March 31,
1999.
WE MAY BE UNABLE TO SUCCESSFULLY INTEGRATE VMS' AND AVIS' OPERATIONS OR REALIZE
THE EXPECTED BENEFITS FROM THE VMS ACQUISITION OR FUTURE ACQUISITIONS
We cannot be sure that we will be able to successfully integrate VMS' and
Avis' operations without substantial costs, delays or other problems. In
addition, expected synergies may not materialize. Our success in integrating
VMS' and Avis' operations will depend upon our ability to:
- integrate VMS' information processing systems into Avis' systems;
- retain key personnel;
- integrate VMS' general and administrative services into Avis' own; and
- avoid diversion of management's attention from operational matters.
Prior to the VMS Acquisition, Cendant provided VMS with a number of
administrative services. We have entered into agreements with Cendant under
which Cendant has agreed to provide us with certain of these services on a
transitional basis.
Pursuant to a corporate services transition agreement, dated as of June 30,
1999, by and among Cendant and Avis Fleet Leasing and Management Corporation,
Cendant has agreed to provide us with certain administrative services relating
to the operation of the VMS entities. These services include: the provision and
administration of employee benefits; processing of corporate accounts payable,
payroll and tax filings; cash management reporting; risk management support
services for the invoicing and underwriting of insurance; fixed asset
administration; credit risk management and corporate financial systems services.
This agreement expires on December 31, 1999 with some services terminating prior
to that date, except that Cendant must continue to provide corporate financial
systems services until December 31, 2000. We cannot be certain that
27
<PAGE>
after the corporate services transition agreement expires we will be able to
provide any of these services internally or obtain them from third-party
providers on a commercially reasonable basis. If we were unable to perform or
obtain these services on a commercially reasonable basis, it could have a
material adverse effect on our financial condition and results of operations.
Additionally, pursuant to an information technology services agreement,
dated as of June 30, 1999, by and among PHH Vehicle Management Services LLC and
Cendant, Cendant has agreed to continue allowing VMS access to Cendant's
mainframe and information technology resources. This information technology
services agreement expires in December 2001. We cannot be certain whether upon
the expiration of the information technology services agreement we would require
further access to Cendant's mainframe and information technology resources. If
we did and were unable to obtain them from Cendant on commercially reasonable
terms, it could have a material adverse effect on our financial condition and
results of operations.
Moreover, the consolidation and integration of VMS' and Avis' operations may
take longer, and be more disruptive to our business, than originally
anticipated. We may also encounter similar problems with future acquisitions.
ARACS IS A FRANCHISEE AND AVIS DEPENDS ON THE AVIS SYSTEM
As an Avis System franchisee, ARACS is required to pay royalties to the
Franchisor for use of the Avis trademarks and the Avis System. These royalties
are based upon ARACS' revenue, not its profits, which could result in increasing
royalty payments even during a period of declining profits. These royalties
resulted in a charge to Avis for the fiscal year ended December 31, 1998 of
$91.9 million and for the six months ended June 30, 1999 of $48.2 million.
The Franchisor has the right to terminate ARACS' franchise for certain
violations of the Master License Agreement, including, among others, if ARACS or
Avis Rent A Car purports to transfer any rights or obligations thereunder or in
the case of Avis Rent A Car, more than 10% of the equity interests in ARACS,
without compliance with its terms, or if ARACS fails, refuses or neglects to
promptly pay certain monies owing to the Franchisor or Cendant. The Franchisor
could also terminate the Master License Agreement upon the occurrence of various
bankruptcy or insolvency events. Any such termination would have a material
adverse effect on our business. Additionally, termination of the Master License
Agreement would result in a termination of the computer services agreement as
discussed below.
WE DEPEND ON COMPUTER SYSTEMS OWNED BY CENDANT
We are dependent on a number of computer systems owned and/or operated by
Cendant. For example, we utilize the Wizard System, a computer system which is
owned and operated by Cendant, pursuant to a 50-year computer services
agreement. We use the Wizard System for global reservation processing, rental
agreement generation and administration and fleet control and accounting. Our
data is also processed by the Wizard System to enable us to plan fleet
acquisitions, improve profits, monitor our competitors' rates and analyze our
business mix.
Cendant has the right to terminate this computer services agreement for
certain violations, including, among others, if we fail, refuse or neglect to
promptly pay monies owing to Cendant on two or more occasions within a six-month
period as well as for a change of control and various bankruptcy or insolvency
events. In addition, termination of the Master License Agreement would also
result in a termination of this computer services agreement. A loss of the
services provided by the Wizard System would have a material adverse effect on
our financial condition and results of operations.
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Similarly, VMS' SPIN data warehouse and European data warehouse are
partially resident on a mainframe computer owned and operated by Cendant. As is
discussed above, VMS has entered into an information technology services
agreement with Cendant, whereby Cendant has agreed to continue allowing VMS
access to Cendant's mainframe and information technology resources. However,
this agreement expires in December 2001. We cannot be certain that upon the
expiration of this information technology services agreement whether we would
require further access to Cendant's mainframe and information technology
resources. If we did and were unable to obtain them from Cendant on commercially
reasonable terms, it could have a material adverse effect on our financial
condition and results of operations.
If we were prevented from having access to our data for any reason,
including a failure of the computer system or an inability to find a supplier of
these services, it could have a material adverse effect on our financial
condition and results of operations.
AN INCREASE IN INTEREST RATES COULD REDUCE OUR PROFITABILITY
A substantial portion of our debt, including our debt under the New Credit
Facility and the ABS Facilities to the extent costs cannot be passed through, is
interest rate sensitive. As a result, an increase in interest rates, whether
because of an increase in market interest rates or an increase in our own cost
of borrowing, may materially reduce our profitability. In addition, in the event
of an increase in prevailing interest rates, lessees with floating rate leases
may have greater difficulty in meeting their increased payment obligations,
which could result in an increase in default rates. Moreover, lessees generally
have the option to convert their floating rate leases to fixed rate leases which
could, if not properly hedged, expose us to additional risks resulting from
interest rate fluctuations.
CHANGES IN REPURCHASE PROGRAMS MAY AFFECT OUR BUSINESS
At June 30, 1999, substantially all of the vehicles in Avis' then existing
rental fleet were covered by vehicle manufacturers' repurchase programs
("Repurchase Programs"). The entities acquired pursuant to the VMS Acquisition
do not participate in Repurchase Programs. Under a Repurchase Program, we agree
to purchase a specified minimum number of vehicles directly from franchised
dealers of the manufacturer at a specified price, and the manufacturer agrees to
buy those vehicles back from us at a future date at a price that is based upon
the capitalized cost of the vehicles less an agreed-upon depreciation factor
and, in certain cases, an adjustment for damage and /or excess mileage. The
Repurchase Programs limit our risk of a decline in the residual value of our
fleet and enables us to fix depreciation expense in advance. We expect vehicle
depreciation to continue to be the largest cost factor in our car rental
operations. If automobile manufacturers reduced the availability of Repurchase
Programs or related incentives, it could have a material adverse effect on our
financial condition and results of operations.
In addition, we could be placed at a competitive disadvantage if U.S.
automobile manufacturers selectively restricted eligibility to participate in
their Repurchase Programs. For example, any effort by GM to reduce the scope of
our GM Repurchase Program could adversely affect our ability to compete with
those competitors whose access to similar programs is not reduced or that have
well established alternative vehicle disposition facilities.
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Furthermore, we currently obtain a substantial portion of our financing in
reliance on Repurchase Programs. A significant change in the financial condition
of the vehicle manufacturers, particularly General Motors Corporation ("GM" or
"General Motors") or Daimler Chrysler Corporation ("Chrysler"), would
significantly affect our ability to continue to obtain this financing on
favorable terms. In addition, under the terms of certain of our credit
facilities, including the Avis ABS Facility, various events over which we will
have no control, including:
- the bankruptcy of a repurchase party, and
- a material default of a repurchase party under a Repurchase Program
may result in:
- termination of our credit lines for the purchase of vehicles under a
Repurchase Program from such repurchase party, and
- a requirement to liquidate vehicles purchased from that repurchase
party.
WE BEAR THE RESIDUAL RISK ON THE VALUE OF A PORTION OF OUR LEASED VEHICLES
We lease vehicles on both closed-end and open-end bases. We generally bear
the residual value risk on the value of vehicles leased under closed-end leases.
Therefore, if the market for used vehicles declines, we may suffer losses in
remarketing vehicles upon the expiration of closed-end leases. While PHH North
America generally uses open-end leases, PHH Europe has traditionally relied on
closed end leases. In 1998, as a result of a decline in the used vehicle market,
VMS incurred a $4.4 million charge relating to remarketing losses. At June 30,
1999, approximately 15% of VMS' total lease portfolio consisted of closed-end
leases. In addition, if we are successful in our strategy of penetrating the
smaller-fleet leasing market, this percentage may increase.
WE ARE EXPOSED TO FOREIGN CURRENCY RISKS
For the twelve months ended December 31, 1998, pro forma for the VMS
Acquisition, a significant portion of our revenue and operating costs were
denominated in foreign currencies. We are therefore exposed to fluctuations in
the exchange rates between the U.S. dollar and the currencies in which our
foreign operations receive revenues and pay expenses, particularly, the British
pound sterling. Our consolidated financial results will be denominated in U.S.
dollars and therefore require translation adjustments for purposes of reporting
results from foreign operations. Such adjustments, which may arise, for example,
due to an appreciation of the U.S. dollar relative to the pound sterling, may be
significant. In addition, we expect to borrow amounts denominated in foreign
currencies. Although we intend to hedge our exposure under such borrowings to
exchange rate fluctuations, we cannot be sure that such hedges will be
successful or that the costs of such hedges will not be significant.
WE FACE RISKS IN INTERNATIONAL OPERATIONS
The international nature of our existing and planned operations, especially
our extensive presence in the United Kingdom, involves a number of risks,
including changes in U.S. and foreign government regulations, tariffs, taxes,
fuel duties, other trade barriers, the potential for nationalization of
enterprises, economic downturns, inflation, environmental regulations, political
and social instability, foreign exchange risk, difficulties in receivables
collections, and dependence on foreign personnel and foreign unions. Foreign
government regulations may also restrict our ability to own or operate
subsidiaries in those countries, acquire new businesses or repatriate dividends
from foreign subsidiaries back to the United States. We cannot be certain that
we will be able to enter and successfully compete in additional foreign markets
or that we will be able to continue to compete in the foreign markets in which
we currently operate.
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RISING CAR PRICES AND CHANGES IN INDUSTRY POLICIES MAY AFFECT OUR BUSINESS
In recent years the average price of new cars has increased. From time to
time, automobile manufacturers sponsor sales incentive programs that tend to
lower the average cost of vehicles for fleet purchasers like us. We anticipate
that new vehicle prices will continue to increase, and we cannot be sure that
sales incentive programs will remain available, that we will be able to
effectively control the average cost of our rental fleet by purchasing a mix of
less expensive vehicles or that, because of competitive pressures, we will be
able to pass on the increased cost of vehicles to rental customers.
In the United States VMS receives fees from its dealers, who, in turn,
receive fees from vehicle manufacturers for vehicles purchased directly from the
manufacturers. These fees totalled approximately $38.4 million in 1998. We
cannot be sure that manufacturers will continue to offer these fees at
historical levels.
In addition, if car prices were to decline, we expect that leasing revenues
would decline as well.
AVIS DEPENDS ON GM FOR ITS SUPPLY OF VEHICLES
Whereas VMS has historically purchased vehicles from a broad range of
manufacturers, Avis has historically purchased a substantial majority of its
vehicles from GM. In fact, from January 25, 1989 until October 16, 1996, GM was
a minority shareholder of Avis. The number of vehicles purchased by Avis has
varied from year to year. In model year 1998, approximately 80% of Avis' vehicle
fleet purchases in the United States consisted of GM vehicles. In model year
1999, approximately 87% of Avis' vehicle fleet purchases in the United States
are expected to consist of GM vehicles. During the term of Avis' current
agreement with GM, which expires in 2002, at least 51% of Avis' domestic fleet
must consist of GM vehicles acquired from local GM dealers. Shifting significant
portions of fleet purchases to other manufacturers would require significant
lead time. As a result, GM's inability to supply us with the planned number and
type of vehicles could have a material adverse effect on our financial condition
and results of operations. In addition, if GM is not able to offer competitive
terms and conditions and we are unable to purchase enough vehicles from other
manufacturers on competitive terms and conditions, then we may be forced to
purchase vehicles at higher prices or on otherwise less favorable terms. Such a
situation could adversely affect our financial condition and results of
operations through increased vehicle acquisition and depreciation costs if we
are unable to pass these costs on to our customers through increases in rental
rates.
FLUCTUATIONS IN FUEL COSTS OR REDUCED SUPPLIES COULD HARM OUR BUSINESS
We could be adversely affected by limitations on fuel supplies, the
imposition of mandatory allocations or rationing of fuel or significant
increases in fuel prices. A severe and protracted disruption of fuel supplies or
significant increases in fuel prices could have a material adverse effect on our
financial condition and results of operations. On the other hand, decreases in
fuel costs, including decreases in applicable taxes, could reduce fuel card
revenues, since fuel card fees are generally based on the gross amount of
purchases.
A DECREASE IN AIR TRAVEL COULD HARM OUR BUSINESS
For the twelve months ended December 31, 1998, approximately 85% of Avis'
revenue from U.S. rental operations was generated at airport rental locations. A
sustained decrease in airline passenger traffic in the United States or the loss
of a significant airport concession could have a material adverse effect on our
financial condition and results of operations. Events that could reduce airline
passenger traffic include, in addition to a general economic downturn (as
discussed
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below), labor unrest, airline bankruptcies and consolidations, substantially
higher air fares, the outbreak of war, high-profile crimes against tourists and
incidents of terrorism. In addition, our leases at several major airports are
renewed on a month-to-month basis.
OUR BUSINESS COULD BE HURT BY AN ECONOMIC DOWNTURN
Our business is affected by a number of economic factors, including the
level of economic activity in the markets in which we operate. A decline in
economic activity either in the United States or in international markets could
materially affect our financial condition and results of operations. In the
vehicle rental business, a decline in economic activity typically results in a
decline in both business and leisure travel, and, accordingly, a decline in the
volume of vehicle rental transactions. In the case of a decline in vehicle
rental activity, we may reduce rental rates to meet competitive pressures, which
could adversely affect our financial condition and results of operations. With
regard to vehicle leasing and other vehicle management services, economic
downturns may result in a decrease in sales volume and fee revenues, as well as
reduced margins.
A decline in economic activity may also adversely affect residual values
realized on the disposition of vehicles that are not covered by Repurchase
Programs. At June 30, 1999, we were subject to residual risk with respect to 15%
of the VMS vehicles. In addition, an economic decline is likely to result in an
increase in default rates, particularly if we are successful in penetrating the
smaller fleet leasing market. Any of the above factors could contribute to a
downgrading of our credit ratings. Any such downgrading could increase our
funding costs and decrease the spread between our cost of borrowing and our
lending rates. We cannot be sure that a decline in economic activity would not
have a material adverse effect on our financial condition and results of
operations.
OUR VEHICLE RENTAL BUSINESS IS HIGHLY SEASONAL
Avis' third quarter, which covers the peak summer travel months, has
historically been its strongest, accounting in 1998 for approximately 28% and
47% of its rental revenue and pre-tax income from rental operations,
respectively. Any occurrence that disrupts travel patterns during the summer
period could have a material adverse effect on our annual operating results.
Avis' fourth quarter has generally been its weakest with respect to pre-tax
income because of reduced leisure travel and the greater potential for adverse
weather conditions. Many operating expenses, such as rent, insurance and
personnel, are fixed and cannot be reduced during periods of decreased rental
demand. As a result, we cannot be sure that we will have sufficient liquidity
under all conditions.
OUR BUSINESS IS HIGHLY COMPETITIVE
The vehicle rental industry is highly competitive, particularly with respect
to price and service. In addition, recent changes in ownership of a number of
the major domestic vehicle rental companies could further intensify competition.
In any given location, franchisees may encounter competition from national,
regional and local companies, many of which, particularly those owned by the
major automobile manufacturers, have greater financial resources than we do.
Principal competitors for commercial accounts, unaffiliated business and leisure
travelers in the United States are Hertz Corporation ("Hertz"), National Car
Rental System, Inc. ("National"), Budget Rent A Car Corporation ("Budget") and,
particularly, with regard to leisure travelers, Alamo Rent-A-Car Inc. ("Alamo").
Similarly, the vehicle leasing and vehicle management services industries in
which VMS operates are also highly competitive. There are four other major
providers of fleet management services in the United States, hundreds of local
and regional competitors and numerous niche competitors who focus on only one or
two products. We cannot be sure that we will be able to compete successfully
with either existing or new competitors.
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From time to time, either because of overcapacity or reduced demand, the
major vehicle rental companies have been subject to industry-wide price
pressures, and Avis has, on such occasions, adjusted its rental rates in
response to such pressures. A recurrence of oversupply or a marked reduction in
overall demand could adversely affect our ability to maintain or increase our
rental rates.
TECHNOLOGICAL ADVANCES COULD REDUCE OUR COMPETITIVE ADVANTAGE IN INFORMATION
TECHNOLOGY
We believe that customers, especially in the United States, are demanding
broader and faster access to information in the manner that we will provide
through our SPIN system and other technology platforms. Technological advances
could enable our competitors to develop the ability to deliver information in a
similar manner more quickly than we currently anticipate. If our competitors
developed this ability, it would reduce our competitive advantage in information
technology.
GOVERNMENT ACTION MAY AFFECT SOURCES OF OUR REVENUES
Governmental action could affect several sources of our revenues. For
example, a significant source of profits for the vehicle rental industry has
been the sale of loss damage waivers, by which rental companies agree to relieve
a customer from financial responsibility arising from vehicle damage sustained
during the rental period. Approximately 3.3% of Avis' total revenue during 1998
was generated by the sale of loss damage waivers. The U.S. Congress has from
time to time considered legislation that would regulate the conditions under
which loss damage waivers may be sold by vehicle rental companies. At present,
no legislation is pending. In addition, approximately 40 states have considered
legislation affecting loss damage waivers. To date, 24 states have enacted
legislation regulating the sale of loss damage waivers, most of which requires
disclosure to each customer at the time of rental that damage to the rented
vehicle may be covered by the customer's personal automobile insurance and that
loss damage waivers may not be necessary. In addition, in 1988 New York enacted
legislation which eliminated Avis' right to offer loss damage waivers for sale
and limited potential customer liability to $100. California and Nevada have
capped rates that may be charged for loss damage waivers at $9.00 and $10.00 per
day, respectively. Texas requires that the rate charged for loss damage waivers
be reasonably related to the direct cost of the repairs. In Illinois, Avis is
currently permitted to sell loss damage waivers at fixed rates. If, however, the
customer elects not to purchase the loss damage waiver, the customer's liability
is limited to $9,000 unless the customer violates the prohibited use terms of
the rental agreement, in which case the customer is liable for the fair market
value of the vehicle or the cost of the repairs, whichever is less. Adoption of
national or additional state legislation affecting or limiting the sale of loss
damage waivers could result in the loss of this revenue source and additional
limitations on potential customers' liability could increase our costs. In
addition, any decrease in fuel taxes could reduce fuel card revenues.
In addition several state legislatures and insurance regulators have
recently begun to require vehicle rental companies or their personnel to obtain
limited licenses in order to sell optional insurance products at the rental
counter. In New York, legislation requires a single corporate license for the
vehicle rental company in order to permit the sale of additional liability
insurance, personal accident insurance and personal effects protection. In Ohio,
regulations now require that one person be licensed at each rental station in
order to sell these insurance products. In 1998, the Texas Insurance
Commissioner reversed earlier policy and imposed a limited licensing plan upon
the entire vehicle rental industry. Further, each company was required to refund
to customers proportions of sales revenues in compensation for operating without
a limited license. Avis' share of this refund program was approximately $2
million. However, we do not believe that fines have been
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proposed by other state regulators or that any licensing requirements would have
a material adverse effect on us.
WE MAY HAVE CLEAN-UP COSTS RELATING TO PETROLEUM STORAGE
Approximately 245 of Avis' domestic and international facilities contain
tanks for the storage of petroleum products, such as gasoline, diesel fuel and
waste oils. At approximately 208 of Avis' locations, one or more of these tanks
are located underground. We cannot be sure that these tank systems will at all
times remain free from leaks or that the use of these tanks will not result in
spills. In addition, historical operations at certain of Avis' properties,
including activities relating to automobile and bus maintenance, may have
resulted in leaks or spills into soil or groundwater. Any such leak or spill,
depending on such factors as the material involved, quantity and environmental
setting, could result in interruptions to our operations and expenditures that
could have a material adverse effect on our financial condition and results of
operations. At certain facilities, we are presently remediating soil and
groundwater contamination. Based on currently available information, we estimate
that future expenditures for remediation of known contamination will be
approximately $5.54 million (which has been fully reserved). Such amount does
not take into account possible recoveries under any insurance that may be
available or reimbursement that may be available from certain state
reimbursement programs applicable to leaking underground storage tanks. In the
United States, Canada and Puerto Rico, we carry environmental impairment
liability coverage with annual limits of $4.0 million per incident and $4.0
million in the aggregate per site and a deductible generally of $250,000 against
liability to third parties and clean-up costs, but this insurance does not cover
internal business interruptions. In addition, we cannot be sure that our
liabilities will not exceed our insurance coverage.
WE MAY BE SUED AS A RESULT OF ACCIDENTS INVOLVING OUR CARS
Our business exposes us to claims for personal injury, death and property
damage resulting from the use of the vehicles rented or leased by us. Avis
currently either self-insures or maintains coverage from a wholly-owned
insurance subsidiary for such risk up to $1.0 million per occurrence and
maintains insurance with unaffiliated carriers in excess of such level up to
$200.0 million per occurrence. VMS also currently maintains liability insurance
with unaffiliated insurance carriers to a limit of $26 million per occurrence.
We intend to keep these insurance programs in place. We cannot, however, be sure
that we will not be exposed to uninsured liability at levels above historical
levels resulting from multiple payouts or otherwise, that liabilities in respect
of existing or future claims will not exceed the level of our insurance, that we
will have sufficient capital available to pay any uninsured claims or that
insurance with unaffiliated carriers will continue to be available to us on
economically reasonable terms. In addition, we cannot be certain that we will be
able to obtain the insurance for VMS on economically reasonable terms.
YEAR 2000 RISK
As has been widely reported, many computer systems process dates based on
two digits for the year of a transaction and may be unable to process dates in
the Year 2000 and beyond. There are many risks associated with the Year 2000
compliance issue, including but not limited to the possible failure of our
systems and hardware with embedded applications. Any such failure could result
in:
- the malfunctioning of the Wizard System, PHH Interactive or the SPIN data
warehouse and other technology platforms;
- an inability to track our vehicles and provide the fleet maintenance
services that account for a majority of the revenue of VMS;
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- the malfunctioning of our other service processes;
- an inability to properly bill and collect payments from our customers;
and/or
- errors or omissions in accounting and financial data, any of which could
have a material adverse effect on our results of operations and financial
condition.
In addition, we cannot be sure that the systems of other companies,
including our vendors, utilities and customers, will be compliant in a timely
manner, or that a failure to be compliant by another company, or a conversion
that is incompatible with our systems, would not have a material adverse effect
on our financial condition and results of operations.
Avis has conducted a review of its computer systems including those owned by
Cendant to identify the systems that could be affected by the Year 2000 problem
and believes its mission critical systems will be Year 2000 compliant in the
summer of 1999. VMS has conducted a review of its computer systems including
those owned by Cendant to identify the systems that could be affected by the
Year 2000 problem and believes its mission critical systems are Year 2000 ready.
We are developing contingency plans with respect to certain key technology
used in our mission critical systems. The contingency planning process is
ongoing and will require modification as we obtain further information regarding
the results of testing our systems for Year 2000 compliance and the results of
tests performed on our vendors' systems. We cannot be sure that any contingency
plan will effectively mitigate problems caused by the failure of computer
systems to be Year 2000 compliant.
Our inability to remedy any mission critical systems or the failure of third
parties to do so may cause business interruptions or shutdowns, financial loss,
regulatory actions, reputational harm or legal liability. We cannot be sure that
our Year 2000 program will be effective or that our estimates about the timing
and cost of completing our program will be proven accurate.
WE MAY HAVE DIFFICULTY MANAGING FUTURE GROWTH
We expect to continue to experience rapid growth and development as a result
of the implementation of our operating strategy and industry changes. We cannot
be sure that such growth will continue to occur or that our operating strategy
will be successful. If we experience rapid growth, such growth would require the
hiring, retention and training of new personnel, the development and
introduction of new products, the expansion of our management information
systems, the control of expenses related to the expansion of our information
network and customer base, and the management of additional demands on our
customer support, sales and marketing, administrative resources and network
infrastructure. If we are unable to satisfy these requirements, or if we are
otherwise unable to manage growth effectively, our operations and financial
condition could be materially adversely affected.
WE MAY BE UNABLE TO ATTRACT AND RETAIN KEY PERSONNEL
Our success will depend in large part upon the ability and experience of
certain key management employees, particularly Robert Salerno, Kevin Sheehan and
Mark Miller. In addition, our performance will be highly dependent on our
ability to identify, hire, train, motivate and retain highly qualified
management, technical, sales and marketing personnel. Our need for new personnel
will be heightened as a result of the VMS Acquisition and other attempts to
expand operations. Competition for such personnel is intense, and we cannot be
certain that we will be able to attract, assimilate or retain highly qualified
technical, sales, marketing and managerial personnel. The inability to attract
and retain the necessary management, technical and sales and marketing
personnel, including without limitation, senior management personnel, could have
a material adverse effect on our business, results of operations and financial
condition.
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YOU MAY FIND IT DIFFICULT TO SELL YOUR NOTES
There is no established trading market for the new notes or the old notes.
Although Chase Securities Inc. and Lehman Brothers Inc., the initial purchasers
of the old notes, have informed us that they currently intend to make a market
in the new notes, they have no obligation to do so and may discontinue making a
market at any time without notice.
We do not intend to apply for listing of the new notes on any national
securities exchange or for quotation through The Nasdaq National Market.
The liquidity of any market for the new notes will depend upon many factors,
including:
- our operating performance and financial condition;
- our ability to complete the offer to exchange the old notes for the new
notes;
- the interest of securities dealers in making a market; and
- the market for similar securities.
Historically, the market for non-investment grade debt has been subject to
disruptions that have caused volatility in prices. It is possible that the
market for the notes will be subject to disruptions. Any such disruptions may
have a negative effect on you (as a holder of the notes) regardless of our
prospects and financial performance. In addition, to the extent old notes are
tendered and accepted in the exchange offer, the trading market, if any, for the
old notes would be adversely affected.
HOLDERS WHO FAIL TO EXCHANGE THEIR OLD NOTES WILL CONTINUE TO BE SUBJECT TO
RESTRICTIONS ON TRANSFERS.
If you do not exchange your old notes for new notes in the exchange offer,
you will continue to be subject to the restrictions on transfer of your old
notes described in the legend on the certificates for your old notes. The
restrictions on transfer of your old notes arise because we issued the old notes
under exemption from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, you may only offer or sell the old notes if they are registered under
the Securities Act and applicable state securities laws, or offered and sold
under an exemption from these requirements. We do not plan to register the old
notes under the Securities Act. For further information regarding the
consequences of tendering your old notes in the exchange offer, see the
discussions below under the captions "The Exchange Offer--Consequences of
exchanging or failing to exchange old notes" and "Certain United States Federal
Income Tax Consequences."
SOME HOLDERS WHO EXCHANGE THEIR OLD NOTES MAY BE DEEMED TO BE UNDERWRITERS
If you exchange your old notes in the exchange offer for the purpose of
participating in a distribution of the new notes, you may be deemed to have
received restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
CONFLICTS OF INTEREST WITH CENDANT MAY ARISE
Cendant's ownership of approximately 19% (which may increase to up to
approximately 34% upon the conversion of the preferred stock of Avis Fleet
received by Cendant in connection with the VMS Acquisition (based on Cendant's
ownership as of the date hereof)) of our common stock, as well as the service of
certain persons as directors of both Avis Rent A Car and Cendant, could
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create conflicts of interest when those directors and officers are faced with
decisions that could have different implications for Cendant and us, including:
- potential acquisitions of businesses;
- the issuance of additional securities;
- the election of new or additional directors; and
- the payment of dividends and other matters.
We have not instituted any formal plan or arrangement to address potential
conflicts of interest that may arise among us, Cendant and Cendant's affiliates.
Avis is party to various agreements with Cendant and its affiliates that were
entered into when Cendant beneficially owned all of Avis Rent A Car's
outstanding common stock. In addition, we will be relying on Cendant to provide
transitional services with regard to VMS and to continue to provide access to
its mainframe computers on which the SPIN data warehouse and other data is
stored. See "--We depend on computer systems owned by Cendant" and "Certain
Relationships and Related Party Transactions".
On April 15, 1998, Cendant publicly announced that it discovered accounting
irregularities in the former business units of CUC International, Inc. As a
result, Cendant restated its previously reported financial results for 1997,
1996 and 1995 and is currently party to more than 70 lawsuits regarding the
same. We are currently not a party to such litigation, and we do not currently
believe that there is any basis for asserting a claim thereunder against us. In
addition, Avis was spun off from Cendant before CUC International, Inc. merged
into Cendant. However, we cannot be certain that claims will not be asserted
against us in the future or that we will not have any liability in respect of
such litigation. In the event that we were subject to any such liability, we
cannot be certain that we would be able to recover any amounts in respect of
such liability from Cendant. See "The VMS Acquisition" and Note 15 to the VMS
Audited Combined Financial Statements.
FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID
THE GUARANTEES OF THE NOTES
The issuance of the guarantees of the notes may be subject to review under
U.S. federal bankruptcy law and comparable provisions of state fraudulent
conveyance laws if a bankruptcy or reorganization case or lawsuit is commenced
by or on behalf of a guarantor subsidiary's unpaid creditors. Under these laws,
if a court were to find in such a bankruptcy or reorganization case or lawsuit
that, at the time such guarantor subsidiary issued the guarantee of the notes:
- it issued the guarantee to delay, hinder or defraud present or future
creditors; or
- it received less than reasonably equivalent value or fair consideration
for issuing the guarantee; and
at the time it issued the guarantee:
- it was insolvent or rendered insolvent by reason of issuing the
guarantee (and the application of the proceeds thereof); or
- it was engaged, or about to engage, in a business or transaction for
which its remaining unencumbered assets constituted unreasonably small
capital to carry on its business; or
- it intended to incur, or believed that it would incur, debts beyond its
ability to pay as they mature; or
- it was a defendant in an action for money damages, or had a judgment for
money damages docketed against it (if, in either case, after final
judgment, the judgment is unsatisfied).
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then the court could void the obligations under the guarantees of the notes or
subordinate the guarantees of the Notes to such guarantor subsidiary's other
debt or take other action detrimental to holder of the guarantees of the notes.
The measures of insolvency for purposes of fraudulent transfer laws vary
depending upon the law of the jurisdiction that is being applied in any
proceeding to determine whether a fraudulent transfer has occurred. Generally,
however, a person would be considered insolvent if, at the time it incurred the
debt:
- the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
- it could not pay its debts as they become due.
We cannot be sure as to the standard that a court would use to determine
whether or not the guarantor subsidiary was solvent at the relevant time, or,
regardless of the standard that the court uses, that the issuance of the
guarantee of the notes would not be voided or the guarantee of the notes would
not be subordinated to such guarantor subsidiary's other debt.
If such a case were to occur any guarantee of the notes incurred by one of
the guarantor subsidiaries could also be subject to the claim that, since the
guarantee was incurred for Avis Rent A Car's benefit, and only indirectly for
the benefit of the guarantor subsidiary, the obligations of the applicable
guarantor were incurred for less than fair consideration.
A court could thus void the obligations under the guarantee or subordinate
the guarantee to the applicable guarantor's other debt or take other action
detrimental to holders of the notes.
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THE VMS ACQUISITION
On June 30, 1999, pursuant to an Agreement and Plan of Merger and
Reorganization, dated as of May 22, 1999 (the "Merger Agreement"), by and among
PHH Corporation, a Maryland corporation and wholly-owned subsidiary of Cendant
Corporation, PHH Holdings, a Texas corporation and wholly-owned subsidiary of
PHH Corporation, Avis Rent A Car, and Avis Fleet, a Texas corporation and
wholly-owned subsidiary of Avis Rent A Car, Avis Fleet and PHH Holdings merged,
and Avis Fleet acquired VMS, which is comprised of PHH North America, PHH Europe
and WEX. Under Texas law, which governs the Merger Agreement, both PHH Holdings
and Avis Fleet continued to exist as separate entities following the VMS
Acquisition.
As consideration for the VMS Acquisition, PHH Corporation received $360.0
million aggregate liquidation preference of Series A Preferred of Avis Fleet and
$2.0 million aggregate liquidation preference of Series C Preferred of Avis
Fleet. PHH Corporation transferred the Series C Preferred to a third party. In
addition, Avis Fleet assumed liabilities of PHH Holdings to PHH Corporation (the
"PHH Holdings Indebtedness") in an amount equal to $1,438.0 million. In
addition, indebtedness (the "Net Intercompany Indebtedness") in an amount equal
to $338.1 million (including $103.0 million of current taxes) owing to PHH
Corporation or other Cendant entities by the subsidiaries of PHH Holdings
acquired pursuant to the VMS Acquisition became due upon consummation of the VMS
Acquisition. At the closing of the VMS Acquisition, New Avis (1) paid the Net
Intercompany Indebtedness in an estimated amount of $338.1 million (including
$103.0 million of current taxes), and (2) placed an amount equal to the PHH
Holdings Indebtedness into escrow (the "Escrow Funds"). All but $15.5 million of
the Escrow Funds were transferred to Cendant on July 1, 1999, with the remaining
$15.5 million transferred on July 13, 1999 upon transfer of the stock of WEX
Financial to us once the requisite FDIC approval was obtained. The total
consideration for the VMS Acquisition was approximately $1.8 billion, plus the
refinancing of approximately $3.5 billion of existing VMS indebtedness.
In connection with the VMS Acquisition, New Avis also received a perpetual,
royalty-free license to use a number of VMS trademarks, including the "PHH" name
and logo, and PHH Corporation and PHH Holdings entered into a 5-year
non-competition agreement with Avis Fleet. New Avis also received a limited
license to use the Cendant name in Europe for a period of up to one year. In
addition, the parties entered into agreements under which Cendant will provide
New Avis with computer services and with transitional services with respect to
various administrative services, including payroll and benefits, which had
previously been provided to VMS by Cendant. In addition, we have agreed to
provide Cendant with certain transitional administrative services which had
previously been provided by VMS. See "Certain Relationships and Related Party
Transactions" for a description of these agreements.
Under the Merger Agreement, PHH Corporation and PHH Holdings and Avis Rent A
Car and Avis Fleet have agreed to indemnify each other from and against certain
liabilities and expenses outlined in the Merger Agreement which are incurred by
an indemnified party as a result of, among other things, any breach of a
representation, warranty or covenant made by an indemnifying party. Such
indemnification obligations will survive for a period of one year following the
closing of the VMS Acquisition other than (A) with respect to either PHH
Corporation or PHH Holdings, any representation or warranty made relating to
their authorization to consummate the VMS Acquisition, the subsidiaries being
transferred, ownership of the capital stock being sold, taxes and employee
benefit matters and, (B) with respect to either Avis Rent A Car or Avis Fleet,
any representation or warranty made relating to their authorization to
consummate the VMS Acquisition or to its capitalization, which shall each
survive any applicable statute of limitations. The Merger Agreement provides
that the indemnifying parties are not obligated to indemnify the indemnified
parties until the aggregate damages suffered by such indemnified parties exceed
$30.0 million. Such indemnifying parties will thereafter be required to pay all
damages in excess of $18.0 million. Any
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single claim which is equal to or less than $250,000 will not count against the
$30.0 million and $18.0 million thresholds. The indemnification obligations of
the respective indemnifying parties is limited to $500.0 million in the
aggregate. PHH Corporation and PHH Holdings are also obligated to indemnify Avis
Rent A Car and Avis Fleet and Avis Rent A Car and Avis Fleet are obligated to
indemnify PHH Corporation and PHH Holdings, without regard to the above
limitations, from any liabilities suffered for pre-closing taxes and
post-closing taxes. The indemnification obligations of PHH Corporation and PHH
Holdings and of Avis Rent a Car and Avis Fleet under the Merger Agreement are
all subject to, and limited by, any insurance proceeds received, and any tax
benefits actually realized, by the indemnified parties. PHH Corporation and PHH
Holdings are also obligated to continue the defense of and indemnify Avis Rent A
Car and Avis Fleet from and against all liabilities suffered by them in excess
of $500,000 in connection with the current litigation filed against The Harpur
Group Limited ("Harpur") by Richbell Information Services Inc., The Richbell
Group Limited and David Elias claiming damages in the amount of $240 million for
allegedly conspiring to defraud Mr. Elias of his interest in H-G Holdings, Inc.,
the former parent company of Harpur.
In connection with the VMS Acquisition, New Avis refinanced certain existing
debt through, among other things, borrowings under the New Credit Facility and
the Interim VMS ABS Offering. The sources and uses of funds in connection with
the VMS Acquisition and this refinancing as of June 30, 1999 are set forth
below:
<TABLE>
<CAPTION>
AMOUNT
-------------------
<S> <C>
(DOLLARS IN
MILLIONS)
SOURCES OF FUNDS:
Unrestricted Cash............................................................................ $ 32.6
Revolving Credit Facility(1)(2).............................................................. 73.0
Term Loan A.................................................................................. 250.0
Term Loan B.................................................................................. 375.0
Term Loan C.................................................................................. 375.0
Senior Subordinated Notes.................................................................... 500.0
Avis Fleet Preferred Stock(3)................................................................ 362.0
Interim VMS ABS Facility(4).................................................................. 3,455.5
-------------------
Total Sources................................................................................ $ 5,423.1
-------------------
USES OF FUNDS:
VMS Acquisition consideration................................................................ $ 1,800.0
Refinancing of VMS non-vehicle debt.......................................................... 14.9
Refinancing of VMS existing fleet debt(5).................................................... 3,486.7
Fees and expenses(6)......................................................................... 63.4
Escrow Deposits.............................................................................. 58.1
-------------------
Total Uses................................................................................... $ 5,423.1
-------------------
</TABLE>
- ------------------------
(1) The Revolving Credit Facility permits borrowings of up to an aggregate
principal amount of $350.0 million. Approximately $95.0 million was
available under the New Credit Facility on June 30, 1999 to fund our
liquidity requirements after giving effect to the Transactions. See
"Capitalization" for a description of anticipated unrestricted cash balances
as of June 30, 1999.
(2) Does not include $184.8 million in letters of credit that were outstanding
in connection with the Avis ABS Facility and to support airport concession
agreements, insurance matters and foreign debt.
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(3) Comprised of $360.0 million liquidation preference of Series A Preferred and
$2.0 million liquidation preference of Series C Preferred to be issued by
Avis Fleet. Until the fifth anniversary of the issue date of the Avis Fleet
Preferred Stock, dividends on the Series A Preferred may be paid in shares
of Series B Cumulative PIK Preferred of Avis Fleet which has terms
substantially similar to the terms of the Series A Preferred. Dividends on
the Series C Preferred are payable in cash. See "Description of Avis Fleet
Preferred Stock and Class B Common Stock".
(4) See "Description of Other Indebtedness-Interim VMS ABS Facility".
(5) Consists of the following, approximately: (i) $283.0 million of intercompany
debt; (ii) $103.0 million of current taxes; (iii) $2,121.6 million of North
American Vehicle Related Debt; (iv) $53.3 million of Canadian Vehicle
Related Debt; and (v) $925.8 million of European Vehicle Related Debt.
(6) Consists of fees and expenses incurred in connection with the Transactions.
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<PAGE>
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new notes in
the exchange offer. We will receive old notes in like principal amount in
exchange for the issuance of the new notes in the exchange offer. We will cancel
all old notes surrendered in exchange for new notes in the exchange offer.
The proceeds from the issuance and sale of the old notes was approximately
$479 million after deducting the initial purchasers' discount and other expenses
related to the offering. The net proceeds from the offering were applied,
together with unrestricted cash, the Avis Fleet Preferred Stock and proceeds
from borrowings under the New Credit Facility and the Interim VMS ABS Facility
to fund the VMS Acquisition, the refinancing of existing VMS fleet debt, the
refinancing of existing VMS non-vehicle debt, and the payment of fees and
expenses in connection with the Transactions. For a further discussion of the
sources and uses of funds relating to the Transactions, see "The VMS
Acquisition".
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
On June 30, 1999, we issued an aggregate principal amount of $500,000,000 of
our 11% Senior Subordinated Notes due 2009 in offerings under Rule 144A and
Regulation S of the Securities Act that were not registered under the Securities
Act. The old notes were issued, and the new notes will be issued, under an
indenture, dated as of June 30, 1999, by and among Avis Rent A Car, the
Subsidiary Guarantors and The Bank of New York, as trustee. We sold the old
notes to Chase Securities Inc. and Lehman Brothers Inc., as initial purchasers,
under a Purchase Agreement, dated June 25, 1999, among Avis Rent A Car, the
Subsidiary Guarantors, Chase Securities Inc. and Lehman Brothers Inc. When we
sold the old notes to Chase Securities Inc. and Lehman Brothers Inc., we also
signed a Registration Rights Agreement in which we agreed to exchange all the
issued and outstanding old notes for a like principal amount of our 11% Senior
Subordinated Exchange Notes due 2009. The terms of the new notes are
substantially identical to those of the outstanding old notes, except that the
transfer restrictions and registration rights relating to the old notes do not
apply to the new notes.
This prospectus and the enclosed letter of transmittal constitute an offer
to exchange new notes for all of the issued and outstanding old notes. This
exchange offer is being extended to all holders of the old notes. As of the date
of this prospectus, $500,000,000 aggregate principal amount of the old notes are
outstanding. This prospectus and the enclosed letter of transmittal are first
being sent on or about [ ], 1999, to all holders of old notes known to us.
Subject to the conditions listed below, we will accept for exchange all old
notes which are properly tendered on or prior to the expiration of the exchange
offer and not withdrawn as permitted below. The exchange offer will expire at
5:00 p.m., New York City time, on [ ], 1999. However, if we, in our sole
discretion, extend the period of time during which the exchange offer is open,
the exchange offer will expire at the latest time and date to which we extend
the exchange offer. Our obligation to accept old notes for exchange in the
exchange offer is subject to the conditions listed below under the caption
"--Conditions to the exchange offer."
We expressly reserve the right, at any time and from time to time, to extend
the period of time during which the exchange offer is open, and thereby delay
acceptance for exchange of any old notes. If we elect to extend the period of
time during which the exchange offer is open, we will give you oral or written
notice of the extension and delay, as described below. During any extension of
the exchange offer, all old notes previously tendered and not withdrawn will
remain subject to the exchange offer and may be accepted for exchange by us. We
will return to the registered holder, at our expense, any old notes not accepted
for exchange as promptly as practicable after the expiration or termination of
the exchange offer. In the case of an extension, we will issue a press release
or other public announcement no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled expiration of the exchange
offer.
We expressly reserve the right to amend or terminate the exchange offer, and
not to accept for exchange any old notes not previously accepted for exchange if
any of the events described below under the caption "--Conditions to the
exchange offer" should occur. We will give you oral or written notice of any
amendment, termination or non-acceptance as promptly as practicable.
Following completion of the exchange offer, we may, in our sole discretion,
commence one or more additional exchange offers to those old note holders who
did not exchange their old notes for new notes. The terms of these additional
exchange offers may differ from those applicable to this exchange offer, as
provided in the Registration Rights Agreement. We may use this prospectus, as
amended or supplemented from time to time, in connection with any additional
exchange offers. These additional exchange offers will take place from time to
time until all outstanding old notes have been exchanged for new notes, subject
to the terms and conditions contained in the
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prospectus and letter of transmittal we will distribute in connection with the
additional exchange offers.
PROCEDURES FOR TENDERING OLD NOTES
Old notes tendered in the exchange offer must be in denominations of $1,000
principal amount and any integral multiple thereof.
When you tender your old notes, and we accept the old notes, this will
constitute a binding agreement between you and Avis Rent A Car, subject to the
terms and conditions set forth in this prospectus and the enclosed letter of
transmittal. Unless you comply with the procedures described below under the
caption "--Guaranteed delivery procedures," you must do one of the following on
or prior to the expiration of the exchange offer to participate in the exchange
offer:
- tender your old notes by sending the certificates for your old notes, in
proper form for transfer, a properly completed and duly executed letter of
transmittal, with any required signature guarantees, and all other
documents required by the letter of transmittal, to The Bank of New York,
as exchange agent, at one of the addresses listed below under the caption
"--Exchange agent"; or
- tender your old notes by using the book-entry procedures described below
under the caption "--Book-entry transfer" and transmitting a properly
completed and duly executed letter of transmittal, with any required
signature guarantees, or an agent's message instead of the letter of
transmittal, to The Bank of New York, as exchange agent, at one of the
addresses listed below under the caption "--Exchange agent."
In order for a book-entry transfer to constitute a valid tender of your old
notes in the exchange offer, the exchange agent must receive a confirmation of
book-entry transfer of your old notes into the exchange agent's account at The
Depository Trust Company prior to the expiration of the exchange offer. The term
"agent's message" means a message, transmitted by The Depository Trust Company
and received by the exchange agent and forming a part of the book-entry
confirmation, which states that The Depository Trust Company has received an
express acknowledgment from you that you have received and have agreed to be
bound by the letter of transmittal. If you use this procedure, we may enforce
the letter of transmittal against you.
Each broker-dealer that receives new notes for its own account in exchange
for old notes, where such old notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such new
notes. See "Plan of Distribution."
THE METHOD OF DELIVERY OF CERTIFICATES FOR OLD NOTES, LETTERS OF
TRANSMITTAL, AGENT'S MESSAGES AND ALL OTHER REQUIRED DOCUMENTS IS AT YOUR
ELECTION. IF YOU DELIVER YOUR OLD NOTES BY MAIL, WE RECOMMEND REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES, YOU SHOULD ALLOW
SUFFICIENT TIME TO ASSURE TIMELY DELIVERY. DO NOT SEND CERTIFICATES FOR OLD
NOTES, LETTERS OF TRANSMITTAL OR AGENT'S MESSAGES TO US.
Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless you are either (1) a registered old note
holder and have not completed the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" on the letter of transmittal or (2) you are
exchanging old notes for the account of an eligible guarantor institution. An
eligible guarantor institution means:
- Banks (as defined in Section 3(a) of the Federal Deposit Insurance Act);
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<PAGE>
- Brokers, dealers, municipal securities dealers, municipal securities
brokers, government securities dealers and government securities brokers
(as defined in the Securities Exchange Act of 1934, as amended);
- Credit unions (as defined in Section 19B(l)(A) of the Federal Reserve
Act);
- National securities exchanges, registered securities associations and
clearing agencies (as these terms are defined in the Exchange Act); and
- Savings associations (as defined in Section 3(b) of the Federal Deposit
Insurance Act).
If signatures on a letter of transmittal or a notice of withdrawal are
required to be guaranteed, the guarantor must be an eligible guarantor
institution. If you plan to sign the letter of transmittal but you are not the
registered holder of the old notes--which term, for this purpose, includes any
participant in The Depository Trust Company's system whose name appears on a
security position listing as the owner of the old notes--you must have the old
notes signed by the registered holder of the old notes and that signature must
be guaranteed by an eligible guarantor institution. You may also send a separate
instrument of transfer or exchange signed by the registered holder and
guaranteed by an eligible guarantor institution, but that instrument must be in
a form satisfactory to us in our sole discretion. In addition, if a person or
persons other than the registered holder or holders of old notes signs the
letter of transmittal, certificates for the old notes must be endorsed or
accompanied by appropriate bond powers, in either case signed exactly as the
name or names of the registered holder or holders that appear on the
certificates for old notes.
All questions as to the validity, form, eligibility--including time of
receipt--and acceptance of old notes tendered for exchange will be determined by
us in our sole discretion. Our determination will be final and binding. We
reserve the absolute right to reject any and all tenders of old notes improperly
tendered or to not accept any old notes, the acceptance of which might be
unlawful as determined by us or our counsel. We also reserve the absolute right
to waive any defects or irregularities or conditions of the exchange offer as to
any old notes either before or after the expiration of the exchange
offer--including the right to waive the ineligibility of any holder who seeks to
tender old notes in the exchange offer. Our interpretation of the terms and
conditions of the exchange offer as to any particular old notes either before or
after the expiration of the exchange offer--including the terms and conditions
of the letter of transmittal and the accompanying instructions--will be final
and binding. Unless waived, any defects or irregularities in connection with
tenders of old notes for exchange must be cured within a reasonable period of
time, as determined by us. Neither we, The Bank of New York, as exchange agent,
nor any other person has any duty to give notification of any defect or
irregularity with respect to any tender of old notes for exchange, nor will we
have any liability for failure to give this notification.
If you are a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation, or act in a similar fiduciary or representative
capacity, and wish to sign the letter of transmittal or any certificates for old
notes or bond powers, you must indicate your status when signing. If you are
acting in any of these capacities, you must submit proper evidence satisfactory
to us of your authority to so act unless we waive this requirement.
By tendering your old notes, you represent to us:
- that you are not an "affiliate" of New Avis, as defined in Rule 405 under
the Securities Act;
- that any new notes you receive in the exchange offer are being acquired by
you in the ordinary course of your business;
- that at the time of the commencement of the exchange offer, you do not
have any arrangement or understanding with any person to participate in
the distribution of the new notes, as defined in the Securities Act, in
violation of the Securities Act;
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- if you are not a participating broker-dealer, that you are not engaged in,
and do not intend to engage in, the distribution of the new notes, as
defined in the Securities Act; and
- if you are a participating broker-dealer, that you will receive the new
notes for your own account in exchange for old notes that were acquired by
you as a result of your market-making or other trading activities and that
you will deliver a prospectus in connection with any resale of the new
notes you receive. As used in this prospectus, a "participating broker-
dealer" is a broker-dealer that receives new notes for its own account in
exchange for old notes that it acquired as a result of market-making or
other trading activities. The Commission has taken the position that
participating broker-dealers may fulfill their prospectus delivery
requirements with respect to resales of the new notes--other than a resale
of an unsold allotment from the original sale of the old notes--by
delivering this prospectus to prospective purchasers. For further
information regarding participating broker-dealers and the prospectus
delivery requirement, see "Plan of Distribution."
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration of the exchange offer, all old
notes properly tendered and will issue the new notes promptly after acceptance
of the old notes. For purposes of the exchange offer, we will be deemed to have
accepted properly tendered old notes for exchange when, as and if we have given
oral or written notice of acceptance to The Bank of New York, as exchange agent,
with written confirmation of any oral notice to be given promptly after any oral
notice.
For each old note accepted for exchange in the exchange offer, the holder of
the old note will receive a new note having a principal amount at maturity equal
to that of the surrendered old note. Interest on the new note will accrue:
(1) from the later of (a) the last date to which interest was paid on
the old note surrendered in exchange for the new note or (b) if the old note
is surrendered for exchange on a date in a period which includes the record
date for an interest payment date to occur on or after the date of the
exchange and as to which interest will be paid, the date to which interest
will be paid on such interest payment date; or
(2) if no interest has been paid on the old note, from and including
June 30, 1999.
If the exchange offer is not completed by December 27, 1999, we will be
obligated to pay liquidated damages of $.0192 per week per $1,000 principal
amount of old notes that are subject to transfer restrictions until the exchange
offer is completed. Payments of interest, if any, on old notes that were
exchanged for new notes will be made on each May 1 and November 1 during which
the new notes are outstanding to the person who, at the close of business on the
April 15th or October 15th next preceding the interest payment date, is the
registered holder of the old notes if the record date occurs prior to the
exchange, or is the registered holder of the new notes it the record date occurs
on or after the date of the exchange, even if the notes are canceled after the
record date and on or before the interest payment date.
In all cases, the issuance of new notes in exchange for old notes will be
made only after The Bank of New York, as exchange agent, timely receives either
certificates for all physically tendered old notes, in proper form for transfer,
or a book-entry confirmation of transfer of the old notes into the exchange
agent's account at The Depository Trust Company, as the case may be, a properly
completed and duly executed letter of transmittal, with any required signature
guarantees, and all other required documents or, in the case of a book-entry
confirmation, a properly completed and duly executed letter of transmittal, with
any required signature guarantees, or an agent's message instead of the letter
of transmittal. If for any reason we do not accept any tendered old notes or if
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<PAGE>
old notes are submitted for a greater principal amount than the holder desires
to exchange, we will return the unaccepted or non-exchanged old notes without
expense to the registered tendering holder. In the case of old notes tendered by
book-entry transfer into the exchange agent's account at The Depository Trust
Company by using the book-entry procedures described below, the unaccepted or
non-exchanged old notes will be credited to an account maintained with The
Depository Trust Company. Any old notes to be returned to the holder will be
returned as promptly as practicable after the expiration or termination of the
exchange offer.
BOOK-ENTRY TRANSFER
Within two business days after the date of this prospectus, The Bank of New
York, as exchange agent, will establish an account at The Depository Trust
Company for the old notes tendered in the exchange offer. Once established, any
financial institution that is a participant in The Depository Trust Company's
systems may make book-entry delivery of old notes by causing The Depository
Trust Company to transfer the old notes into the exchange agent's account at The
Depository Trust Company in accordance with The Depository Trust Company's
procedures for transfer. Although delivery of the old notes may be effected
through book-entry transfer at The Depository Trust Company, the letter of
transmittal or facsimile of the letter of transmittal, with any required
signature guarantees, or an agent's message instead of a letter of transmittal,
and any other required documents, must be transmitted to and received by the
exchange agent on or prior to the expiration of the exchange offer at one of the
addresses listed below under the caption "--Exchange agent." In addition, the
exchange agent must receive book-entry confirmation of transfer of the old notes
into the exchange agent's account at The Depository Trust Company prior to the
expiration of the exchange offer. If you cannot comply with these procedures,
you may be able to use the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
If you are a registered holder of the old notes and wish to tender your old
notes, but
- the certificates for the old notes are not immediately available,
- time will not permit your certificates for the old notes or other required
documents to reach The Bank of New York, as exchange agent, before the
expiration of the exchange offer, or
- the procedure for book-entry transfer cannot be completed before the
expiration of the exchange offer, you may effect a tender of your old
notes if:
- the tender is made through an eligible guarantor institution;
- prior to the expiration of the exchange offer, the exchange agent
receives from an eligible guarantor institution a properly completed and
duly executed notice of guaranteed delivery, substantially in the form we
have provided, setting forth your name and address, and the amount of old
notes you are tendering and stating that the tender is being made by
notice of guaranteed delivery. These documents may be sent by overnight
courier, registered or certified mail or facsimile transmission. If you
elect to use this procedure, you must also guarantee that within three
NYSE trading days after the date of execution of the notice of guaranteed
delivery, the certificates for all physically tendered old notes, in
proper form for transfer, or a book-entry confirmation of transfer of the
old notes into the exchange agent's account at The Depository Trust
Company, as the case may be, a properly completed and duly executed
letter of transmittal, with any required signature guarantees, and all
other required or, in the case of a book-entry confirmation, a properly
completed and duly executed letter of transmittal, with any required
signature guarantees, or an agent's
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<PAGE>
message instead of the letter of transmittal, will be deposited by the
eligible guarantor institution with the exchange agent; and
- the exchange agent receives the certificates for all physically tendered
old notes, in proper form for transfer, or a book-entry confirmation of
transfer of the old notes into the exchange agent's account at The
Depository Trust Company, as the case may be, a properly completed and
duly executed letter of transmittal, with any required signature
guarantees, and all other required documents or, in the case of a book
entry confirmation, a properly completed and duly executed letter of
transmittal, with any required signature guarantees, or an agent's
message instead of the letter of transmittal, in each case, within three
NYSE trading days after the date of execution of the notice of guaranteed
delivery.
WITHDRAWAL RIGHTS
YOU MAY WITHDRAW TENDERS OF OLD NOTES AT ANY TIME PRIOR TO THE EXPIRATION OF
THE EXCHANGE OFFER.
For a withdrawal to be effective, a written notice of withdrawal must be
received by The Bank of New York, as exchange agent, prior to the expiration of
the exchange offer at one of the addresses listed below under the caption
"--Exchange agent". Any notice of withdrawal must specify the name of the person
who tendered the old notes to be withdrawn, identify the old notes to be
withdrawn, including the principal amount of the old notes, and, where
certificates for old notes have been transmitted, specify the name in which the
old notes are registered, if different from that of the withdrawing holder. If
certificates for old notes have been delivered or otherwise identified to the
exchange agent, then, prior to the release of the certificates, the withdrawing
holder must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
eligible guarantor institution unless the holder is an eligible guarantor
institution. If old notes have been tendered using the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at The Depository Trust Company to be credited with the
withdrawn old notes and otherwise comply with the procedures of the book-entry
transfer facility. All questions as to the validity, form and
eligibility--including time of receipt--of these notices will be determined by
us, and our determination will be final and binding. Any old notes so withdrawn
will be deemed not to have been validly tendered for exchange for purposes of
the exchange offer. Any old notes which have been tendered for exchange but
which are not exchanged for any reason will be returned to the registered holder
without cost to that holder as soon as practicable after withdrawal,
non-acceptance of tender or termination of the exchange offer. In the case of
old notes tendered by book-entry transfer into the exchange agent's account at
The Depository Trust Company by using the book-entry transfer procedures
described above, any withdrawn or unaccepted old notes will be credited to the
tendering holder's account at The Depository Trust Company. Properly withdrawn
old notes may be retendered at any time on or prior to the expiration of the
exchange offer by following one of the procedures described above under
"--Procedures for tendering old notes."
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the exchange offer, we will not be
required to accept any old notes for exchange or to issue any new notes in
exchange for old notes, and we may terminate or amend the exchange offer if, at
any time before the acceptance of the old notes for exchange or the exchange of
new notes for old notes, any of the following events occurs:
- the exchange offer is determined to violate any applicable law or any
applicable interpretation of the staff of the Commission;
48
<PAGE>
- an action or proceeding is pending or threatened in any court or by any
governmental agency that might materially impair our ability to proceed
with the exchange offer;
- any material adverse development occurs in any existing legal action or
proceeding involving New Avis;
- we do not receive any governmental approval we deem necessary for the
completion of the exchange offer; or
- any of the conditions precedent to our obligations under the Registration
Rights Agreement are not fulfilled.
These conditions are for our benefit only and we may assert them regardless
of the circumstances giving rise to any condition. We may also waive any
condition in whole or in part at any time in our sole discretion. Our failure at
any time to exercise any of the foregoing rights will not constitute a waiver of
that right and each right is an ongoing right that we may assert at any time.
In addition, we will not accept any old notes for exchange or issue any new
notes in exchange for old notes, if at the time a stop order is threatened or in
effect which relates to:
- the registration statement of which this prospectus forms a part; or
- the qualification under the Trust Indenture Act of 1939 of the indenture
under which the old notes were issued and the new notes will be issued.
EXCHANGE AGENT
We have appointed The Bank of New York as the exchange agent for the
exchange offer. All completed letters of transmittal and agent's messages should
be directed to the exchange agent at one of the addresses listed below.
Questions and requests for assistance, requests for additional copies of this
prospectus or the letter of transmittal, agent's messages and requests for
notices of guaranteed delivery should be directed to the exchange agent at one
of the following addresses:
DELIVERY TO: THE BANK OF NEW YORK, EXCHANGE AGENT
<TABLE>
<S> <C> <C>
BY REGULAR OR CERTIFIED MAIL: BY FACSIMILE: BY OVERNIGHT COURIER OR HAND:
The Bank of New York (Eligible Guarantor The Bank of New York
101 Barclay Street, 7E Institutions Only) 101 Barclay Street
New York, NY 10286 (212) 815-4699 Corporate Trust Services
Attention: To Confirm by Telephone Window
Reorganization Section, for Information Call: Ground Level
Enrique Lopez (212) 815-2742 New York, NY 10286
Attention:
Reorganization Section,
Enrique Lopez
</TABLE>
DELIVERY OF A LETTER OF TRANSMITTAL OR AGENT'S MESSAGE TO AN ADDRESS OTHER
THAN THE ADDRESS LISTED ABOVE OR TRANSMISSION OF INSTRUCTIONS BY FACSIMILE OTHER
THAN AS SET FORTH ABOVE IS NOT VALID DELIVERY OF THE LETTER OF TRANSMITTAL OR
AGENT'S MESSAGE.
49
<PAGE>
FEES AND EXPENSES
The principal solicitation is being made by mail by The Bank of New York, as
exchange agent. We will pay the exchange agent customary fees for its services,
reimburse the exchange agent for its reasonable out-of-pocket expenses incurred
in connection with the provision of these services and pay other registration
expenses, including fees and expenses of the trustee under the indenture
relating to the notes, filing fees, blue sky fees and printing and distribution
expenses. We will not make any payment to brokers, dealers or others soliciting
acceptances of the exchange offer.
Additional solicitation may be made by telephone, facsimile or in person by
officers and regular employees of New Avis and its affiliates and by persons so
engaged by the exchange agent.
TRANSFER TAXES
You will not be obligated to pay any transfer taxes in connection with the
tender of old notes in the exchange offer unless you instruct us to register new
notes in the name of, or request that old notes not tendered or not accepted in
the exchange offer be returned to, a person other than the registered tendering
holder. In those cases, you will be responsible for the payment of any
applicable transfer tax.
CONSEQUENCES OF EXCHANGING OR FAILING TO EXCHANGE OLD NOTES
If you do not exchange your old notes for new notes in the exchange offer,
your old notes will continue to be subject to the provisions of the indenture
relating to the notes regarding transfer and exchange of the old notes and the
restrictions on transfer of the old notes described in the legend on your
certificates. These transfer restrictions are required because the old notes
were issued under an exemption from, or in transactions not subject to, the
registration requirements of the Securities Act and applicable state securities
laws. In general, the old notes may not be offered or sold, unless registered
under the Securities Act, except under an exemption from, or in a transaction
not subject to, the Securities Act and applicable state securities laws. We do
not plan to register the old notes under the Securities Act. Based on
interpretations by the staff of the Commission, as set forth in no-action
letters issued to third parties, we believe that the new notes you receive in
the exchange offer may be offered for resale, resold or otherwise transferred
without compliance with the registration and prospectus delivery provisions of
the Securities Act. However, you will not be able to freely transfer the new
notes if:
- you are an "affiliate" of New Avis, as defined in Rule 405 under the
Securities Act;
- you are not acquiring the new notes in the exchange offer in the ordinary
course of your business;
- you have an arrangement or understanding with any person to participate in
the distribution of the new notes, as defined in the Securities Act, you
will receive in the exchange offer, or
- you are a participating broker-dealer.
We do not intend to request the Commission to consider, and the Commission
has not considered, the exchange offer in the context of a similar no-action
letter. As a result, we cannot guarantee that the staff of the Commission would
make a similar determination with respect to the exchange offer as in the
circumstances described in the no-action letters discussed above. Each holder,
other than a broker-dealer, must acknowledge that it is not engaged in, and does
not intend to engage in, a distribution of new notes and has no arrangement or
understanding to participate in a distribution of new notes. If you are an
affiliate of New Avis, are engaged in or intend to engage in a distribution of
the new notes or have any arrangement or understanding with respect to the
distribution of the new notes you will receive in the exchange offer, you
50
<PAGE>
- may not rely on the applicable interpretations of the staff of the
Commission, and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction involving the
new notes. If you are a participating broker-dealer, you must acknowledge
that you will deliver a prospectus in connection with any resale of the
new notes. In addition, to comply with state securities laws, you may not
offer or sell the new notes in any state unless they have been registered
or qualified for sale in that state or an exemption from registration or
qualification is available and is complied with. The offer and sale of the
new notes to "qualified institutional buyers"--as defined in Rule 144A of
the Securities Act--is generally exempt from registration or qualification
under state securities laws. We do not plan to register or qualify the
sale of the new notes in any state where an exemption from registration or
qualification is required and not available.
51
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited capitalization of New Avis as
of June 30, 1999. The information set forth below should be read in conjunction
with the Summary Historical Financial Data of Avis and VMS, the Selected
Historical Financial Data of Avis and VMS, the Unaudited Pro Forma Consolidated
Financial Information of New Avis, Management's Discussion and Analysis of
Financial Conditions and Results of Operations, and the audited financial
statements of Avis and VMS, in each case, with the notes thereto, included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF
JUNE 30, 1999
-------------
NEW AVIS
CONSOLIDATED
-------------
<S> <C>
(DOLLARS IN
THOUSANDS)
Restricted cash(1)................................................................................. $ 189,680
Unrestricted cash(2)............................................................................... 280,370
-------------
Total cash......................................................................................... $ 470,050
-------------
-------------
Avis vehicle debt:
Asset-backed MTNs(3)............................................................................. $ 2,250,000
Commercial paper(4).............................................................................. 1,463,996
Other vehicle debt(5)............................................................................ 176,141
VMS vehicle debt:
Interim VMS ABS Facility(6)...................................................................... 3,455,508
Self Funded Notes................................................................................ 26,853
-------------
Total vehicle debt............................................................................. 7,372,498
-------------
Non-vehicle debt:
Revolving Credit Facility(7)..................................................................... 73,000
Term Loans(8).................................................................................... 1,000,000
Senior Subordinated Notes due 2009............................................................... 500,000
Other non-vehicle debt(9)........................................................................ 71,608
-------------
Total non-vehicle debt......................................................................... 1,644,608
-------------
Total debt................................................................................... 9,017,106
Avis Fleet Preferred Stock(10)..................................................................... 362,000
Common stockholders' equity........................................................................ 615,143
-------------
Total capitalization......................................................................... $ 9,994,249
-------------
-------------
</TABLE>
- ------------------------
Footnotes:
(1) Restricted cash consists primarily of escrow funds related to Avis'
Asset-Backed MTNs and the Avis ABS Facility. See "Description of Other
Indebtedness-Vehicle Related Indebtedness-Avis ABS Facility" and Note 1 to
the Avis Audited Financial Statements.
(2) Cash balances fluctuate significantly throughout each year.
(3) Asset-Backed MTNs consist of medium-term notes with maturity dates of July
2000, July 2002, and February 2005, with interest rates of 6.22%, 6.40% and
6.14%, respectively. See "Description of Other Indebtedness-Vehicle Related
Indebtedness-Avis ABS Facility" and Note 9 to the Avis Audited Financial
Statements.
52
<PAGE>
(4) Represents commercial paper with an average rate for the six months ended
June 30, 1999 of 5.0%. See "Description of Other Indebtedness-Vehicle
Related Indebtedness-Avis ABS Facility" and Note 9 to the Avis Audited
Financial Statements.
(5) Consists primarily of Canadian and Australian debt to finance vehicles.
(6) The Interim VMS ABS Offering consists of (i) variable funding asset-backed
notes, supported by U.S. leases and vehicles, (ii) asset-based preferred
membership interests supported by U.S. leases and vehicles, and (iii) an
advance under an asset-backed facility to PHH Europe guaranteed by various
PHH Europe entities and supported by all of the assets of such entities.
Each of these securities will be placed with one or more multi-seller
commercial paper conduits. See "Description of Other Indebtedness-Vehicle
Related Indebtedness-Interim VMS ABS Facilities". We expect to refinance a
portion of the Interim VMS ABS Facility with asset-backed medium-term notes,
subject to market conditions.
(7) The Revolving Credit Facility permits borrowings of up to an aggregate
principal amount of $350.0 million.
(8) Reflects the following: (i) a $250.0 million Term Loan A with a term of six
years; (ii) a $375.0 million Term Loan B with a term of seven years; and
(iii) a $375.0 million Term Loan C with a term of eight years. Each of the
Term Loans are senior secured obligations of Avis Rent A Car.
(9) Consists primarily of WEX non-vehicle debt.
(10) Avis Fleet Preferred Stock consists of (1) Series A Cumulative
Participating Redeemable Convertible Preferred Stock, 7,200,000 shares
outstanding, liquidation preference $50 per share, issued as part of the
consideration for the VMS Acquisition; (2) Series B Cumulative PIK Preferred
Stock, no shares outstanding, liquidation preference $50 per share, issued
as dividends on the Series A Cumulative Participating Redeemable Convertible
Preferred Stock; and (3) Series C Cumulative Redeemable Preferred Stock,
liquidation preference $50 per share, 40,000 shares authorized, issued as
part of the consideration for the VMS Acquisition.
53
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma consolidated financial statements (the
"Unaudited Pro Forma Consolidated Financial Statements") have been derived by
the application of pro forma adjustments to the historical financial statements
of Avis and VMS included elsewhere in this prospectus. The unaudited pro forma
consolidated statements of operations for the year ended December 31, 1998 and
for the six month period ended June 30, 1999, give effect to the Transactions as
if they had occurred on January 1 of the earliest period presented. The pro
forma adjustments are described in the accompanying notes. See "Description of
Avis Fleet Preferred Stock and Class B Common Stock", "Description of Other
Indebtedness" and "Description of Notes".
The VMS Acquisition was accounted for using the purchase method of
accounting for financial accounting purposes. The purchase price was allocated
to the assets acquired and the liabilities assumed, based on their respective
fair values. The allocation of the purchase price reflected in the Unaudited Pro
Forma Consolidated Financial Statements is preliminary. The adjustments that
have been included in the Unaudited Pro Forma Consolidated Financial Statements
will change based upon the final allocation of the purchase price when
additional information concerning asset and liability valuation is obtained. The
actual allocation of the purchase price and the resulting effect on operating
income may differ from the unaudited pro forma amounts included herein. However,
the changes are not expected to have a material effect on the consolidated
financial statements of Avis Rent A Car.
Avis Rent A Car believes that the accounting used to reflect the above
transactions provides a reasonable basis on which to present this unaudited pro
forma consolidated financial data. The pro forma consolidated statements of
operations are unaudited and were derived by adjusting the historical financial
statements of Avis and VMS. The Unaudited Pro Forma Consolidated Financial
Statements are provided for informational purposes only and should not be
construed to be indicative of Avis Rent A Car's consolidated results of
operations had the Transactions been consummated on the dates assumed and do not
project Avis Rent A Car's consolidated results of operations for any future date
or period. The Unaudited Pro Forma Consolidated Financial Statements and
accompanying notes should be read in conjunction with the Avis Consolidated
Financial Statements, the VMS Combined Financial Statements, as well as the
other financial information pertaining to Avis Rent A Car, in each case included
elsewhere in this prospectus.
54
<PAGE>
AVIS RENT A CAR, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
AVIS VMS ADJUSTMENTS(1) CONSOLIDATED
------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Revenue............................................ $ 2,297,582 $ 1,605,063 $ -- $ 3,902,645
Costs and expenses:
Direct operating, net............................ 925,181 -- -- 925,181
Vehicle interest................................. 187,773 179,729 841(2) 357,362
(10,981)(6)
Vehicle depreciation............................. 581,022 1,015,511 -- 1,596,533
Property and equipment depreciation.............. 13,191 18,144 -- 31,335
Goodwill amortization............................ 11,854 7,536 23,999(3) 43,389
Non-vehicle interest............................. 3,862 3,831 145,528(5) 146,074
(1,307)(7)
(5,840)(6)
Amortization of debt issuance costs and other.... 11,705 -- 9,900(4) 21,605
Lease charges.................................... 12,042 -- -- 12,042
Selling, general and administrative.............. 438,724 231,444 -- 670,168
------------- ------------- --------------- -------------
Income before provision for income taxes........... 112,228 148,868 (162,140) 98,956
Provision for income taxes....................... 48,707 55,800 (53,947)(8) 50,560
------------- ------------- --------------- -------------
Net income....................................... $ 63,521 $ 93,068 $ (108,193) 48,396
------------- ------------- ---------------
------------- ------------- ---------------
Avis Fleet Preferred Stock dividends............... 18,220(10)
-------------
Earnings applicable to common stockholders......... $ 63,521 $ 30,176
------------- -------------
------------- -------------
Earnings per share(10):
Basic............................................ $ 1.86 $ 0.88
------------- -------------
------------- -------------
Diluted.......................................... $ 1.82 $ 0.86
------------- -------------
------------- -------------
</TABLE>
55
<PAGE>
AVIS RENT A CAR, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
AVIS VMS ADJUSTMENTS(1) CONSOLIDATED
------------- ----------- --------------- -------------
<S> <C> <C> <C> <C>
Revenue.............................................. $ 1,204,374 $ 808,095 $ -- $ 2,012,469
Costs and expenses:
Direct operating, net.............................. 470,032 -- -- 470,032
Vehicle interest................................... 97,466 92,159 (1,875)(2) 184,862
(2,888)(6)
Vehicle depreciation............................... 298,490 510,989 -- 809,479
Property and equipment depreciation................ 6,906 10,310 -- 17,216
Goodwill amortization.............................. 6,351 4,054 11,714(3) 22,119
Non-vehicle interest............................... 1,227 1,439 72,764(5) 72,333
(2,920)(6)
(177)(7)
Amortization of debt issuance costs and other...... 5,669 4,950(4) 10,619
Lease charges...................................... 12,677 -- -- 12,677
Selling, general and administrative................ 231,182 128,517 -- 359,699
------------- ----------- --------------- -------------
Income before provision for income taxes............. 74,374 60,627 (81,568) 53,433
Provision for income taxes......................... 31,906 22,943 (27,343)(8) 27,506
------------- ----------- --------------- -------------
Net income........................................... $ 42,468 $ 37,684 $ (54,225) $ 25,927
------------- ----------- --------------- -------------
------------- ----------- --------------- -------------
Avis Fleet Preferred Stock dividends................. 9,110(10)
-------------
Earnings applicable to common stockholders........... $ 42,468 $ 16,817
------------- -------------
------------- -------------
Earnings per share(9):
Basic.............................................. $ 1.35 $ 0.53
------------- -------------
------------- -------------
Diluted............................................ $ 1.31 $ 0.52
------------- -------------
------------- -------------
</TABLE>
56
<PAGE>
AVIS RENT A CAR, INC
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(1) The Unaudited Pro Forma Consolidated Financial Statements assume that the
amounts borrowed (approximately $5.0 billion) at the closing date, June 30,
1999, would be outstanding for all pro forma periods presented. If such
borrowings were in excess of the historical amounts borrowed, the excess
would be first applied as a reduction of the revolving line of credit
borrowings and the remainder as a reduction of VMS fleet debt.
(2) Represents the adjustment to reflect the pro forma fleet interest expense,
based on pro forma VMS average debt and an assumed interest rate of 5.35%
net of the elimination of historical interest expense and interest income:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1998 JUNE 30, 1999
------------------- --------------
<S> <C> <C>
Pro forma interest expense at 5.35%.......................................... $ 184,870 $ 92,434
Historical interest expense.................................................. (179,729) (92,159)
Historical interest income................................................... (4,300) (2,150)
---------- --------------
Pro forma adjustment......................................................... $ 841 $ (1,875)
---------- --------------
---------- --------------
</TABLE>
(3) Represents the amortization of cost in excess of net assets acquired over 40
years, net of the amortization recorded in the historical combined financial
statements of VMS.
(4) Represents the amortization of deferred debt issuance cost over the period
in which the debt will be outstanding.
(5) Represents the adjustment to reflect the pro forma interest expense on the
acquisition debt.
<TABLE>
<S> <C>
Total amount borrowed at June 30, 1999......................................... $5,028,508
Amounts borrowed under vehicle financing agreements............................ 3,455,508
----------
Non-vehicle debt............................................................... $1,573,000
----------
----------
Composition of net acquisition debt:
Term Loan A.................................................................... $ 250,000
Term Loan B.................................................................... 375,000
Term Loan C.................................................................... 375,000
Senior Subordinated Notes...................................................... 500,000
Revolving credit facility...................................................... 73,000
----------
Total...................................................................... $1,573,000
----------
----------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1998 JUNE 30, 1999
------------------- ---------------
<S> <C> <C>
Interest expense:
Term Loan A--interest at 8.00%.............................................. $ 20,000 $ 10,000
Term Loan B--interest at 8.50%.............................................. 31,875 15,938
Term Loan C--interest at 8.75%.............................................. 32,813 16,406
Senior Subordinated Notes interest at 11.00%................................ 55,000 27,500
Revolving credit facility interest at 8.00%................................. 5,840 2,920
---------- ---------------
Total................................................................... $ 145,528 $ 72,764
---------- ---------------
---------- ---------------
</TABLE>
57
<PAGE>
(6) Represents a reduction in interest expense as a result of the application of
the excess of the amounts borrowed at June 30, 1999 over the average debt
outstanding during the period.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1998 JUNE 30, 1999
------------------- -------------------
<S> <C> <C>
Total amount borrowed at June 30, 1999.................................. $ 5,028,508 $ 5,028,508
------------------- -------------------
Less:
Acquisition purchase price including expenses......................... 1,900,000 1,900,000
Less issuance of Avis Fleet Preferred Stock........................... 362,000 362,000
Less cash on hand utilized to pay a portion of the purchase price..... 32,600 32,600
------------------- -------------------
Acquisition purchase price to be financed............................. 1,505,400 1,505,400
------------------- -------------------
Amount available to refinance existing debt............................. 3,523,108 3,523,108
Average debt outstanding during the period.............................. 3,244,851 3,342,163
------------------- -------------------
Excess borrowings....................................................... $ 278,257 $ 180,945
------------------- -------------------
------------------- -------------------
Revolving debt at 8.00% interest rate................................. $ 73,000 $ 73,000
Vehicle financing at 5.35% interest rate.............................. 205,257 107,945
------------------- -------------------
Total reductions...................................................... $ 278,257 $ 180,945
------------------- -------------------
------------------- -------------------
Reductions in interest expense relating to:
Revolving debt........................................................ $ 5,840 $ 2,920
------------------- -------------------
------------------- -------------------
Vehicle financing..................................................... $ 10,981 $ 2,888
------------------- -------------------
------------------- -------------------
</TABLE>
(7) Represents a reduction in interest expense because the obligation was
refinanced and the related interest expense is included in acquisition
interest.
(8) Represents the estimated income tax effect of the above adjustments. The
effective rate differs from the statutory rate due to the non-deductibility
of goodwill.
(9) Basic and diluted earnings per share for the year ended December 31, 1998,
were computed based on 34,172,249 and 34,952,557 shares of common stock,
respectively. Basic and diluted earnings per share for the six months ended
June 30, 1999, were computed based on 31,529,114 and 32,380,499 shares of
common stock, respectively.
(10) Represents the Avis Fleet Preferred Stock dividend as follows:
<TABLE>
<CAPTION>
($000'S)
($000'S) DIVIDEND
($000'S) DIVIDEND SIX MONTHS
LIQUIDATION DIVIDEND YEAR ENDED ENDED
PREFERENCE RATE DECEMBER 31, 1998 JUNE 30, 1999
----------- ----------- ------------------- --------------
<S> <C> <C> <C> <C>
Series A............................................ 360,000 5.0% $ 18,000 $ 9,000
Series C............................................ 2,000 11.0% 220 110
-------- -------
$ 18,220 $ 9,110
-------- -------
-------- -------
</TABLE>
58
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA (AVIS)
The following selected historical consolidated financial data for each of
the years ended December 31, 1997 and 1998 and the periods ended October 16,
1996 and December 31, 1996, have been derived from the Avis Audited Consolidated
Financial Statements. The selected historical consolidated financial data for
each of the years in the two year period ended December 31, 1995, have been
derived from Avis' audited consolidated financial statements. The selected
historical consolidated unaudited financial data set forth below for the six
month periods ended June 30, 1998 and 1999 have been derived from the Avis
unaudited condensed consolidated financial statements and include all
adjustments, consisting of normal recurring adjustments, which management
considers necessary for a fair presentation of Avis' results for such periods.
Results for the interim periods are not indicative of results for the full year.
The selected historical consolidated financial data set forth below should be
read in conjunction with, and are qualified by reference to, Unaudited Pro Forma
Consolidated Financial Data, Management's Discussion and Analysis of Financial
Condition and Results of Operations, the Avis Consolidated Financial Statements
and accompanying notes thereto and the other financial information included
elsewhere in this prospectus.
59
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
OCTOBER 17,
PREDECESSOR COMPANIES(1) 1996
JANUARY 1, (DATE OF COMBINED
YEARS ENDED 1996 TO ACQUISITION) YEAR ENDED YEARS ENDED DECEMBER
DECEMBER 31, OCTOBER TO DECEMBER DECEMBER 31,
---------------------- 16, 31, 31, ----------------------
1994 1995 1996 1996 1996(2)(3) 1997 1998
---------- ---------- ----------- ------------ ----------- ---------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE, RATIO AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenue............................. $1,412,400 $1,615,951 $1,504,673 $ 362,844 $1,867,517 $2,046,154 $2,297,582
---------- ---------- ----------- ------------ ----------- ---------- ----------
Costs and expenses:
Direct operating, net(4).......... 664,993 724,759 650,750 167,682 818,432 863,839 939,986
Vehicle depreciation and lease
charges, net.................... 301,805 394,057 358,937 85,455 444,392 525,143 593,064
Selling, general and
administrative(5)............... 252,024 269,434 283,180 68,215 351,395 415,728 438,724
Interest, net..................... 136,508 162,244 138,225 38,205 176,430 184,261 201,726
Amortization of costs in excess of
net assets acquired............. 4,754 4,757 3,782 1,026 4,808 6,860 11,854
---------- ---------- ----------- ------------ ----------- ---------- ----------
Total operating expenses...... 1,360,084 1,555,251 1,434,874 360,583 1,795,457 1,995,831 2,185,354
---------- ---------- ----------- ------------ ----------- ---------- ----------
Income before provision for income
taxes........................... 52,316 60,700 69,799 2,261 72,060 50,323 112,228
Provision for income taxes........ 30,213 34,635 31,198 1,040 32,238 22,850 48,707
---------- ---------- ----------- ------------ ----------- ---------- ----------
Net income........................ $ 22,103 $ 26,065 $ 38,601 $ 1,221 $ 39,822 $ 27,473 $ 63,521
---------- ---------- ----------- ------------ ----------- ---------- ----------
---------- ---------- ----------- ------------ ----------- ---------- ----------
Earnings per share:
Basic............................. $ 0.71 $ 0.84 $ 1.25 $ 0.04 $ 0.89 $ 1.86
Diluted........................... $ 0.71 $ 0.84 $ 1.25 $ 0.04 $ 0.88 $ 1.82
Weighted average shares outstanding:
Basic............................. 30,925,000 30,925,000 30,925,000 30,925,000 30,925,000 34,172,249
Diluted........................... 30,925,000 30,925,000 30,925,000 30,925,000 31,181,134 34,952,557
OTHER FINANCIAL DATA:
Vehicle depreciation (Fleet
Cost)........................... $ 291,360 $ 342,048 $ 306,159 $ 71,343 $ 377,502 $ 466,799 $ 581,022
Vehicle interest (Fleet Cost)..... 132,867 159,212 135,577 38,087 173,664 178,213 187,773
Non-vehicle depreciation and
amortization.................... 20,990 20,804 18,538 3,238 21,776 23,022 36,750
Non-vehicle interest.............. 187 372 225 118 343 2,395 3,862
EBITDA after Fleet Costs(6)....... 73,493 81,876 88,562 5,617 94,179 75,740 152,840
Ratio of earnings to fixed
charges(7)...................... 1.3x 1.3x 1.4x 1.0x 1.3x 1.2x 1.4x
Cash flows from operating
activities...................... $ 312,934 $ 544,119 $ 246,212 $ 35,809 $ 282,021 $ 580,973 $ 652,889
Cash flows from investing
activities...................... (559,767) (558,074) (557,136) 1,656 (555,480) (1,244,149) (967,140)
Cash flows from financing
activities...................... 248,764 19,408 357,348 (72,419) 284,929 679,302 299,437
STATEMENTS OF FINANCIAL POSITION
DATA (END OF PERIOD):
Accounts receivable, net of
allowance for doubtful
accounts(8)..................... $ 287,376 $ 194,971 $ 269,848 $ 311,179 $ 311,179 $ 359,463 $ 360,574
Vehicles, net(9).................. 1,873,158 2,167,167 2,404,275 2,243,492 2,243,492 3,018,856 3,164,816
Total assets...................... 2,602,744 2,824,798 3,186,503 3,131,232 3,131,232 4,282,657 4,505,062
Total debt, including amounts due
within one year(10)............. 2,110,123 2,289,747 2,645,095 2,542,974 2,542,974 2,826,422 3,014,712
Total non-vehicle debt............ 7,207 5,911 4,138 3,976 3,976 2,914 1,777
Common stockholders' equity(11)... 658,012 688,260 740,113 76,415 76,415 453,722 622,614
OPERATING DATA:
Car rental data:
Number of rental locations (end of
period)......................... 576 541 550 546 546 612 660
Number of rental transactions
during period (in thousands).... 10,577 11,544 10,272 2,534 12,806 13,667 15,296
Peak number of vehicles during
period.......................... 150,966 167,511 196,077 177,839 196,077 212,104 231,086
Average number of vehicles........ 137,715 150,853 174,813 172,461 174,226 186,317 205,685
Average monthly revenue per
vehicle(12)..................... $ 855 $ 893 $ 906 $ 842 $ 893 $ 915 $ 931
Average revenue per rental
transaction during period(13)... $ 134 $ 140 $ 146 $ 143 $ 146 $ 150 $ 150
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
1998 1999
---------- ----------
<S> <C> <C>
<S> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenue............................. $1,086,670 $1,204,374
---------- ----------
Costs and expenses:
Direct operating, net(4).......... 440,684 476,938
Vehicle depreciation and lease
charges, net.................... 277,394 311,167
Selling, general and
administrative(5)............... 213,114 231,182
Interest, net..................... 96,818 104,362
Amortization of costs in excess of
net assets acquired............. 5,521 6,351
---------- ----------
Total operating expenses...... 1,033,531 1,130,000
---------- ----------
Income before provision for income
taxes........................... 53,139 74,374
Provision for income taxes........ 23,381 31,906
---------- ----------
Net income........................ $ 29,758 $ 42,468
---------- ----------
---------- ----------
Earnings per share:
Basic............................. $ 0.88 $ 1.35
Diluted........................... $ 0.86 $ 1.31
Weighted average shares outstanding:
Basic............................. 33,687,431 31,529,114
Diluted........................... 34,680,670 32,380,499
OTHER FINANCIAL DATA:
Vehicle depreciation (Fleet
Cost)........................... $ 268,944 $ 298,490
Vehicle interest (Fleet Cost)..... 92,628 98,699
Non-vehicle depreciation and
amortization.................... 16,646 18,926
Non-vehicle interest.............. 74 1,227
EBITDA after Fleet Costs(6)....... 69,859 94,527
Ratio of earnings to fixed
charges(7)...................... 0.8x 0.8x
Cash flows from operating
activities...................... $ 158,659 $ 299,169
Cash flows from investing
activities...................... (788,076) (2,365,088)
Cash flows from financing
activities...................... 613,428 2,316,451
STATEMENTS OF FINANCIAL POSITION
DATA (END OF PERIOD):
Accounts receivable, net of
allowance for doubtful
accounts(8)..................... $ 211,861 $ 910,311
Vehicles, net(9).................. 3,587,834 7,663,270
Total assets...................... 4,809,697 11,588,627
Total debt, including amounts due
within one year(10)............. 3,278,619 9,017,106
Total non-vehicle debt............ 2,237 1,644,608
Common stockholders' equity(11)... 635,196 615,143
OPERATING DATA:
Car rental data:
Number of rental locations (end of
period)......................... 636 670
Number of rental transactions
during period (in thousands).... 7,425 8,129
Peak number of vehicles during
period.......................... 216,128 233,456
Average number of vehicles........ 198,160 217,114
Average monthly revenue per
vehicle(12)..................... $ 914 $ 925
Average revenue per rental
transaction during period(13)... $ 148 $ 146
</TABLE>
60
<PAGE>
NOTES TO SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA (AVIS)
(1) On the Acquisition Date, Cendant acquired the predecessors to Avis. See Note
1 to the Avis Audited Consolidated Financial Statements.
(2) Excludes any purchase accounting adjustments for the period January 1, 1996
to October 16, 1996.
(3) Presented on a combined twelve-month basis and includes the results of the
Predecessor Companies for the period January 1, 1996 to October 16, 1996 and
the results of Avis Rent A Car for the period October 17, 1996 (Date of
Acquisition) to December 31, 1996. See Note 1 to the Avis Audited
Consolidated Financial Data.
(4) Consist of expenses directly associated with Avis' rental of vehicles,
including fleet costs, facility costs, salaries and benefits.
(5) Selling, general and administrative expenses includes a 4% royalty fee
payable to Cendant for the years ended December 31, 1997 and 1998 and
charges from Cendant for the period October 17, 1996, (Date of Acquisition)
to December 31, 1996. See Note 5 to the Avis Audited Consolidated Financial
Statements.
(6) "EBITDA after Fleet Costs" represents net income plus non-vehicle interest
expense, non-vehicle depreciation and amortization and income taxes. We
believe that EBITDA after Fleet Costs provides useful information regarding
this ability to service debt, and we understand that such information is
considered by certain investors to be an additional basis for evaluating our
ability to pay interest and repay debt. EBITDA after Fleet Costs does not,
however, represent cash flow from operations as defined by generally
accepted accounting principles and should not be considered as a substitute
for net income on as an indicator of our operating performance or cash flow
as a measure of liquidity. Because EBITDA after Fleet Costs is not
calculated identically by all companies, the presentation herein may not be
directly comparable to other similarly titled measures of other companies.
See the Avis Consolidated Financial Statements, and related notes thereto,
included elsewhere in this prospectus. EBITDA is presented after Fleet costs
because management believes this is a more meaningful representation of cash
flows available to service non-fleet debt.
(7) Ratio of earnings to fixed charges consists of income from continuing
operations (before extraordinary items) before income taxes and fixed
charges, divided by fixed charges of interest (included amounts capitalized
and the interest factor in rental expense), amortization of deferred debt
issuance costs.
(8) Includes manufacturers receivables, net (in thousands) of $192,811, $80,812,
$134,315, $183,304, $183,304, $219,391, $226,963, $53,517 and $116,975 at
December 31, 1994; December 31, 1995; October 16, 1996; December 31, 1996;
December 31, 1996; December 31, 1997; December 31, 1998; June 30, 1998; and
June 30, 1999, respectively. Manufacturers receivables arise from the sale
of vehicles to manufacturers pursuant to guaranteed Repurchase Programs and
amounts due from incentives and allowances.
(9) Vehicles, are presented net of accumulated vehicle depreciation.
(10) Includes vehicle financing notes-due to affiliates at December 31, 1994,
December 31, 1995, October 16, 1996 and December 31, 1996 (in thousands) of
$1,050,000, $1,180,000, $1,289,500 and $247,500, respectively.
(11) Decrease in common stockholders' equity during the three months ended June
30, 1999 reflects a repurchase of Class A Common Stock by Avis.
(12) Average monthly revenue per vehicle for each period is calculated as
revenue divided by the average number of vehicles for the period, divided by
the number of months in each period.
(13) Average rental revenue per rental transaction for each respective period is
calculated as revenue divided by the number of rental transactions during
the period.
61
<PAGE>
SELECTED HISTORICAL COMBINED FINANCIAL DATA (VMS)
The selected historical combined financial data for VMS as of December 31,
1998 and 1997 and for each of the three years in the period ended December 31,
1998 have been derived from the VMS Audited Combined Financial Statements. The
selected historical combined financial data for VMS as of and for the three
months ended March 31, 1999 and for the three months ended March 31, 1998 have
been derived from the VMS Unaudited Combined Financial Statements which were
prepared on the same basis as the VMS Audited Combined Financial Statements and
include, in the opinion of VMS' management, all adjustments necessary to present
fairly the information presented for such interim periods. The interim results
for the three months ended March 31, 1999 are not necessarily indicative of
results that can be expected for the full fiscal year. This information should
be read in conjunction with the VMS Combined Financial Statements and notes
thereto, the Unaudited Pro Forma Combined Financial Data, Management's
Discussion and Analysis of Financial Condition and Results of Operations, and
the other financial information included elsewhere in this prospectus.
62
<PAGE>
SELECTED HISTORICAL COMBINED FINANCIAL DATA (VMS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------------------------- --------------------------
1996 1997 1998(1) 1998 1999
------------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENTS OF OPERATIONS DATA:
Revenue:
Fleet leasing revenue............... $ 1,128,495 $ 1,187,193 $ 1,286,896 $ 312,126 $ 317,992
Fleet management services........... 167,512 184,047 182,356 49,689 50,694
Other............................... 61,032 81,455 135,811 29,490 31,567
------------- -------------- ------------- ----------- -------------
Total revenues...................... 1,357,039 1,452,695 1,605,063 391,305 400,253
Depreciation on vehicles.............. 912,830 953,551 1,015,511 249,384 253,743
Interest expense...................... 167,687 177,149 183,560 43,183 46,457
Selling, general and administrative
expenses............................ 193,822 211,123 232,724 55,425 63,569
Depreciation and amortization on
assets other than vehicles.......... 16,585 14,943 25,680 6,341 7,332
Merger-related costs and other unusual
charges (credits)(2)................ -- 61,090 (1,280) -- --
------------- -------------- ------------- ----------- -------------
Total expenses...................... 1,290,924 1,417,856 1,456,195 354,333 371,101
------------- -------------- ------------- ----------- -------------
Income before provision for income
taxes............................... 66,515 34,839 148,868 36,972 29,152
Provision for income taxes............ 25,323 23,649 55,800 13,857 11,002
------------- -------------- ------------- ----------- -------------
Net income.......................... $ 40,792 $ 11,190 $ 93,068 $ 23,115 $ 18,150
------------- -------------- ------------- ----------- -------------
------------- -------------- ------------- ----------- -------------
OTHER FINANCIAL DATA:
Vehicle depreciation (Fleet Costs).... $ 912,830 $ 953,551 $ 1,015,511 $ 249,384 $ 253,743
Vehicle interest (Fleet Costs)........ 165,466 173,891 179,729 42,265 45,706
Non-vehicle depreciation and
amortization........................ 16,585 14,943 25,680 6,341 7,332
Non-vehicle interest.................. 2,221 3,258 3,831 918 751
EBITDA after Fleet Costs(3)........... 85,321 53,040 178,379 44,231 37,235
STATEMENT OF FINANCIAL POSITION DATA
(END OF PERIOD):
Accounts and loans receivable, net
of allowance for doubtful
accounts.......................... $ 383,830 $ 508,901 $ 506,325
Vehicles, net of accumulated
depreciation........................ 3,594,418 3,788,328 3,867,856
Total assets.......................... 4,135,112 4,728,299 4,832,134
Total debt, including amounts due
within one year..................... 3,083,603 3,339,579 3,263,687
Total non-vehicle debt................ 46,123 62,489 56,070
Shareholders' equity.................. 440,166 730,824 749,109
OPERATING DATA (END OF PERIOD):
Vehicle management data:
Vehicles under management(4)...... 642,000 664,000 779,000 761,000 767,000
Fuel and maintenance cards
outstanding(5).................. 2,314,000 2,726,000 3,629,000 3,688,000 4,390,000
</TABLE>
63
<PAGE>
- ------------------------
(1) Includes the results of operations of the Harpur Group Limited from January
20, 1998, the date of acquisition. See Note 4 to the VMS Audited Combined
Financial Statements.
(2) For a discussion of merger-related costs and other unusual charges
(credits), see Note 3 to the VMS Audited Combined Financial Statements.
(3) "EBITDA after Fleet Costs" represents net income plus non-vehicle interest
expense, non-vehicle depreciation and amortization and income taxes. We
believe that EBITDA after Fleet Costs provides useful information regarding
our ability to service debt, and we understand that such information is
considered by certain investors to be an additional basis for evaluating our
ability to pay interest and repay debt. EBITDA after Fleet Costs does not,
however, represent cash flow from operations as defined by generally
accepted accounting principles and should not be considered as a substitute
for net income as an indicator of our operating performance or cash flow as
a measure of liquidity. Because EBITDA after Fleet Costs is not calculated
identically by all companies, the presentation herein may not be exactly
comparable to other similarly titled measures of other companies. See the
VMS Combined Financial Statements, and related notes thereto, included
elsewhere in this prospectus. EBITDA is presented after Fleet Costs because
management believes this is a more meaningful representation of cash flows
available to service non-fleet debt.
(4) Includes leased vehicles for which third-party vehicle-related services are
provided.
(5) Includes fuel cards for third parties for which VMS acts as processor.
64
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The following discussion and analysis of results of operations of Avis and
VMS includes periods before completion of the VMS Acquisition. Accordingly, the
discussion and analysis of such periods do not reflect the impact the VMS
Acquisition will have on Avis. See "Risk Factors", "Unaudited Pro Forma
Consolidated Financial Data" and the discussion under "--Liquidity and capital
resources" for further discussions relating to the impact that the VMS
Acquisition may have on Avis.
GENERAL
NEW AVIS
REVENUE. New Avis is a leading provider of comprehensive automotive
transportation and vehicle management solutions, with strengths in car rental,
vehicle leasing and vehicle management services. Avis conducts vehicle rental
operations through 670 airport and non-airport (downtown or suburban) locations
in the United States, Canada, Puerto Rico, the U.S. Virgin Islands, Argentina,
Australia and New Zealand as of June 30, 1999. During 1998, Avis completed over
15 million transactions for approximately 56 million rental days with a fleet
that averaged approximately 206,000 vehicles. Revenue is derived principally
from time and mileage charges for vehicle rentals and, to a lesser extent, fees
for personal effects protection and additional liability insurance. For fiscal
1998, approximately 64% of Avis' revenues were derived from commercial use and
small business accounts and 36% from leisure travelers and other products and
services.
VMS' revenues are reported in accordance with generally accepted accounting
principles ("GAAP") which require lease revenues for operating leases to be
reported on a basis which includes the portion of the lease payment relating to
depreciation and interest as leasing revenues. For internal management
presentation and certain analytical presentation in this prospectus, revenues
are reported after Fleet Costs, which nets the depreciation and interest costs
relating to the operating leases against the gross leasing revenues, resulting
in net leasing revenue. Since VMS holds no inventory of vehicles, and therefore
takes no inventory risk, and the depreciation and interest expense on leased
vehicles is directly linked to the underlying lease payment, management believes
that revenue after Fleet Costs is a more appropriate methodology to analyze the
business. By evaluating the business on this basis, charges such as lease
depreciation and interest, which can be impacted by changes in the underlying
lease depreciation period and absolute level of interest rates, are offset
resulting in a net leasing figure. Additionally, management believes that
revenue after Fleet Costs more accurately reflects the true revenues available
to VMS to cover selling, general and administrative expenses and more accurately
reflects the magnitude of fee-based revenues as a percentage of revenues.
VMS' fleet management services are divided into two principal product
categories: (1) asset-based products and services and (2) fee-based products and
services. Asset-based products include leases and the services clients require
to lease a vehicle, such as vehicle acquisition, title and registration, vehicle
remarketing and fleet management consultation, (including fleet, policy and
vehicle recommendation). VMS' principal fee-based products are fuel card
services, maintenance card services and accident management services. VMS has
three primary asset-based revenue streams: (1) depreciation and interest
revenues which are passed through to the leasing clients as part of the lease
billing (Fleet Costs); (2) incentive and allowances paid by auto manufacturers;
and (3) management fees paid by clients for services required in conjunction
with the leased vehicle. VMS' fee-based revenues are derived primarily from: (1)
fees for services rendered in vehicle maintenance assistance; (2) accident and
risk management; (3) billing consolidation; and
65
<PAGE>
(4) information management. In 1998, VMS' total revenues after Fleet Costs were
39% asset-based and 61% fee-based.
VMS operates through three business units: PHH North America, PHH Europe and
WEX. PHH North America's largest portion of revenue (68% of PHH North America's
1998 revenue (after Fleet Costs)) is generated by providing open-end and
closed-end leases and related asset-based services to corporate fleets.
Approximately 96% of the lease portfolio of PHH North America consists of
open-end leases, which means that PHH North America bears only minor residual
risk with respect to a decline in the resale value of its vehicle portfolio. PHH
Europe provides fuel and maintenance cards, as well as vehicle and general
management services to over 16,000 companies, primarily in the United Kingdom.
WEX distributes its fuel cards and related offerings through three primary
channels: (i) the WEX-branded Universal Card, which is issued directly to fleets
by WEX, (ii) the Private Label Card, under which WEX provides private label fuel
cards and related services to commercial fleet customers of major oil companies
and (iii) the Co-Branded Card, under which WEX fuel cards are co-branded and
issued in conjunction with products and services of partners such as commercial
vehicle leasing companies.
EXPENSES. Avis' expenses consist primarily of:
- direct operating expenses (primarily wages and related benefits,
concessions and commissions paid to airport authorities, vehicle insurance
premiums and other costs relating to the operation of the rental fleet);
- depreciation and lease charges relating to the rental fleet (including net
gains or losses upon disposition of vehicles);
- selling, general and administrative expenses (including payments to
Cendant under the Master License Agreement, the computer services
agreement and several other agreements), reservation costs and other
advertising and marketing costs, and commissions paid to airlines and
travel agencies; and
- interest expense, including those relating to the financing of its rental
fleet.
VMS' expenses consist primarily of:
- depreciation and lease charges relating to the fleet (including net gains
or losses upon the disposition of vehicles);
- selling, general and administrative expenses (including charges from
Cendant of $7.0 million in 1998 for administrative services); and
- interest expense relating primarily to VMS' leased fleet.
NET INCOME. Avis' profitability is primarily a function of the volume
(i.e., number of rental transactions) and pricing of Avis' rental transactions
and the utilization of Avis' rental fleet. Significant changes in Avis' net cost
of vehicles or in interest rates may have a material effect on Avis'
profitability and cash flows. Since Avis has entered into repurchase agreements
or other arrangements with respect to the bulk of its fleet, Avis does not bear
a significant risk from declines in the value of its fleet upon disposal. Avis
is required to pay royalties to Cendant based on ARACS' revenue (4.0% in 1998
and increasing periodically to a maximum of 4.5% in 2003), and such royalties
could increase during a period of declining profits. This royalty fee and Avis'
expenditures for vehicles and facilities impose a significant need for
liquidity.
VMS' profitability and cash flows are primarily a function of the volume of
fee-based transactions, leased vehicle volume and average unit pricing. VMS'
results of operations are susceptible to competitive pricing pressures,
particularly in the large corporate market, despite possible increases in the
volume of leasing and fee-based transactions. To address this competition, VMS
has focused on accelerating the development of new fee-based products to
66
<PAGE>
strengthen customer loyalty and increase customer penetration. Since VMS bears
residual risk with respect to the portion of its fleet that is subject to
closed-end leases, VMS' results are impacted by the strength or weakness of the
used car market. VMS utilizes market estimates of residual projections from the
Automotive Lease Guide ("ALG") in the United States and David Henley Systems in
the United Kingdom along with its internal expertise to formulate residual price
projections. As of December 31, 1998, 74% of the U.K. units and 4% of the North
American vehicles are leased under closed-end leases and subject to residual
risk. In 1998 and 1999, VMS will suffer losses on the closed end residual
realizations in both the United Kingdom and North America. Approximately 66% of
VMS' leasing portfolio is priced on the basis of floating rates, therefore any
increase in the underlying cost which VMS is unable to pass through will have a
negative impact on VMS' profitability. Additionally, if either the fixed rate or
floating rate portfolio is not effectively matched (as VMS' strategy is to
match-fund its portfolio to the duration of the underlying debt), a movement in
interest rates would have an impact on the VMS' profitability. In addition, VMS'
profitability is positively impacted by the significant fuel taxes imposed in
the United Kingdom as VMS' fees are a function of the gross amount of each sale.
The following discussion and analysis provides information that management
believes to be relevant to understanding Avis' and VMS' respective financial
positions and results of operations. For Avis, management believes that a more
meaningful comparison of the results of operations for the years ended December
31, 1997 and 1996 is obtained by presenting results on a pro forma basis to give
effect to the following transactions as if they had occurred on January 1 of
1996 and 1997: Avis' acquisition by Cendant in October 1996 and the
establishment of a franchisor/franchisee relationship; the acquisition of The
First Gray Line Corporation ("First Gray Line") in August 1997 and the repayment
of debt with the net proceeds of the IPO. See "Company Background" for more
details on these transactions. Moreover, Avis' results for 1996 are presented on
a combined twelve-month basis and include the results of the predecessor
companies of Avis for the period January 1, 1996 to October 16, 1996 and Avis'
results for the period October 17, 1996 (the date of the 1996 acquisition by
Cendant) to December 31, 1996. As a result of the 1996 acquisition by Cendant,
Avis' consolidated financial statements for the periods subsequent to such date
are presented on a different basis of accounting than those for the periods
prior to the 1996 acquisition and, therefore, are not directly comparable.
This management's discussion and analysis of financial condition and results
of operations should be read in conjunction with the financial statements of
Avis and VMS included elsewhere in this prospectus.
67
<PAGE>
COMPARISON OF THE SIX-MONTH PERIOD ENDED JUNE 30, 1999 AND 1998
The following table sets forth for the periods indicated, certain items in
the Company's consolidated statement of operations (dollars in thousands):
<TABLE>
<CAPTION>
HISTORICAL
----------------------------------------------------------
<S> <C> <C> <C> <C>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1999
---------------------------- ----------------------------
<CAPTION>
PERCENTAGE PERCENTAGE
OF REVENUE OF REVENUE
------------- -------------
<S> <C> <C> <C> <C>
Revenue................................................. $ 1,086,670 100.0% $ 1,204,374 100.0%
Costs and expenses:
Direct operating...................................... 440,684 40.6 476,938 39.6
Vehicle depreciation and lease charges, net........... 277,394 25.5 311,167 25.8
Selling, general and administrative................... 213,114 19.6 231,182 19.2
Interest, net......................................... 96,818 8.9 104,362 8.7
Amortization of cost in excess of net assets
acquired............................................ 5,521 0.5 6,351 0.5
------------- ----- ------------- -----
1,033,531 95.1 1,130,000 93.8
------------- ----- ------------- -----
Income before provision for income taxes................ 53,139 4.9 74,374 6.2
Provision for income taxes.............................. 23,381 2.2 31,906 2.7
------------- ----- ------------- -----
Net income.............................................. $ 29,758 2.7% $ 42,468 3.5%
------------- ----- ------------- -----
------------- ----- ------------- -----
</TABLE>
REVENUE. Revenue increased 10.8%, from $1,086.7 million to $1,204.4
million, compared to the same period in 1998. The increase in revenue is due
primarily to overall market demand (8.1%) and the acquisition of the Hayes
Leasing Company, Inc. on May 1, 1998 (2.7%). The revenue increase reflected a
9.5% increase in the number of rental transactions and a 1.2% increase in
revenue per rental transactions.
COSTS AND EXPENSES. Total costs and expenses increased 9.3%, from $1,033.5
million to $1,130.0 million, compared to the same period in 1998. Direct
operating expenses increased 8.2%, from $440.7 million to $476.9 million,
compared to the same period in 1998. As a percentage of revenue, direct
operating expenses declined to 39.6%, from 40.6% for the corresponding period in
1998. Direct operating expense included a one-time $7.5 million credit (0.6% of
revenue), resulting from the curtailment of the Company's Deferred Benefit Plan.
Operating efficiencies were derived primarily from lower vehicle insurance costs
(0.4% of revenue), and lower airport commissions (0.9% of revenue) and were
partially offset by higher compensation costs (0.5% of revenue), and higher
computer services costs (0.4% of revenues).
VEHICLE DEPRECIATION AND LEASE CHARGES. Vehicle depreciation and lease
charges increased 12.1%, from $277.4 million to $311.2 million, compared to the
same period in 1998. As a percentage of revenue, vehicle depreciation and lease
charges were 25.8% of revenue, as compared to 25.5% of revenue for the
corresponding period in 1998. The change reflected a 9.6% increase in the
average rental fleet combined with a higher monthly cost per vehicle.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 8.5%, from $213.1 million to $231.2 million,
compared to the same period in 1998. The increase was due to higher reservation
costs, higher general and administrative expenses, and higher royalty fees.
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<PAGE>
INTEREST EXPENSE. Interest expense increased 7.8%, from $96.8 million to
$104.4 million, compared to the same period in 1998, due to higher borrowings
required to finance the growth of the rental fleet, partially offset by lower
average interest rates.
INCOME TAXES. The provision for income taxes for the six months ended June
30, 1999, increased to $31.9 million, from $23.4 million for the same period in
1998. The effective income tax rate was 42.9%, down from 44.0% for the
corresponding period in 1998. The effective tax rate reflects differences
between foreign income tax rates and the U.S. federal statutory income tax rate,
taxes on the repatriation of foreign earnings, and foreign withholding taxes on
dividends paid to the Company.
NET INCOME. Net income increased 42.7%, from $29.8 million to $42.5
million, compared to the same period in 1998. The increase reflects higher
revenue, decreased costs and expenses as a percentage of revenue and a lower
effective income tax rate.
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 AND PRO FORMA YEAR ENDED 1997
The following table sets forth, for the periods indicated, certain items in
Avis' consolidated statements of operations (dollars in thousands):
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA(1) HISTORICAL
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
YEAR YEAR
ENDED ENDED
DECEMBER 31, PERCENTAGE DECEMBER 31, PERCENTAGE
1997 OF REVENUE 1998 OF REVENUE
-------------- ------------- -------------- -------------
Revenue............................................... $ 2,175,897 100.0% $ 2,297,582 100.0%
Costs and Expenses:
Direct operating, net................................. 920,283 42.3 939,986 40.9
Vehicle depreciation and lease charges, net........... 559,433 25.7 593,064 25.8
Selling, general and administrative................... 422,053 19.4 438,724 19.1
Interest, net......................................... 192,598 8.9 201,726 8.8
Amortization of cost in excess of net assets
acquired............................................ 9,743 0.4 11,854 0.5
-------------- ----- -------------- -----
2,104,110 96.7 2,185,354 95.1
-------------- ----- -------------- -----
Income before provision for income taxes.............. 71,787 3.3 112,228 4.9
Provision for income taxes............................ 32,355 1.5 48,707 2.1
-------------- ----- -------------- -----
Net income............................................ $ 39,432 1.8% $ 63,521 2.8%
-------------- ----- -------------- -----
-------------- ----- -------------- -----
</TABLE>
- ------------------------
(1) Includes the effects of the following transactions as if they had occurred
on January 1 of each period presented: (i) Avis' acquisition by Cendant and
the establishment of a franchisor/ franchisee relationship, (ii) the
acquisition of First Gray Line and (iii) the repayment of debt with the net
proceeds (after the acquisition of First Gray Line) from the IPO.
REVENUE. Avis' revenue for 1998 increased 5.6% from $2,175.9 million to
$2,297.6 million, over 1997. The increase in revenue is due primarily to the
acquisition of the assets of Hayes Leasing Company, Inc. ("Hayes Leasing")
(2.7%) and overall market demand (2.9%). The revenue increase reflected a 5.3%
increase in the number of rental transactions and a 0.3% increase in revenue per
rental transaction.
COSTS AND EXPENSES. Avis' total costs and expenses for 1998 increased 3.9%,
from $2,104.1 million to $2,185.4 million, over 1997. Avis' direct operating
expenses increased 2.1%, from $920.3 million to $940.0 million, over 1997. As a
percentage of revenue, Avis' direct operating expenses for 1998 declined to
40.9%, from 42.3% for 1997. Avis' operating efficiencies were derived primarily
from lower vehicle insurance costs (0.3% of revenue), lower airport commissions
(1.5% of
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<PAGE>
revenue), and lower computer services costs (0.4% of revenue). These
efficiencies were partially offset by higher vehicle damage costs (0.2% of
revenue) and higher compensation costs (0.5% of revenue).
VEHICLE DEPRECIATION AND LEASE CHARGES. Vehicle depreciation and lease
charges for 1998 increased 6.0%, from $559.4 million to $593.1 million, over
1997. As a percentage of revenue, Avis' vehicle depreciation and lease charges
were 25.8% of revenue in 1998, as compared to 25.7% of revenue in 1997. The
change reflected a 3.4% increase in the average rental fleet combined with a
higher monthly cost per vehicle. In addition, the net proceeds received by Avis
in excess of book value for the disposition of used vehicles was $2.3 million
lower (0.1% of revenue) in 1998 compared to 1997. This was primarily due to
favorable market conditions for the sale of certain model vehicles during 1997.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Avis' selling, general and
administrative expenses for 1998 increased 3.9%, from $422.1 million to $438.7
million, over 1997. The increase was due to $6.6 million higher reservation
costs, $5.2 million higher marketing expenses, and $4.9 million higher royalty
fees.
INTEREST EXPENSE. Avis' interest expense for 1998 increased 4.7%, from
$192.6 million to $201.7 million, over 1997, due to higher borrowings required
to finance the growth of the rental fleet.
INCOME TAXES. Avis' provision for income taxes for 1998 increased 50.5%,
from $32.4 million to $48.7 million, over 1997. The effective income tax rate
was 43.4%, down from 45.1% in 1997. The effective tax rate reflects differences
between foreign income tax rates and the U.S. federal statutory income tax rate,
taxes on the repatriation of foreign earnings, and foreign withholding taxes on
dividends paid to us.
NET INCOME. Avis' net income for 1998 increased 61.1%, from $39.4 million
to $63.5 million, over 1997. The increase reflected higher revenue, decreased
costs and expenses as a percentage of revenue and a lower effective income tax
rate in 1998.
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<PAGE>
COMPARISON OF PRO FORMA YEARS ENDED DECEMBER 31, 1997 AND 1996
The following table sets forth, for the periods indicated, certain items in
Avis's consolidated statements of operations (dollars in thousands):
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA(1)
---------------------------------------------
<S> <C> <C> <C> <C>
YEAR YEAR
ENDED ENDED
DECEMBER 31, PERCENTAGE DECEMBER 31, PERCENTAGE
1996 OF REVENUE 1997 OF REVENUE
-------------- ------------- -------------- -------------
Revenue............................................... $ 2,055,519 100.0% $ 2,175,897 100.0%
Costs and Expenses:
Direct operating, net................................. 905,534 44.0 920,283 42.3
Vehicle depreciation and lease charges, net........... 493,306 24.0 559,433 25.7
Selling, general and administrative................... 439,674 21.4 422,053 19.4
Interest, net......................................... 183,115 8.9 192,598 8.9
Amortization of cost in excess of net assets
acquired............................................ 9,295 0.5 9,743 0.4
-------------- ------ -------------- ------
2,030,924 98.8 2,104,110 96.7
-------------- ------ -------------- ------
Income before provision for income taxes.............. 24,595 1.2 71,787 3.3
Provision for income taxes............................ 16,028 0.8 32,355 1.5
-------------- ------ -------------- ------
Net income............................................ $ 8,567 0.4% $ 39,432 1.8%
-------------- ------ -------------- ------
-------------- ------ -------------- ------
</TABLE>
- --------------------------
(1) Includes the effects of the following transactions as if they had occurred
on January 1 of each period presented: (i) Avis' acquisition by Cendant and
the establishment of a franchisor/franchisee relationship, (ii) the
acquisition of First Gray Line and (iii) the repayment of debt with the net
proceeds (after the acquisition of First Gray Line) from the IPO.
REVENUE. Avis' revenue for 1997 increased 5.9%, from $2,055.5 million to
$2,175.9 million, over 1996. The revenue increase reflected a 3.5% increase in
the number of rental transactions and a 2.3% increase in revenue per rental
transaction, resulting from greater overall market demand.
COSTS AND EXPENSES. Avis' total costs and expenses for 1997 increased 3.6%,
from $2,030.9 million to $2,104.1 million, over 1996. Avis' direct operating
expenses for 1997 increased 1.6%, from $905.5 million to $920.3 million, over
1996. As a percentage of revenue, Avis' direct operating expenses for 1997
declined to 42.3% from 44.0% for 1996. Avis' operating efficiencies were derived
primarily from lower vehicle damage costs (0.3% of revenue), lower facility
costs (0.3% of revenue), lower vehicle insurance costs (0.2% of revenue), lower
vehicle registration costs (0.6% of revenue) and a decline in wages and benefits
as a percentage of revenue (0.2% of revenue).
VEHICLE DEPRECIATION AND LEASE CHARGES. Vehicle depreciation and lease
charges for 1997 increased 13.4%, from $493.3 million to $559.4 million, over
1996. As a percentage of revenue, vehicle depreciation and lease charges for
1997 was 25.7% of revenue, as compared to 24.0% of revenue for 1996. The change
reflected a 3.2% increase in the average rental fleet required to service higher
rental day activity. In addition, due to favorable market conditions for the
sale of certain model vehicles, the net proceeds received in excess of book
value upon the disposition of used vehicles was $30.0 million higher in 1996 as
compared to 1997. This resulted in a 1.7% reduction in vehicle depreciation and
lease charges as a percentage of revenue in 1996.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Avis' selling, general and
administrative expenses for 1997 decreased 4.0%, from $439.7 million to $422.1
million, over 1996. As a percentage of revenue, selling, general and
administrative expenses for 1997 decreased to 19.4% from 21.4% for 1996. This
decrease was the result of lower reservation costs due to operating efficiencies
and reduced marketing costs as a result of the elimination of certain marketing
programs in place during the first half of 1996, partially offset by higher
royalty fees due to increased revenue.
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<PAGE>
INTEREST EXPENSE. Avis' interest expense for 1997 increased 5.2%, from
$183.1 million to $192.6 million, over 1996, due primarily to higher borrowings
required to finance the growth of the rental fleet, which was partially offset
by lower average interest rates.
INCOME TAXES. The provision for income taxes for 1997 increased 101.9%,
from $16.0 million to $32.4 million, over 1996. The effective tax rate for 1997
was 45.1% as compared to 65.2% for 1996. The increase in the tax provision and
the decrease in the effective tax rate were primarily due to higher domestic
income before provision for income taxes. The effective tax rate reflects
differences between the foreign income tax rates and the U.S. federal statutory
income tax rate, taxes on the repatriation of foreign earnings, and foreign
withholding taxes on dividends paid to us.
NET INCOME. Avis' net income for 1997 increased 360.3%, from $8.6 million
to $39.4 million, over 1996. The increase reflected higher revenue, decreased
costs and expenses as a percentage of revenue and a higher effective income tax
rate in 1997.
RESULTS OF OPERATIONS (VMS)
HARPUR ACQUISITION. In January 1998, Cendant completed the acquisition of
Harpur, a leading vehicle management company in the United Kingdom. When
acquired, Harpur had outstanding over 390,000 fuel cards which were used to
purchase over 185,000 gallons of fuel during 1997. Harpur's processing and
support services have been fully integrated into the VMS platform. The
acquisition was accounted for as a purchase and, accordingly, the operating
results of Harpur have been included in the combined financial statements since
the date of acquisition.
VMS-PAYMENTECH TRANSACTION. In January 1997, VMS sold one-half of its
interest in PHH Paymentech LLC ("Paymentech") to Paymentech Inc. resulting in a
gain of $17.5 million included in other revenues. Paymentech included all of the
card businesses of PHH Vehicle Management Services Corporation. The entity was
operated as a joint venture with each party maintaining a 50% interest and was
reflected in the 1997 combined financial results under the equity method of
accounting. In December 1997, Cendant purchased the 50% interest from Paymentech
Inc. in order to allow Cendant to evaluate other structuring possibilities with
its portfolio of card businesses. The 1998 financial results include 100% of the
operations of Paymentech.
MERGER RELATED COSTS AND OTHER UNUSUAL CHARGES. In connection with the
merger of PHH Corporation and HFS Incorporated in the second quarter of 1997 and
the merger of HFS Incorporated with CUC International, Inc. in the fourth
quarter of 1997 (the "Mergers"), VMS incurred $61.1 million of merger-related
costs and other unusual charges. Management initiated a plan to continue the
downsizing of fleet operations by providing for job reductions and eliminating
unprofitable products.
Personnel-related charges included termination benefits such as severance,
medical and other benefits as well as retirement benefits (pursuant to
pre-existing contracts) resulting from a change in control. Business termination
charges of $55 million represented costs to exit certain activities including:
(i) a $30 million payment to terminate a relationship with a third-party
associated with certain credit card operations and (ii) a $25 million goodwill
impairment loss recorded as a result of abandoning certain unprofitable
closed-end leasing activities. The plan was substantially completed by December
31, 1997. At December 31, 1997, the remaining liability of approximately $2.1
million represented severance payments, which were paid in 1998 with the excess
liability of approximately $1.3 million reversed in the second quarter of 1998
as the plan was completed. See Note 3 to the VMS Audited Combined Financial
Statements.
CENDANT SERVICES. Prior to the VMS Acquisition, VMS was wholly owned by
Cendant. During this period, Cendant provided VMS with certain administrative
functions, such as risk management, treasury, legal, payroll, human resources,
certain information technology and taxes. Cendant has agreed to continue
providing certain of these services to us for a limited period of time.
Thereafter, we will either perform these services internally or obtain them from
one or more third-party providers. See "Risk Factors--We may be unable to
successfully integrate VMS into our operations or realize the expected benefits
from the VMS Acquisition or future acquisitions".
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<PAGE>
The following table sets forth, for the periods indicated, certain items in
VMS' statements of operations (dollars in thousands):
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------------------------------------------------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
1996 OF REVENUE 1997 OF REVENUE 1998 OF REVENUE 1998 OF REVENUE
---------- ------------- ---------- ------------- ---------- ------------- --------- -------------
Revenue
Fleet leasing
revenue........ $1,128,495 $1,187,193 $1,286,896 $ 312,126
Fleet management
services....... 167,512 184,047 182,356 49,689
Other............ 61,032 81,455 135,811 29,490
---------- ---------- ---------- ---------
Total
revenue...... 1,357,039 100.0% 1,452,695 100.0% 1,605,063 100.0% 391,305 100.0%
Expenses
Depreciation on
leased
vehicles....... 912,830 67.3 953,551 65.6 1,015,511 63.3 249,384 63.7
Interest
expense........ 167,687 12.4 177,149 12.2 183,560 11.4 43,183 11.1
Selling, general
and
administrative
expenses....... 193,822 14.3 211,123 14.6 232,724 14.5 55,425 14.2
Depreciation and
amortization on
assets other
than leased
vehicles....... 16,585 1.2 14,943 1.0 25,680 1.6 6,341 1.6
Merger-related
costs
(credits)...... 61,090 4.2 (1,280) (0.1)
---------- ----- ---------- ----- ---------- ----- --------- -----
Total
expenses..... 1,290,924 95.2 1,417,856 97.6 1,456,195 90.7 354,333 90.6
---------- ----- ---------- ----- ---------- ----- --------- -----
Income before
income taxes..... 66,115 4.9 34,839 2.4 148,868 9.3 36,972 9.4
Provision for
income taxes..... 25,323 1.9 23,649 1.6 55,800 3.5 13,857 3.5
---------- ----- ---------- ----- ---------- ----- --------- -----
Net income......... $ 40,792 3.0% $ 11,190 0.8% $ 93,068 5.8% $ 23,115 5.9%
---------- ----- ---------- ----- ---------- ----- --------- -----
---------- ----- ---------- ----- ---------- ----- --------- -----
<CAPTION>
<S> <C> <C>
PERCENTAGE
1999 OF REVENUE
--------- -------------
Revenue
Fleet leasing
revenue........ $ 317,992
Fleet management
services....... 50,694
Other............ 31,567
---------
Total
revenue...... 400,253 100.0%
Expenses
Depreciation on
leased
vehicles....... 253,743 63.4
Interest
expense........ 46,457 11.6
Selling, general
and
administrative
expenses....... 63,569 15.9
Depreciation and
amortization on
assets other
than leased
vehicles....... 7,332 1.8
Merger-related
costs
(credits)......
--------- -----
Total
expenses..... 371,101 92.7
--------- -----
Income before
income taxes..... 29,152 7.3
Provision for
income taxes..... 11,002 2.8
--------- -----
Net income......... $ 18,150 4.5%
--------- -----
--------- -----
</TABLE>
COMPARISON OF THREE MONTH PERIOD ENDED MARCH 31, 1999 AND 1998
REVENUES. VMS's revenues for the three month period ended March 31, 1999
increased 2.3% from $391.3 million in the three month period ended March 31,
1998 to $400.3 million. Vehicles under management remained stable, growing 1%
from 761,000 in the 1998 period to 767,000 in the 1999 period; while fuel and
maintenance cards outstanding grew 19% from 3.7 million to 4.4 million,
primarily in the United Kingdom and at WEX.
Fleet leasing revenues increased 1.9% in the three month period ended March
31, 1999 from $312.1 million in the comparable period in 1998 to $318.0 million.
The largest portion of the increase was due to higher depreciation and interest
pass-through costs on operating leases, which increased 2.7% to $299.4 million.
VMS' leased vehicles increased 5.1% to 356,467 units.
Fleet management services revenues increased 2.0% in the three month period
ended March 31, 1999 from $49.7 million in the comparable period in 1998 to
$50.7 million. Volume increases led to a 21% increase in vehicle maintenance
assistance revenue and a 31% increase in accident and risk management revenue.
The increase was offset in part by a $2.2 million decrease in revenues from
closed-end used car dispositions in the United Kingdom as a loss of $1.8 million
was realized in the first quarter of 1999 versus a $0.4 million gain in the
first quarter of 1998.
Other revenue increased 7.0% to $31.6 million due to unit increases in the
fuel card product line. WEX's fuel cards increased 26% while the PHH proprietary
fuel card increased 12%. This
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<PAGE>
increase was partially offset by lower revenue per card due to lower fuel
prices. In the United States, the average price of a gallon of fuel dropped from
$1.11 in the first three months of 1998 to $1.01 in the first three months of
1999.
EXPENSES. Total expenses (including interest) for the three-month period
ended March 31, 1999, increased 4.7% from $354.3 million to $371.1 million.
Expenses generally increased due to higher volumes.
Selling, general and administrative expenses increased $8.1 million to $63.6
million. This increase is due to higher transaction volumes across all product
lines.
Vehicle depreciation on leased assets for the three month period ended March
31, 1999, increased 1.8% from $249.4 million to $253.7 million. The increase
reflects higher lease billings resulting in part from higher volumes.
Total interest cost for the three month period ended March 31, 1999,
increased 7.6% from $43.2 million to $46.5 million. Despite relatively flat
interest rates, total interest costs increased due to PHH Corporation's
commercial paper rating downgrade to A2/P2 as of October 1998. Most of this
increased cost could not be passed through to customers.
NET INCOME. Net income for the three month period ended March 31, 1999
decreased 21.5% from $23.1 million to $18.2 million. The decrease was primarily
driven by two factors: (i) interest expense grew at a faster rate than interest
income due to VMS' inability to pass-through the higher interest costs resulting
from PHH Corporation's debt rating downgrade and (ii) the pretax loss of $1.8
million generated by the United Kingdom on its residual realization on contract
hire units (closed-end leases in the United Kingdom).
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 AND 1997
REVENUES. VMS' revenues increased 10.5% from $1.5 billion in 1997 to $1.6
billion in 1998. The increase is due primarily to the continued growth in all
major product lines and the inclusion of the Harpur revenues. Vehicles under
management increased from 664,000 units in 1997 to 779,000 units in 1998.
Additionally, total cards increased from 2.7 million to 3.6 million in 1998 due
to increased growth in both the United Kingdom and at WEX and from the addition
of approximately 400,000 Harpur cards.
Fleet leasing revenues increased 8.4% from $1.2 billion in 1997 to $1.3
billion in 1998. The largest portion of the increase was due to higher
depreciation and interest pass-through costs on open-end leases due to higher
volumes, which increased 6.0%, to $1.2 billion. Additionally, contract hire
revenues in the United Kingdom increased 111% to $18.3 million due to volume
increases.
Fleet management services revenues decreased 0.9% from $184.0 million in
1997 to $182.4 million in 1998. Excluding the effects of a $17.5 million gain
from the sale of 50% of Paymentech recorded in 1997 and a $10.3 million
deterioration in closed-end used car results as a loss of $4.4 million was
realized in 1998 versus a gain of $5.9 million in 1997, fleet management
services revenues increased due to accounting for Paymentech as a consolidated
subsidiary in 1998 (versus the equity method in 1997) and growth in fee based
revenues.
Other revenues increased 66.7% from $81.5 million in 1997 to $135.8 million
in 1998. The principal factors driving the increase were the inclusion of $31.7
million of revenues from the Harpur acquisition, the increase in WEX revenues of
$8.6 million and increases in the U.K. fuel card business.
EXPENSES. Total expenses increased 2.7% from $1.4 billion in 1997 to $1.5
billion in 1998.
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<PAGE>
Total pass-through costs of depreciation on leased vehicles and interest
expense increased $67.8 million from $1.1 billion in 1997 to $1.2 billion in
1998. The increases were related to higher volumes as leased units in the United
Kingdom increased 37% to approximately 51,000 units and leased units in North
America increased 4.4% to approximately 303,000 units. These pass-through costs
decreased as a percentage of fleet leasing revenues from 95.0% of revenues in
1997 to 92.9% of revenues in 1998.
Selling, general and administrative expenses increased 10.2% from $211.0
million in 1997 to $232.7 million in 1998. The increase resulted from three
major factors: (i) the inclusion of $10.9 million of Harpur expenses in 1998,
(ii) the consolidation of PHH Paymentech LLC in 1998 versus the accounting under
the equity method in 1997 resulting in a $20.9 million increase, and (iii) a
decrease in the corporate overhead allocated from PHH Corporation and Cendant
from $18.9 million in 1997 to $7.0 million in 1998.
Depreciation and amortization on assets other than leased vehicles increased
71.9% from $14.9 million in 1997 to $25.7 million in 1998. Increased capital
expenditures in certain key operating systems centered in the United Kingdom and
WEX were the principal factors contributing to the increase.
Merger-related expenses decreased in 1998 as charges related to the Mergers
were recorded in 1997. The credit reflected in 1998 resulted from changes in
estimates.
NET INCOME. VMS' net income for the year ended December 31, 1998 increased
732% from $11.2 million to $93.1 million, compared to the same period in 1997.
The increase reflects higher revenues due to volume increases and the impact of
the merger-related expenses recognized in 1997.
COMPARISON OF YEAR ENDED DECEMBER 31, 1997 AND 1996
REVENUES. VMS' revenues increased 7.0% from $1.4 billion in 1996 to $1.5
billion in 1997. The increase is due to growth in all major product lines.
Strong card growth in both the United Kingdom and WEX resulted in total cards
increasing from 2.3 million to 2.7 million in 1997.
Fleet leasing revenues increased 5.2% from $1.1 billion in 1996 to $1.2
billion in 1997. The largest increase was due to higher depreciation and
interest pass-through costs on the open-end leases in North America. Total
leased vehicles increased from 316,000 units in 1996 to 327,000 units in 1997.
Fleet management services revenues increased 9.9% from $167.5 million in
1996 to $184.0 million in 1997. The increase was due to the gain from the sale
of 50% of Paymentech recorded in January, 1997 of $17.5 million which was offset
by the decrease in revenues of approximately $21 million resulting from
Paymentech being accounted for under the equity method by VMS in 1997. Excluding
these offsetting effects, the growth resulted from increases in the major fee
based service offerings including accident management and maintenance in both
North America and Europe.
Other revenues increased 33.5% from $61.0 million in 1996 to $81.5 million
in 1997. Strong growth in both the European and WEX fuel card businesses were
the primary factors in the increase as each generated in excess of 30% growth in
revenues for the product.
EXPENSES. Total expenses increased 9.8% from $1.3 billion in 1996 to $1.4
billion in 1997. The increase was due to merger-related expenses of $61.1
million in 1997 from the merger of PHH Corporation and HFS Incorporated was the
principal increase.
Total pass-through costs of depreciation on leased vehicles and interest
expense increased 4.6% from $1.08 million to $1.13 million. The increase was due
principally to the 3.5% increase in
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<PAGE>
the number of leased units. These pass-through costs decreased as a percentage
of fleet leasing revenues from 95.7% of revenues in 1996 to 95.0% of revenues in
1997.
Selling, general and administrative expenses increased 8.9% from $193.8
million in 1996 to $211.1 million in 1997. The increases were related to two
factors: (1) an $11.9 million increase in corporate overhead allocated from PHH
Corporation and Cendant from $7.0 million in 1996 to $18.9 million in 1997, and
(2) increases in volume-related expenses.
Depreciation and amortization on assets other than leased vehicles decreased
9.9% from $16.6 million in 1996 to $14.9 million in 1997. The decrease resulted
principally from lower amortization of goodwill due to the merger write-off of
$25 million of goodwill in 1997 and lower depreciation on capitalized systems.
Merger-related expenses totaled $61.1 million in 1997. The principal
components of the charge were a $30 million payment to terminate a relationship
with a third-party associated with certain credit card operations and a $25
million goodwill impairment loss recorded as a result of abandoning certain
unprofitable closed-end leasing activities. There were no merger-related
expenses in 1996.
NET INCOME. VMS' net income for the year ended December 31, 1997 decreased
72.6% from $40.8 million to $11.2 million, compared to the same period in 1996.
The merger-related expenses of $61.1 million pre-tax were the singular cause of
the decrease.
LIQUIDITY AND CAPITAL RESOURCES
Our operations are expected to be funded by cash provided by operating
activities and by financing arrangements maintained by us in the markets in
which we operate. Our primary use of funds will be for the acquisition of new
vehicles and the repayment of acquisition indebitness. For the six months ended
June 30 1999, pro forma for the VMS Acquisition, our expenditures for new
vehicles would have been approximately $4.9 billion and proceeds from the
disposition of used vehicles would have been approximately $3.2 billion. For
1999, we expect our expenditures for new vehicles (net of proceeds from the
disposition of used vehicles) to be higher than in 1998. Since the late 1980's,
Avis has acquired vehicles related to its car rental operations primarily
pursuant to Repurchase Programs. Repurchase prices under the Repurchase Programs
are based on either (1) a specified percentage of original vehicle cost
determined by the month the vehicle is returned to the manufacturer or (2) the
original capitalization cost less a set daily depreciation amount. These
Repurchase Programs limit residual risk with respect to vehicles purchased under
the programs. This enables management to better estimate depreciation expense in
advance. VMS has historically not participated in Repurchase Programs and
management does not expect to do so in the future. Generally, customers with
open-end leases, which make up approximately 85% of VMS' lease portfolio, bear
the residual risk with respect to their vehicles, whereas with respect to
closed-end leases, which made up approximately 15% of VMS' lease portfolio, VMS
bears such residual risk. Avis and VMS have established methods for disposition
of used vehicles that are not covered by Repurchase Programs.
Historically, Avis' financing requirements for vehicles have typically
reached an annual peak during the second and third calendar quarters, as fleet
levels build in response to increased rental demand during that period. The
typical low point for cash requirements occurs during the end of the fourth
quarter and the beginning of the first quarter, coinciding with lower levels of
vehicle and rental demand. Management expects that this pattern will continue
with the addition of VMS, whose cash requirements have historically been
relatively consistent over the course of a given year.
We expect that cash flows from operations and funds from available credit
facilities will be sufficient to meet our anticipated cash requirements for
operating purposes for the next twelve
76
<PAGE>
months. Customer receivables also provide liquidity with approximately 10 days
of daily sales outstanding.
Pro forma for the VMS Acquisition, we would have made capital investments
for property improvements totaling $49.4 million for the six months ended June
30 1999, and $60.8 million for the six months ended June 30, 1998.
Management has an interest rate management policy, including a target mix
for average fixed rate and floating rate indebtedness on a consolidated basis.
However, an increase in interest rates may have a material adverse impact on our
profitability.
Borrowings for our international operations consist mainly of loans obtained
from local and international banks. All borrowings for international operations
are in the local currencies of the countries in which those operations are
conducted. We will guarantee only the borrowings of our subsidiary in Argentina.
At June 30, 1999, the total debt for our international operations was
approximately $900 million. The impact on our liquidity and financial condition
due to the exchange rate fluctuations of our foreign operations is not expected
to be material.
Avis Rent A Car is party to a credit agreement (the "New Credit Facility")
which provides for up to $1.35 billion of borrowings in the form of (1) A
Revolving Credit Facility in the amount of up to $350.0 million, (2) a $250.0
million Term A Loan, (3) a $375.0 million Term B Loan and (4) a $375.0 million
Term C Loan. Upon consummation of the VMS Acquisition, Avis borrowed as of June
30, 1999, the full $1.0 billion under the Term A Loan, Term B Loan and Term C
Loan and $73.0 million under the Revolving Credit Facility. The loans under the
New Credit Facility bear interest at variable rates at fixed margin, above
either The Chase Manhattan Bank's alternative base rate or the Eurodollar rate.
The New Credit Facility is guaranteed by each U.S subsidiary of Avis Rent A Car
but excluding any insurance subsidiaries, banking subsidiaries, and
securitization or other vehicle financing subsidiaries. All borrowings by us
under the New Credit Facility are secured by a first-priority perfected lien on
substantially all of the tangible and intangible assets of New Avis and each
guarantor under the New Credit Facility excluding assets that secure the ABS
Facilities, and by a pledge of all the capital stock of each of Avis Rent A Car,
Inc.'s U.S. subsidiaries and 65% of the capital stock of its first tier non-U.S.
subsidiaries.
The old notes and the new notes will mature in 2009. Avis Rent A Car's
obligations under these notes are subordinate and junior in right of payment in
all existing and future senior indebtedness of New Avis, including all
indebtedness under the New Credit Facility. The obligations of New Avis under
these notes and the Indenture have been guaranteed on a senior subordinated
basis by each of our U.S. subsidiaries, other than our banking subsidiaries,
insurance subsidiaries and securitization and other vehicle financing
subsidiaries which have not guaranteed senior indebtedness of New Avis. The New
Credit Facility and the Indenture contain numerous financing and operating
covenants that limit the discretion of our management with respect to certain
business matters. These covenants place significant restrictions on, among other
things, the ability of Avis Rent A Car and some subsidiaries to incur additional
indebtedness, pay dividends and other distributions, prepay subordinated
indebtedness, create liens or other encumbrances, make capital expenditures,
make certain investments or acquisitions, engage in certain transactions with
affiliates, sell or otherwise dispose of assets and merge with other entities
and otherwise restrict corporate activities. The New Credit Facility and the
Indenture contain customary events of default.
THE AVIS ABS FACILITY
Avis has a domestic integrated financing program (the "Avis ABS Facility")
that as of June 30, 1999 provide for up to $3.75 billion in financing for
vehicles covered by Repurchase Programs, with up to 25% of the Avis ABS Facility
available for vehicles not covered by Repurchase Programs. The Avis ABS Facility
provides for the issuance of up to $1.5 billion of asset backed variable funding
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notes (the "Variable Funding Notes") and $2.25 billion of asset-backed medium
term notes are outstanding under the Avis ABS Facility (the "Medium Term
Notes"). The Variable Funding Notes and the Medium Term Notes are indirectly
secured by, among other things, a first priority security interest in Avis's
fleet. The Variable Funding Notes support the issuance by a special purpose
company of commercial paper notes that are rated A-1 by Standard & Poor's
Ratings Services ("S&P") and P-1 by Moody's Investors Service, Inc. ("Moody's").
The Medium Term Notes are guaranteed under a surety bond issued by MBIA and as a
result are rated AAA by S&P and Aaa by Moody's. At June 30, 1999, Avis had
approximately $3.7 billion of debt outstanding under the Avis ABS Facility. At
June 30, 1999, Avis had approximately $34 million of additional credit available
for vehicle purchases.
Based on current market conditions and Avis' current banking relationships,
we expect to fund maturities of the Medium Term Notes either by the issuance of
new medium term notes or an increase in the outstanding principal amount of the
Variable Funding Notes depending on market conditions at the time the Medium
Term Notes mature. However, we cannot be sure that this will occur.
THE INTERIM VMS ABS FACILITY
VMS currently has an interim $3.6 billion vehicle financing program (the
"Interim VMS ABS Facility" and, together with the Avis ABS Facility, the "ABS
Facilities") supported by leases and vehicles owned by VMS and to initially
consist of (1) up to $2.5 billion of variable funding asset-backed notes
supported by U.S. leases and vehicles, (2) up to $236 million of asset-backed
preferred membership interests supported by U.S. leases and vehicles and (3) an
advance of up to $829 million under an asset-backed facility to PHH United
Kingdom guaranteed by various PHH United Kingdom entities and supported by all
of the assets of such entities, each of which will be placed with one or more
multi-seller commercial paper conduits. We intend to refinance the Interim VMS
ABS Facility through the issuance of medium-term notes and bank conduits.
SEASONALITY
Avis' third quarter, which covers the peak summer travel months, has
historically been its strongest quarter, accounting for approximately 28% and
47% of Avis' rental revenue and pre-tax income from rental operations,
respectively, in 1998. Any occurrence that disrupts travel patterns during the
summer period could have a material adverse effect on New Avis' financial
condition and results of operations. Avis' fourth quarter is generally its
weakest, when there is limited leisure travel and a greater potential for
adverse weather conditions. Many of Avis' operating expenses, such as rent,
insurance and personnel, are fixed and cannot be reduced during periods of
decreased rental demand. As a result, there can be no assurance that Avis would
have sufficient liquidity under all conditions. Since VMS' business is generally
not seasonal, management expects these patterns to continue.
INFLATION
The increased acquisition cost of vehicles is expected to be the primary
inflationary factor affecting New Avis' operations. Many of New Avis' other
operating expenses are inflation sensitive, with increases in inflation
generally resulting in increased costs of operations. The effect of inflation-
driven cost increases on New Avis' overall operating costs is not expected to be
greater for New Avis than for its competitors.
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RECENT PRONOUNCEMENTS OF THE FINANCIAL ACCOUNTING STANDARDS BOARD
A recent pronouncement of the Financial Accounting Standards Board which are
not required to be adopted at this date, is Statement of Financial Accounting
Standards No. 133--"ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES", ("SFAS 133") which is effective for our consolidated financial
statements for the year ending December 31, 2001. SFAS 133 establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position at fair value. The adoption
of SFAS 133 is not expected to have a material effect on the Company's
consolidated financial statements.
The Accounting Standards Executive Committee of the American Institute of
Certified Public Accountants issued a Statement of Position No. 98-5,
"ACCOUNTING FOR START-UP COSTS" ("SOP No. 98-5"). The SOP requires that all
start-up costs should be expensed as incurred, unless the costs incurred were to
acquire or develop tangible assets or to acquire intangible assets from a third
party. SOP No. 98-5 is effective for fiscal years beginning after December 15,
1998.
The adoption of SOP No. 98-5 is not expected to have a material effect on
our consolidated financial statements. Avis Rent A Car has not completed its
assessment of the effect on New Avis' consolidated financial statements that
will result from the adoption of SFAS No. 133.
RESTRICTIONS IMPOSED BY INDEBTEDNESS
Our agreements with various lenders, including the New Credit Facility, the
Indenture and the ABS Facilities include a number of significant covenants that,
among other things, will restrict our ability to dispose of non-fleet assets,
incur additional indebtedness, create liens, pay dividends, enter into certain
investments or acquisitions, repurchase or redeem capital stock, engage in
mergers or consolidations or engage in certain transactions with affiliates, and
otherwise restrict corporate activities. Certain of these agreements will also
require us to maintain specified financial ratios. A breach of any of these
covenants or our inability to maintain the required financial ratios could
result in a default in respect of the related indebtedness. In the event of a
default, the lenders could declare, among other options, the indebtedness,
together with accrued interest and other fees, to be immediately due and
payable, failing which the lenders could proceed against the collateral securing
such indebtedness.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Avis has derivative financial instruments at December 31, 1998 that are
sensitive to changes in interest rates on Avis' debt obligations and on Avis'
interest rate swap agreements. See Note 9 to the Avis Audited Consolidated
Financial Statements. For long-term obligations, the following table presents
cash flows and weighted average interest rates by expected maturity dates.
Avis has entered into four interest rate swap agreements to reduce the
impact of changes in interest rates on certain outstanding current domestic and
Canadian debt obligations. Avis' swap agreements have the effect of changing the
interest rate on certain of Avis' current debt from a variable to a fixed rate
of interest. The variable interest rates for certain of these interest rate swap
agreements are either reset quarterly or daily based upon the average 30-day
commercial paper rate for the quarter. Interest is cash settled on a net basis
for each agreement quarterly. The U.S. interest rate swap agreement will
terminate in October 2001 and the three Canadian swap agreements in August 2003.
Under the Canadian swap agreements terminating in August 2003, the counter-party
has the right to terminate one of the agreements in August 2000 and one
agreement in August 2001.
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The notional amounts used to calculate the contractual payments to be
exchanged under these swap agreements consist of $250 million and $38.6 million
for the U.S. and Canada swap agreements, respectively. The weighted average
variable payment and receipt rates are based on implied forward rates in the
yield curve at December 31, 1998. The weighted average expected payment rates
are 4.8%, 4.8%, 4.8%, 5.6% and 5.6% for the years ended December 31, 1999, 2000,
2001, 2002 and 2003, respectively. The weighted average expected receipt rates
are 4.9%, 5.0%, 5.1%, 5.2% and 5.4% for the years ended December 31, 1999, 2000,
2001, 2002 and 2003, respectively. The fair value of the interest rate swap
agreements at December 31, 1998 is approximately $885,000.
<TABLE>
<CAPTION>
EXPECTED MATURITY DATES AS OF DECEMBER 31, 1998
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 2000 2001 2002 2003 THEREAFTER TOTAL
--------- --------- ----- --------- ----- ----------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Long-term debt:
Fixed rate
Medium Term Notes........................ $ 800,000 $ 850,000 $ 600,000 $2,250,000
Other domestic debt...................... $ 1,085 $ 209 $ 227 $ 256 $ 1,777
Annualized weighted average interest rate
Variable Rate............................ 8.0% 6.2% 9.3% 6.4% 6.1%
Floating rate notes...................... $ 9,677 $ 9,677
Average interest rate.................... 6.0%
<CAPTION>
<S> <C>
FAIR VALUE
----------
<S> <C>
Long-term debt:
Fixed rate
Medium Term Notes........................ $2,294,541
Other domestic debt...................... $ 1,777
Annualized weighted average interest rate
Variable Rate............................
Floating rate notes...................... $ 9,677
Average interest rate....................
</TABLE>
There have been no material changes to the Company's derivative financial
instruments for the six months ended June 30, 1999. However, in connection with
the VMS Acquisition and in order to reduce its risks from interest rate
fluctuations, the Company has entered into a domestic 10 year interest rate cap
agreement and a foreign five year agreement on notional amounts of US
$526,361,951 and LBS Sterling of 436,134,125. The agreements limit the domestic
and foreign interest rate exposures to 5.675% and 6.50%, respectively.
YEAR 2000 READINESS DISCLOSURE
GENERAL
Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field and cannot distinguish
21(st) century dates from 20(th) century dates. Consequently, these software and
computer systems need to be either reprogrammed, upgraded or replaced in order
to properly function when Year 2000 arrives.
Our state of readiness, contingency plans, Year 2000 costs and possible
consequences from Year 2000 problems are as follows:
(I) STATE OF READINESS
We have implemented a comprehensive plan to address the Year 2000
requirements in its mission critical systems. Mission critical systems are
those whose failure poses a risk of disruption to our ability to provide
vehicle reservations, rental services and vehicle management services. Our
comprehensive plan includes (i) the identification of all mission critical
systems and the inventory of all hardware and software affected by the Year
2000; (ii) assessment of these systems including prioritization; (iii)
modification, upgrading and replacement of the affected systems; and (iv)
testing of the systems. We are using both internal and external sources to
implement its plan. We have completed the remediation of our mission
critical systems including the modification, upgrading and replacement of
the affected systems. We
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have completed the testing of substantially all of these mission critical
systems. We currently believe our mission critical systems are Year 2000
ready.
Much of our technology, including technology associated with its mission
critical systems, is purchased from third parties. We are dependent on those
third parties to assess the impact of Year 2000 on the technology they have
supplied and to take any necessary corrective action. We are monitoring the
progress of these third parties and conducting tests to determine whether
they have accurately assessed the problem and taken corrective action.
(II) CONTINGENCY PLANS
Based upon the progress of our comprehensive plan, we expect that we
will not experience a disruption of our operations as a result of the change
to the Year 2000. However, there can be no assurance that the third parties
who have supplied technology used in our mission critical systems will be
successful in taking corrective action in a timely manner. We are developing
contingency plans with respect to certain key technology used in our mission
critical systems, which are intended to enable us to continue to operate.
The contingency plans include performing certain processes manually;
repairing systems and changing suppliers if necessary, although there can be
no assurance that these contingency plans will successfully avoid service
disruption in the reservation and rental of vehicles. We believe, that due
to the widespread nature of potential Year 2000 issues, the contingency
planning process is ongoing, which will require further modifications as we
obtain additional information regarding (1) our internal systems and
equipment during the remediation and testing phases of our Year 2000
comprehensive plan; and (2) the status of third parties Year 2000 readiness.
(III) YEAR 2000 COSTS
Total costs of hardware and software remediation are expected to be
$26.2 million including $2.7 million related to VMS. Costs of hardware and
software remediation were approximately $3.0 million in 1997, $8.4 million
in 1998 and are estimated to be approximately $12.8 million in 1999 and $2.0
million in 2000. Costs of hardware and software remediation were
approximately $5.2 million for the six months ended June 30, 1999. These
estimates include the costs of certain equipment and software for which
planned replacement was accelerated due to Year 2000 requirements. In
addition, they reflected the cost of redeploying certain internal resources
to address the Year 2000 requirements. This estimate assumes that third
party suppliers have accurately assessed the compliance of their products
and that they will successfully correct the issue in non-compliant products.
Because of the complexity of correcting the Year 2000 issue, actual costs
may vary from these estimates. We expect to finance these costs through
internally generated cash flow and existing credit facilities.
(IV) POSSIBLE CONSEQUENCES FROM YEAR 2000 PROBLEMS
We believe that completed and planned modifications and conversions of
our internal systems and equipment will allow us to be Year 2000 compliant
in a timely manner. There can be no assurance, however, that our internal
systems or equipment or those of third parties on which we rely will be Year
2000 compliant in a timely manner or that our or third parties' contingency
plans will mitigate the effects of any non-compliance. The failure of the
systems or equipment of our or third parties (which we believe is the most
reasonably likely worst case scenario) could effect vehicle reservation and
rental operations and could have a material adverse effect on our business
or consolidated financial statements.
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FORWARD LOOKING INFORMATION
Certain matters discussed in this Management's Discussion and Analysis of
Financial Condition and Results of Operations section that are not historical
facts are forward-looking statements that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve risks and uncertainties including the impact
of competitive products and pricing, changing market conditions, our ability and
our vendors' ability to complete the necessary actions to achieve a Year 2000
conversion for our computer systems and applications, and other risks which were
detailed from time to time in Avis' or VMS' publicly-filed documents, including
Avis' Annual Report on Form 10-K for the period ended December 31, 1998 and
Avis' Quarterly Report on Form 10-Q for the period ended June 30, 1999. Actual
results may differ materially from those projected. These forward-looking
statements represent management's judgment as of the date of this prospectus.
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COMPANY BACKGROUND
AVIS
On October 17, 1996 the Franchisor (formerly Avis, Inc.) and its
subsidiaries were purchased by Cendant for approximately $806.5 million (such
acquisition, the "1996 Acquisition"). The purchase price was comprised of
approximately $367.2 million in cash, $100.9 million in indebtedness and $338.4
million of common stock. Avis is the successor to the car rental operations
previously owned by the Franchisor and its subsidiaries (collectively referred
to as the "Predecessor Companies"). Prior to the 1996 Acquisition, the principal
shareholder of the Franchisor and the Predecessor Companies was an Employee
Stock Ownership Plan, and the minority shareholder was GM.
On September 24, 1997, Avis Rent A Car completed the IPO of its Class A
Common Stock at a price of $17 per share and received net proceeds of
approximately $359.3 million. Immediately after the IPO, Cendant continued to
own a significant portion of the Class A Common Stock. On March 23, 1998, Avis
Rent A Car sold an additional 5,000,000 shares of Class A Common Stock through a
secondary public offering (the "1998 Offering") and received net proceeds of
approximately $161.0 million from such offering. In addition, in the 1998
Offering, Cendant reduced its ownership in Avis by selling 1,000,000 shares of
Class A Common Stock. Following the 1998 Offering, Cendant beneficially owned
7,500,000 shares of Class A Common Stock, representing approximately 20.9% of
the then outstanding shares. Pursuant to a stock repurchase program approved by
Avis Rent A Car's Board of Directors on September 1, 1998 and amended on
September 23, 1998 authorizing the repurchase of up to 5,000,000 shares of Class
A Common Stock, Avis Rent A Car has purchased 5,000,000 shares through April 26,
1999, including 1,614,200 shares repurchased from Cendant in 1999. As a result
of these repurchases, Cendant's beneficial ownership of Class A Common Stock has
been reduced to 5,885,800 shares or approximately 19% as of June 30, 1999.
Assuming that Cendant had converted all of the Avis Fleet Preferred Stock that
it received in the VMS Acquisition into Class B Common Stock as of such date
(such conversion being subject to certain conditions), Cendant's ownership of
Avis Rent A Car would have been approximately 34%. Class B Common Stock is
non-voting. Upon transfer of shares of Class B Common Stock to transferees other
than Cendant or any affiliates of Cendant such shares will automatically convert
into shares of Class A Common Stock. Also, Cendant and its affiliates can cause
the Class B Common Stock to be converted into Class A Common Stock while owned
by Cendant and its affiliates to the extent that Cendant's voting interests in
Avis Rent A Car's common stock would not exceed 20%. Cendant and its affiliates
may also convert Class B Common Stock into Class A Common Stock in the event of
a Change of Control as defined in the Master License Agreement or the bankruptcy
of New Avis. See "Description of Avis Fleet Preferred Stock and Class B Common
Stock" and "Certain Relationships and Related Party Transactions".
The Franchisor, which is owned by Cendant, owns the Avis System, and ARACS
is currently the largest Avis System franchisee in the world. Avis System
franchisees operate approximately 4,200 rental locations, including locations at
the largest airports and cities in the United States and approximately 160 other
countries and territories, and a fleet of approximately 404,000 vehicles during
the peak season. Avis is the sole franchisee of the Avis System in the
international markets in which it operates. The Avis System in Europe, Africa,
part of Asia and the Middle East is operated under franchise by Avis Europe plc,
which is not affiliated with Avis. Management believes that the strong
recognition of the Avis brand name, the breadth of the Avis System and the
sophistication of the Wizard System enable Avis and other Avis System
franchisees to provide consistent quality, pricing and service to business and
leisure customers worldwide.
As an Avis System franchisee, ARACS has entered into certain arrangements
with the Franchisor and its affiliates that require ARACS to make various
payments, including monthly
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payments under the Master License Agreement consisting of a monthly base royalty
of 3.0% of ARACS' gross revenue and a supplemental royalty of 1.0% of ARACS'
gross revenue payable quarterly in arrears (which supplemental royalty will
increase periodically to a maximum of 1.5% in 2003). Until July 30, 2002, the
supplemental royalty or a portion thereof may be deferred if ARACS does not
attain certain financial targets.
Since 1997, ARACS has made the following significant acquisitions:
FIRST GRAY LINE. On August 20, 1997, ARACS purchased all of the outstanding
capital stock of First Gray Line, then the largest Avis System franchisee in
North America (excluding Avis Rent A Car) with 70 locations in Southern
California, Nevada and Arizona, including Los Angeles International Airport,
McCarran International Airport (Las Vegas) and San Diego International Airport.
On September 18, 1997 ARACS purchased certain assets and repurchased the
franchise rights of another Avis System franchisee. The total consideration for
these acquisitions was approximately $199 million. On July 31, 1998, First Gray
Line was merged into ARACS.
HAYES LEASING. On May 1, 1998, ARACS acquired the assets of the car rental
business of Hayes Leasing, including the Avis System franchises for the cities
of Austin, Fort Worth and San Antonio, and the counties of Dallas and Tarrant,
Texas, for approximately $86 million in cash, plus the refinancing of
vehicle-related indebtedness which totalled approximately $136 million for a
total purchase price of approximately $222 million. At that time, Hayes Leasing
was the largest Avis System franchisee in North America (excluding Avis Rent A
Car), serving six locations in Texas, including the Dallas/Fort Worth Airport,
San Antonio Airport and Austin Municipal Airport.
RENT-A-CAR COMPANY, INCORPORATED. On March 19, 1999, ARACS purchased all of
the outstanding capital stock of Rent-A-Car Company, Incorporated ("Car Co.")
for approximately $10 million. Car Co. was then the third largest Avis System
franchisee in North America (excluding Avis Rent A Car) with locations in
Delaware, Maryland and Virginia, including Richmond International Airport.
MOTORENT, INC. On June 30, 1999, Avis purchased all of the outstanding
capital stock of Motorent, Inc. ("Motorent") for approximately $43.7 million.
Motorent operated at the airports in Knoxville, Memphis, Nashville and
Chattanooga, Tennessee, and was then the largest Avis System franchisee in North
America (excluding Avis Rent A Car).
OTHER ASSET ACQUISITIONS. During 1998, ARACS purchased the assets of
various former Avis System licensees for aggregate consideration of
approximately $15 million as outlined in the following table:
<TABLE>
<CAPTION>
DATE FORMER LICENSEE LOCATION
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
April 3, 1998 Amelco Leasing Ltd. Halifax, Nova Scotia and the
Provinces of New Brunswick and
Prince Edward Island
May 12, 1998 Hazqu Car Inc. and Hamilton, Ontario
The Champ Car, Inc.
August 31, 1998 Rent-All-Mart, Inc. Lima, Ohio
September 14, 1998 Economy Leasing Corp. White Plains, New York
October 30, 1998 One Bar, Inc. Butte, Great Falls, Helena, and
Glacier Park, Montana
November 18, 1998 Northern Rent A Car, Inc. Burlington, South Burlington, and
Montpelier, Vermont
</TABLE>
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AVIS TODAY. Avis operates the second largest general-use car rental
business in the world, based on total revenue. As the largest Avis System
franchisee, Avis rents vehicles and provides ancillary products and services to
business and leisure travelers through approximately 670 airport and non-airport
(downtown or suburban) locations in the United States, Canada, Puerto Rico, the
U.S. Virgin Islands, Argentina, Australia and New Zealand as of June 30, 1999.
During 1998, Avis completed over 15 million transactions for approximately 56
million rental days with a fleet that averaged approximately 206,000 vehicles.
Avis has corporate operations at the 50 top domestic airports which account for
approximately 92% of all domestic rental transactions processed through the Avis
System based on 1998 revenue. Avis provides its services to a broad range of
retail and corporate customers including both domestic and multinational
corporations, among which Avis has many long-standing relationships. For model
year 1999, Avis purchased over 90% of its vehicles from the "Big 3" U.S. auto
makers, primarily General Motors. Through repurchase and other agreements with
these and other auto makers, Avis bears the residual risk with respect to less
than 2% of its fleet. For the six month period ended June 30, 1999, Avis
generated total revenues of approximately $324 million.
VMS
VMS is comprised of PHH North America, PHH Europe and WEX. Prior to the VMS
Acquisition, VMS was owned by Cendant. Cendant was formed in December 1997
through the merger of CUC International, Inc. ("CUC") and HFS Incorporated
("HFS"). In April 1997, HFS acquired PHH Corporation which at the time owned PHH
North America and PHH Europe. In August 1996, CUC acquired WEX, which had
earlier been a part of A.R. Wright Co.
PHH NORTH AMERICA
Established in 1946 and headquartered in Hunt Valley, Maryland, PHH North
America is one of the oldest brands in the vehicle management industry. It
provides vehicle leasing and related asset-based services, as well as a
comprehensive range of fee-based, value-added vehicle management products and
services including accident and risk management, fleet administration and fuel
and maintenance cards, to over 3,300 corporate customers, including
approximately one-third of the Fortune 500 companies, as well as various
government agencies. Concurrently with the closing of the VMS Acquisition, PHH
Vehicle Management Services LLC ("VMS LLC"), the principal component of PHH
North America, moved its chief executive office to Garden City, New York. VMS
LLC maintains a regional/processing office in Hunt Valley, Maryland. PHH North
America manages over 434,000 vehicles in the United States and Canada, making it
the number two ranked participant on the basis of vehicles under management in
North America. For the three months ended March 31, 1999, PHH North America
generated total revenues of $324.0 million.
PHH EUROPE
Headquartered in Swindon, England, PHH Europe has been in the European
vehicle management business for over 25 years. PHH Europe provides fuel and
fleet financing products and services as well as general vehicle management
solutions to over 16,000 companies. PHH Europe primarily operates in the United
Kingdom (which accounted for approximately 98% of 1998 revenue), but also
provides services in Ireland and Germany and is expanding its operations into
Austria and Switzerland. Through a strategic alliance with a major international
financial institution, PHH Europe covers the remaining key markets in Europe,
satisfying customers looking for pan-European vehicle management solutions. In
contrast to PHH North America, most of PHH Europe's net revenue (approximately
84% in 1998) stems from fee-based services. With the acquisition of Harpur in
January 1998, PHH Europe had over 1.2 million fuel cards outstanding in the
United Kingdom, accounting for over 613 million gallons of fuel purchased (equal
to a value of
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approximately $3.0 billion) in 1998. The acquisition of Harpur, which was the
number two ranked provider of fuel management services in the United Kingdom
behind PHH Europe, enhanced PHH Europe's leadership position in United Kingdom
fuel and maintenance management. PHH Europe is also the top ranked fleet manager
in the United Kingdom, with over 345,000 vehicles under management. For the
three months ended March 31, 1999, PHH Europe generated total revenues of $61.2
million.
WEX
Headquartered in South Portland, Maine, WEX was incorporated in 1983 and is
currently the top ranked issuer of third-party fuel cards in North America based
on dollar volume and the top ranked provider of related information management,
payment processing and financial services to car, van and light truck fleets.
WEX differentiates itself from traditional open network credit card companies
like Visa and MasterCard and other competitors by providing an array of
information processing services in addition to its core charge card service.
Fuel card-related services include the industry's largest electronic acceptance
point of sale network, a proprietary payment system platform, comprehensive
information management services and responsive, reliable customer service. WEX
provides its end-user customer base of more than 87,000 commercial fleets with
charge card access to approximately 126,000 of the 160,000 retail fuel
facilities in the United States. For the three months ended March 31, 1999, WEX
generated total revenues of $15.1 million.
BUSINESS
NEW AVIS
Avis operates the second largest general-use car rental business in the
world, based on total revenue. As the largest Avis System franchisee, Avis rents
vehicles and provides ancillary products and services to business and leisure
travelers through approximately 670 airport and non-airport (downtown or
suburban) locations in the United States, Canada, Puerto Rico, the U.S. Virgin
Islands, Argentina, Australia and New Zealand as of June 30, 1999. During 1998,
Avis completed over 15 million transactions for approximately 56 million rental
days with a fleet that averaged approximately 206,000 vehicles. Avis has
corporate operations at the 50 top domestic airports which accounted for
approximately 92% of all domestic rental transactions processed through the Avis
System based on 1998 revenue. Avis provides its services to a broad range of
retail and corporate customers including both domestic and multinational
corporations, among which Avis has many long-standing relationships. For model
year 1999, Avis purchased over 90% of its vehicles from the "Big 3" U.S. auto
makers, primarily General Motors. Through repurchase and other agreements with
these and other auto makers, Avis bears the residual risk with respect to less
than 2% of its fleet. For the six month period ended June 30, 1999, Avis
generated total revenues of approximately $1.2 billion.
On June 30, 1999, Avis acquired VMS from Cendant for approximately $1.8
billion, plus the refinancing of approximately $3.5 billion of indebtedness. A
subsidiary of Cendant Corporation received $362.0 million of the acquisition
consideration in the form of Avis Fleet Preferred Stock, $2.0 million of which
was transferred to a third party. The VMS Acquisition has established New Avis
as a leading worldwide provider of comprehensive automotive transportation and
vehicle management solutions. We expect that the VMS Acquisition will allow Avis
to diversify its revenue base, create significant revenue growth and cost
savings opportunities, expand its car rental business, and bring together a
senior management team that has extensive knowledge of the car rental and
vehicle management and financing industries.
VMS provides integrated card payment, vehicle leasing and value-added
vehicle management services in North America and Europe, with leading market
shares across many of its product lines.
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VMS provides comprehensive vehicle management solutions to its customers which
include over 19,000 companies and government agencies in North America and
Europe, including nearly one-third of the Fortune 500 and approximately one-half
of the FTSE 100 companies. VMS' services consist of vehicle leasing and related
asset-based services and a broad range of fee-based services which include fuel
and maintenance cards, accident management, and various other vehicle-related
services, all of which are designed to allow clients to effectively manage costs
and enhance productivity. In 1998, asset-based products and services accounted
for 39% of VMS' total revenues (after Fleet Costs), while fee-based products and
services accounted for the remaining 61%. At December 31, 1998, VMS had
approximately 780,000 vehicles under management and over 3.6 million fuel and
maintenance cards outstanding (accounting for over $5.4 billion of fuel and
maintenance purchases in 1998). At December 31, 1998, VMS' automotive fleet
consisted of approximately 354,000 leased vehicles worldwide, 85% of which were
leased subject to open-ended leases under which the customer bears substantially
all of the vehicle residual risk. VMS' lease and card portfolios have
experienced low historical default rates as a result of the strong credit
quality of its customer base and VMS' credit underwriting procedures. For the
three months ended March 31, 1999, VMS generated total revenues of $400.3
million.
As a result of the VMS Acquisition, we are a leading worldwide provider of
automotive transportation and vehicle management solutions. Pro forma for the
VMS Acquisition, we believe that we hold the following market positions, based
on reported units:
GENERAL-USE CAR RENTALS
- #2 worldwide
- #2 in the United States
- #1 in Australia and New Zealand
VEHICLES UNDER MANAGEMENT(1)
- #2 in the United States
- #1 in the United Kingdom
FUEL AND MAINTENANCE CARDS(2)
- #1 in the United States
- #1 in the United Kingdom
- ------------------------
(1) Includes leased vehicles and vehicles for which third-party vehicle-related
services are provided, which are comparable to those provided by VMS.
(2) Includes cards for third parties in which VMS acts as processor.
For the six months ended June 30, 1999, pro forma for the Transactions (as
defined), we would have generated total revenues of $2.0 billion.
BUSINESS STRATEGY
Our strategy is to be the world's leading provider of comprehensive
automotive transportation and vehicle management solutions by concentrating on
the following key elements:
- INTEGRATE VMS AND AVIS AND CAPITALIZE ON SYNERGIES AND CROSS-SELLING
OPPORTUNITIES. The combination of the strong rental car franchise of Avis,
with its strength in the corporate market, and the vehicle leasing and
management expertise of VMS should result in significant opportunities to
expand the complementary businesses of Avis and VMS across their
respective customer bases. Avis' and VMS' common strengths should provide
a significant opportunity to provide a one-stop shop of comprehensive
automotive transportation and vehicle management solutions that can be
cross-sold. As an example, the
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integration of Avis' Small Account Telesales efforts with VMS' fuel card
operations will permit New Avis to more efficiently penetrate the highly
profitable small-fleet fuel card market. The combination of Avis' small
and medium-sized company relationships and VMS' technology platform should
enable New Avis to penetrate the profitable, yet largely unpenetrated,
smaller-fleet leasing market. We expect to develop additional synergies in
the areas of information technology, sales, insurance, fleet purchasing
and disposition, operations, human resources, marketing and
administration.
- CAPITALIZE ON ADDITIONAL EXPANSION OPPORTUNITIES.Historically, Avis has
capitalized on its network of airport locations by focusing its sales and
marketing resources principally on business travelers. We believe that
Avis' established presence at the leading airports in the United States
provides us with an opportunity to capture a greater share of the leisure
market. Moreover, Avis is expanding its presence in the suburban market
and intends to enter the vehicle replacement market (which Avis will be
permitted to enter on a nationwide basis after expiration of a non-compete
agreement in June 2000). In addition, management estimates that in 1998,
approximately 61% of the combined U.S. and Canadian and a significant
portion of the U.K. and German vehicle leasing markets were unserved by
third party vehicle management companies, providing a significant
opportunity to capture share in unpenetrated markets. In addition,
approximately 45% of the U.S. and U.K. fueling markets remain unpenetrated
by fuel card providers. Management believes that the foregoing will
provide New Avis with strong opportunities to capture additional share in
each of its target markets as a leading provider of automotive
transportation and vehicle management solutions.
- LEVERAGE STRENGTHS IN TECHNOLOGY. We intend to apply our extensive
technology and information processing capabilities to take advantage of
current trends in the car rental and vehicle management industries. We
believe that customers in the domestic car rental industry are focusing
increasingly on brand loyalty, while at the same time our customer base
has become increasingly diverse. We plan to use the Avis System's
proprietary management information applications, enhanced by VMS'
capabilities in real-time data access, to provide customers with
customized information and services. We also plan to use our technology to
identify key operating characteristics among our customers in order to
optimize our business mix. Additionally, as corporations of all sizes in
North America and Europe continue to outsource vehicle management, we will
leverage our strong technological capabilities to increase our array of
services, improve customer service and develop products and services at
reduced costs to appeal to smaller fleet owners that previously could not
justify the cost of outsourcing their vehicle management needs. In
addition, we expect to increase customer loyalty as our technology-based
services become an integral part of our customers' operations.
- DEVELOP NEW PRODUCTS AND SERVICES FOR TARGET MARKETS. In addition to our
existing asset-based and fee-based products and services, we will seek to
develop a broad range of new products and services designed to further
penetrate our existing customer base, expand our presence in international
markets, and penetrate other, previously underserved, markets such as
smaller corporate fleets and leisure travelers. Among the new products and
services that we will consider offering are: (i) a customized leisure pass
which combines Avis' rental cars with VMS' value-added services marketed
to the leisure traveler; (ii) expanding VMS into Australia and New Zealand
by leveraging Avis' existing infrastructure; and (iii) offering prepaid
fuel cards to retail and corporate customers.
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- CONTINUE TO DEVELOP CORE BUSINESS OPPORTUNITIES AT AVIS AND VMS. While
seeking to realize revenue enhancing and cost saving synergies between
Avis and VMS, management of New Avis intends to continue focusing on the
development of each business' core market opportunities.
- Within Avis, such opportunities include: (i) capitalizing on changing
rental car industry dynamics; (ii) improving business mix and fleet
utilization; (iii) increasing brand loyalty through target marketing; and
(iv) developing Avis' suburban program.
- Within VMS, such opportunities include: (i) cross-selling PHH North
America and PHH Europe non-card products to VMS' extensive base of fuel
and maintenance cardholders; (ii) further developing the "One Card"
co-branded corporate card program to capture a greater share of corporate
travel and entertainment expenditures; (iii) further penetrating both the
small and large vehicle leasing markets; (iv) expanding into underserved
markets in Europe; and (v) developing new revenue opportunities based on
enhancements to the services provided by VMS' technology platform.
AVIS
INDUSTRY OVERVIEW
U.S. CAR RENTAL INDUSTRY. The U.S. car rental industry, which includes
short-term car and truck rentals for business and retail customers at both
airport and non-airport locations, was a $17.2 billion industry in 1998 based
on revenues, and has grown at a compound annual growth rate, or CAGR, of 11.1%
from 1985 to 1998. The U.S. airport market accounted for $6.3 billion of these
revenues. Ancillary products offered in addition to vehicle rentals include
refueling services, loss damage waivers and used vehicle sales. Industry
sources estimate that the U.S. car rental industry will continue to grow,
principally due to continued increases in airline passenger traffic, the trend
toward shorter, more frequent vacations resulting from the increased number of
households with two wage earners, the demographic trend toward older, more
affluent Americans who travel more frequently, and increased business travel.
Prior to 1996, the major car rental companies were each affiliated with
automobile manufacturers and served as outlets through which the manufacturers
disposed of their excess vehicles. This resulted in an oversupply of cars in
the rental industry, a lack of infrastructure development and poor financial
performance among car rental companies. In the 1996 Acquisition, Avis Inc.,
the predecessor to the Franchisor, was acquired by Cendant. The 1996
Acquisition was followed by AutoNation, Inc.'s purchase of both Alamo and
National and the purchase of Brac-Opco Inc. by Budget. In 1997, Hertz and
Dollar Thrifty Automotive Group, Inc. both completed initial public offerings.
Also in 1997, Avis Rent A Car issued shares to the public in the IPO, with
Cendant retaining approximately 21%. Significant changes have occurred in the
car rental industry as a result of these shifts in ownership, with the
industry now characterized by more rational pricing, better vehicle management
and improved service and facilities. For example, while industry revenue grew
10.3% in 1998, total fleet size increased only 2%, a reflection of improved
vehicle management practices by industry participants. Management believes
that these changes resulted in improved profitability for the car rental
industry in 1998.
RENTAL OPERATIONS
GENERAL. Avis' fleet includes various categories of automobiles, most of
which are of the current and immediately preceding model years. Rentals are
generally made on a daily, weekend, weekly or monthly basis. Rental charges in
the United States usually are computed on the basis of the duration of the
rental and may include a mileage charge and vary based upon vehicle category,
the day on which the rental begins and local competition and cost factors.
Additional
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charges are made for optional refueling services, loss damage waivers (a
waiver of Avis' right to make a renter pay for damage to the vehicle),
concession fee recovery, personal accident insurance, personal effects
protection, optional products such as cellular phones, child seats and ski
racks and, in some instances, additional liability insurance. Most rentals are
made utilizing rate plans under which the customer is responsible for gasoline
used during the rental. Avis also generally offers customers the convenience
of leaving a rented vehicle at an Avis location in a city other than the one
in which it was rented under Avis' "Rent it Here-Leave it There" program,
although, consistent with industry practices, a drop-off charge or special
intercity rate may be imposed.
UNITED STATES OPERATIONS. At June 30, 1999, Avis operated 539 vehicle
rental facilities at airport, near-airport and downtown locations throughout
the United States. During 1998, approximately 85% of Avis' U.S. revenue was
generated at 208 airports in the United States with the balance generated at
Avis' 331 non-airport locations. Avis' emphasis on airport traffic has
resulted in a particularly strong rental revenue market position at the major
U.S. airports.
At most airports, Avis is one of five to seven vehicle rental
concessionaires. In general, concession fees for airport locations are based
on a percentage of total concessionable revenues (as determined by each
airport location), subject to a minimum guaranteed amount. Concessions are
typically awarded by airport authorities every three to five years based upon
competitive bids. As a result of airport authority requirements as to the size
of the minimum guaranteed fee, smaller vehicle rental companies generally are
not located at airports. Avis' concession arrangements with the various
airport authorities generally include minimum requirements for vehicle age,
operating hours and employee conduct, and provide for relocation in the event
of future construction and abatement of fees in the event of extended low
passenger volume.
INTERNATIONAL OPERATIONS. Avis operates in Canada, Puerto Rico, the U.S.
Virgin Islands, Argentina, Australia and New Zealand. Avis' operations in
Canada, Australia and New Zealand were the principal contributors of revenue,
accounting for 88% of international revenue in 1998. Revenue from
international operations in 1998 was approximately $235.6 million. Avis holds
a solid market position in each of the countries in which it operates. In
terms of revenue, the operations in Australia and New Zealand are the largest
in their respective markets.
AVIS SYSTEM AND WIZARD SYSTEM SERVICES
As a participant in the Avis System, Avis has the benefits of a variety of
services, including:
- comprehensive safety initiatives, including the "Avis Cares" Safe Driving
Program, which offers vehicle safety information, directional assistance
such as satellite guidance, regional maps, weather reports and
specialized equipment for travelers with disabilities;
- standardized system-identity for rental location presentation and
uniforms;
- training programs and business policies, quality of service standards and
data designed to monitor service commitment levels;
- marketing/advertising/public relations support for national consumer
promotions including Frequent Flyer/Frequent Stay programs and the Avis
on-line Internet website; and
- brand awareness of the Avis System through the familiar "We try harder"
service announcements.
Under a long-term computer services agreement, ARACS, like other Avis
System franchisees, is provided with access to the Wizard System, a
reservations, data processing and information management system for the
vehicle rental business. The Wizard System is linked to all major travel
networks on six continents through telephone lines and satellite
communications. Direct
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access with other computerized reservations systems allows real-time
processing for travel agents and corporate travel departments. Among the
principal features of the Wizard System are:
- an advanced graphical interface reservation system;
- "Roving Rapid Return", which permits customers who are returning vehicles
to obtain completed charge records from radio-connected "Roving Rapid
Return" agents who complete and deliver the charge record at the vehicle
as it is being returned;
- "Preferred Service", an expedited rental service that provides customers
with a Preferred Service rental record printed in their pre-assigned
vehicle and a fast convenient check-out;
- "Wizard on Wheels", which enables the Avis System locations to assign
vehicles and complete rental agreements while customers are being
transported to the vehicle;
- "Flight Arrival Notification", a flight arrival notification system that
alerts Avis' rental location when flights have arrived so that vehicles
can be assigned and paperwork prepared automatically;
- "Avis Link", which automatically identifies the fact that a user of a
major credit card is entitled to special rental rates and conditions, and
therefore sharply reduces the number of instances in which Avis
inadvertently fails to give renters the benefits of negotiated rate
arrangements to which they are entitled;
- interactive interfaces through third-party computerized reservation
systems described under "--Marketing"; and
- sophisticated automated ready-line programs that, among other things,
enable rental agents to ensure that a customer who rents a particular
type of vehicle will receive the available vehicle of that type which has
the lowest mileage.
In 1998, the Wizard System enabled Avis to process approximately 30
million incoming customer calls, during which customers inquired about
locations, rates and availability and placed or modified reservations. In
addition, millions of inquiries and reservations come to Avis through travel
agents and travel industry partners, such as airlines. The Wizard System is
designed to provide information as to vehicle availability and rates as well
as personal profile information in an accurate and timely manner.
MANAGEMENT INFORMATION SYSTEMS
Avis also uses data supplied from the Wizard System and airline
reservation systems in certain proprietary management information systems to
maintain centralized control of major business processes such as fleet
acquisition and logistics, sales to corporate accounts and determination of
rental rates. The principal components of the systems Avis employs include:
- FLEET PLANNING MODEL. Avis has created a comprehensive decision tool to
develop fleet plans and schedules for the acquisition and disposition of
Avis' fleet, along with fleet age, mix, mileage and cost reports based
upon these plans and schedules. This tool allows management to monitor
and change fleet volume and composition on a daily basis and to develop
the lowest cost fleet alternative based on business levels and available
Repurchase Programs.
- YIELD MANAGEMENT. Avis has also created a yield management system which
is designed to maximize profits by providing greater control of vehicle
availability and rate availability changes at its rental locations. The
system monitors and forecasts supply and demand to result in a
combination of rentals that will improve the return over time at each
location. Integrated into this yield management system is a fleet
distribution module that takes into
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consideration the costs as well as the potential benefits associated with
distributing vehicles to various rental locations within a geographic
area to accommodate rental demand at these locations. The fleet
distribution module makes specific recommendations for movement of
vehicles between locations.
- PRICING DECISION SUPPORT SYSTEM. Pricing in the vehicle rental industry
is highly competitive and complex. To improve Avis' ability to respond to
rental rate changes in the marketplace, Avis has developed sophisticated
systems to gather and report competitive industry rental rate changes
every day. The system, using data from third-party reservation systems as
its source of information, automatically scans rate movements and reports
significant changes to a staff of pricing analysts for evaluation. The
system greatly enhances Avis' ability to gather and respond to rate
changes in Avis' markets.
- BUSINESS MIX MODEL. Avis has also developed a strategic planning model to
evaluate the discrete segments of its business relative to each other.
The model considers revenues and costs to determine the potential margin
contribution of each discrete segment. The model develops business mix
and fleet optimization recommendations by using data from Avis' financial
systems, the Wizard System and the fleet and revenue management systems
along with management's objectives and targets.
- PROFITABILITY MODEL. Avis has developed a sophisticated model which
blends a corporate customer's rentals into a pattern that determines
fleet costs by developing a profile of the corporate customer's
utilization. The model also combines local operations costs with division
overhead expenses with a resulting benchmark profitability which is used
to determine the financial merit of individual corporate accounts.
- SALES AND MARKETING SYSTEM. Avis has also developed a sophisticated
system of on-line data screens which enables Avis' sales force to analyze
key account information of Avis' corporate customers including historical
and current rental activity, revenue and booking sources, top renting
locations, rate usage categories and customer satisfaction data. Avis
uses this information, which is updated weekly and captured on a
country-by-country basis, to determine opportunities for revenue growth,
profitability and improvement.
FLEET ACQUISITION AND MANAGEMENT
FLEET PURCHASING. Avis participates in a variety of vehicle purchase
programs with major domestic and foreign manufacturers, principally GM,
although actual purchases are made directly through franchised dealers. The
average price for automobiles Avis purchased in 1998 for Avis' U.S. rental
fleet was approximately $17,895. For the 1998 model year, approximately 80% of
new vehicle purchases were GM vehicles, 9% were Chrysler vehicles and the
remaining 11% were a combination of Toyota, Nissan, Subaru, Ford, Mazda and
Suzuki vehicles. In model year 1999, approximately 87% of Avis' fleet in the
United States will consist of GM vehicles, approximately 6% will be Chrysler
vehicles and the balance will be provided by other manufacturers.
Manufacturers' vehicle purchase programs sometimes provide Avis with sales
incentives for the purchase of certain models, and most of these programs
allow Avis to serve as a drop-ship location for vehicles, thus enabling Avis
to receive a fee from the manufacturers for preparing newly purchased vehicles
for use. With regard to, Avis' international operations, vehicles are acquired
through negotiated arrangements with local manufacturers and dealers using
operating leases or Repurchase Programs.
Under the terms of Avis' agreement with GM, which expires at the end of
GM's model year 2002, Avis is required to purchase at least 188,000 GM
vehicles for model year 1999 and maintain at least 51% GM vehicles in Avis'
U.S. fleet at all times. The GM Repurchase Program is available for all
vehicles purchased pursuant to this agreement.
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IMPACT OF SEASONALITY. Avis' business is subject to seasonal variations
in customer demand, with the summer vacation period representing the peak
season for vehicle rentals. This general seasonal variation in demand, along
with more localized changes in demand at each of Avis' operations, causes Avis
to vary its fleet size over the course of the year. In 1998, Avis' average
monthly fleet size ranged from a low of 187,000 vehicles in January to a high
of 231,000 vehicles in July. Fleet utilization, which is based on the number
of hours vehicles are rented compared to the total number of hours vehicles
are available for rental, ranged from 66% in December 1998 to 83% in August
1998 and averaged 75% for all of 1998.
VEHICLE DISPOSITION. Avis' current operating strategy is to hold vehicles
for less than 12 months with the average fleet age being less than six months.
Approximately 99% of the vehicles purchased for Avis' domestic fleet during
the 1998 model year, including most GM vehicles, were eligible for Repurchase
Programs. These programs impose certain return conditions, including those
related to mileage and repair condition over specified allowances. Less than
3.5% of the Repurchase Program vehicles purchased by Avis and returned in 1998
were ineligible for return. Upon return of a Repurchase Program vehicle, Avis
receives a price based on the capitalized cost of the vehicle less an agreed
upon depreciation factor and in certain cases, an adjustment for damage and/or
excess mileage and is thereby protected from a decrease in prevailing used car
prices in the wholesale market. Avis also disposes of used vehicles that are
not covered by Repurchase Programs to dealers in the United States through
informal arrangements or at auctions. The future percentage of Repurchase
Program vehicles in Avis' fleet will depend on the availability of Repurchase
Programs, over which Avis has no control.
MAINTENANCE. Avis places a strong emphasis on vehicle maintenance since
quick and proper repairs are critical to fleet utilization. To accomplish this
task Avis employs two full-time National Institute for Automotive Service
Excellence ("ASE") fully certified technician instructors at Avis'
headquarters. These instructors have developed a specialized training program
for Avis' 350 technicians who operate 87 repair centers. The technicians also
maintain a strong relationship with General Motors Service Technology Group.
Avis uses advanced diagnostic equipment including GM's "Techline" and "Tech 2"
diagnostic computers. Avis' technician training department also prepares its
own technical service bulletins that can be retrieved electronically at all of
Avis' repair locations. Approximately 80% of Avis' technicians are ASE
certified.
MARKETING
UNITED STATES. In the United States, approximately 77% of Avis' 1998
rental transactions were generated by travelers who used the Avis System under
contracts between Avis and their employers or organizations of which they were
members. Avis' corporate sales organization is the principal source of
contracts with corporate accounts. Unaffiliated business travelers are
solicited by direct mail, telesales and advertising campaigns. Avis' telesales
department consists of a centralized staff that handles small corporate
accounts, travel agencies, meetings, conventions, tour operators and
associations. Working with an advanced system in Tulsa, Oklahoma, the
telesales operation produced revenue for the Avis System that exceeded $325
million in 1998.
Avis solicits contractual arrangements with corporate accounts by
emphasizing the advantages of the Wizard System. The Wizard System plays a
significant part in securing business of this type because it enables Avis to
offer a wide variety of rental rate combinations, special reports and tracking
techniques tailored to the particular needs of each account, access to a
worldwide rental network and assurance of adherence to agreed-upon rates.
Avis' presence in the leisure market is substantially less than Avis'
presence in the business market. Leisure rental activity is important in
enabling Avis to balance the use of Avis' fleet. Typically, business renters
use vehicles from Monday through Thursday, while in most areas of
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the United States leisure renters use vehicles primarily over weekends. Avis'
concentration on serving business travelers has led to excess capacity from
Friday through Sunday of most weeks. Avis intends to increase Avis' leisure
market penetration by capitalizing on Avis' strength at airports and by
increased focusing of Avis' marketing efforts toward leisure travelers. An
important part of Avis' leisure marketing strategy is to develop and maintain
contractual arrangements with associations that provide member benefits to
their constituents. In addition to developing arrangements with traditional
organizations, Avis has created innovative programs such as the Affinity Link
Program which cross-references credit card numbers with Avis Worldwide
identification numbers and provides discounts to the cardholders for
participating credit card programs. Avis also uses coupons in dine-out books
and provides discounts to members of shopping and travel clubs. These programs
generated approximately $61 million of leisure business revenue for Avis in
1998. Preferred supplier agreements with select travel agencies and contracts
with tour operators have also succeeded in generating leisure business for
Avis.
Travel agents can make Avis System reservations through all four major
U.S. based global distribution systems and several international based
systems. Users of the U.S. based global distribution systems can obtain access
through these systems to Avis' rental locations, vehicle availability and
applicable rate structures. An automated link between these systems and the
Wizard System gives travel agents the ability to reserve and confirm rentals
directly through these systems. Avis also maintains strong links to the travel
industry. Avis has arrangements with frequent traveler programs of airlines
such as Delta Air Lines Inc., American Airlines Inc., Continental Airlines
Inc., United Air Lines Inc. and Trans World Airlines Inc., and with hotels
including the Hilton Hotels Corporation, Hyatt Hotels Corporation, Best
Western International Inc., and Starwood Hotels and Resorts. These
arrangements provide various incentives to all program participants and
cooperative marketing opportunities for Avis and the partner. Avis also has an
arrangement with Cendant whereby lodging customers who are making reservations
by telephone will be transferred to Avis if they desire to rent a vehicle.
INTERNATIONAL. Avis utilizes a multi-faceted approach to sales and
marketing throughout Avis' global network. In Avis' principal international
operations, Avis employs teams of trained and qualified account executives to
negotiate contracts with major corporate accounts and leisure and travel
industry partners. In addition, Avis utilizes centralized telemarketing and
direct mail initiatives to broaden Avis' customer base. Avis' sales efforts
are designed to secure customer commitment and support customer requirements
for both domestic and international car rental needs.
Avis' international sales and marketing activities promote Avis'
reputation for delivering a high quality of service, contract rates,
competitive pricing and customer benefits from special services such as
Preferred Service, Roving Rapid Return and other benefits of the Wizard
System.
Avis' international operations maintain close relationships with the
travel industry including participation in several airline frequent flyer
programs, such as those operated by Air Canada Inc., British Airways Plc,
Deutsche Lufthansa AG, Ansett Airlines (Australia), and Varig Brazilian
Airlines.
COMPETITION
The vehicle rental industry is characterized by intense price and service
competition. In any given location, Avis may encounter competition from
national, regional and local companies, many of which, particularly those
owned by the major automobile manufacturers, have greater financial resources
than New Avis will. Avis' principal competitors for commercial accounts in the
United States are Hertz and National. Avis' principal competitors for
unaffiliated business and
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leisure travelers in the United States are Budget, Hertz and National, and,
particularly with regard to leisure travelers, Alamo and Dollar. In addition,
Avis competes with a variety of smaller vehicle rental companies throughout
the country.
Competition in the U.S. vehicle rental business is based primarily upon
price, reliability, ease of rental and return and other elements of customer
service. In addition, competition is influenced strongly by advertising and
marketing. New Avis believes that it will be capable of competing for
virtually all aspects of the vehicle rental business, except the insurance
replacement vehicle business (in which Avis has agreed not to engage in
certain markets until June 13, 2000 pursuant to an agreement relating to the
sale of Avis' replacement vehicle rental business). In part because of the
Wizard System, Avis has been particularly successful in competing for
commercial accounts.
There have been many occasions during the history of the vehicle rental
industry in which all of the major vehicle rental companies have been
adversely affected by severe industry-wide rental rate cutting, and Avis has,
on such occasions, lowered its rates in response to such rate cutting.
However, during the past two years, industry-wide rates have increased,
reflecting, in part, both increased costs of owning and maintaining vehicles
and the need to generate returns on invested capital. Management believes that
the effects of any similar fluctuations will be mitigated as a result of the
VMS Acquisition since VMS' business is not subject to such industry dynamics.
INSURANCE
Avis generally assumes the risk of liability to third parties arising from
vehicle rental services in the United States, Canada, Puerto Rico and the U.S.
Virgin Islands, for up to $1.0 million per occurrence, through a combination
of certificates of self-insurance, insurance coverage provided by a
wholly-owned insurance subsidiary, Pathfinder Insurance Company
("Pathfinder"), and insurance coverage secured from unaffiliated domestic
insurance carriers. Avis maintains additional insurance with unaffiliated
carriers in excess of $1.0 million up to $200.0 million per occurrence. In
addition, Avis provides claims management services from its headquarters in
New York to all of its locations in the United States, Canada, Puerto Rico and
the U.S. Virgin Islands.
Avis insures the risk of liability to third parties in Argentina,
Australia and New Zealand through a combination of unaffiliated carriers and
Global Excess & Reinsurance, Ltd., a wholly-owned subsidiary established under
the laws of Bermuda ("Global Excess"). These carriers provide coverage
supplemental to minimum local requirements.
Under Avis' standard rental contract in most states, Avis provides renters
primary automobile liability coverage up to the minimum financial
responsibility limits required by applicable law. In many states, the renters'
insurance is primary and in the States of California and Texas, Avis does not
provide automobile liability coverage for the renter. Higher limits are
provided to some United States national corporate accounts and, for an
additional daily charge, renters may participate in a group policy of
"Additional Liability Insurance" underwritten by Continental Casualty Co. (CNA
Group), which increases renters' liability coverage up to $1.0 million. Avis
also offer renters, for additional daily charges, "Personal Accident
Insurance", which pays medical expenses and accidental death benefits for
accidents during the rental period, and "Personal Effects Protection", which
insures against loss or damage to the renters' personal belongings during the
rental period. Coverages are underwritten by Gulf Insurance Company. In order
to capture a portion of the premiums in respect of these coverages, Avis Rent
A Car's wholly-owned subsidiary, Constellation Reinsurance Company Limited
("Constellation"), an insurance company established under the laws of
Barbados, reinsures such coverages.
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REGULATORY MATTERS
Avis is subject to federal, state and local laws and regulations including
those relating to taxing and licensing of vehicles, franchising, consumer
credit, environmental protection, retail vehicle sales and labor matters. The
principal environmental regulatory requirements applicable to Avis' operations
relate to the ownership or use of tanks for the storage of petroleum products,
such as gasoline, diesel fuel and waste oils; the treatment or discharge of
waste waters; and the generation, storage, transportation and off-site
treatment or disposal of solid or liquid wastes. Avis operates 245 locations
at which petroleum products are stored in underground or above-ground tanks.
Avis has instituted an environmental compliance program designed to maintain
compliance with applicable technical and operational requirements, including
the replacement of underground steel tanks and periodic testing of underground
storage tanks. Avis believes that the locations where it currently operates
are in compliance, in all material respects, with such regulatory
requirements.
New Avis may also be subject to requirements related to the remediation
of, or the liability for remediation of, substances that have been released to
the environment at properties owned or operated by New Avis or at properties
to which New Avis sends substances for treatment or disposal. Such remediation
requirements may be imposed without regard to fault, and liability for
environmental remediation can be substantial.
New Avis may be eligible for reimbursement or payment of remediation costs
associated with future releases from its regulated underground storage tanks.
Certain of the states in which Avis maintains underground storage tanks have
established funds to assist in the payment of remediation costs for releases
from certain registered underground tanks. Subject to certain deductibles, the
availability of funds, compliance status of the tanks and the nature of the
release, these tank funds may be available to New Avis for use in remediating
future releases from tank systems.
A traditional revenue source for the vehicle rental industry has been the
sale of loss damage waivers, by which rental companies agree to relieve a
customer from financial responsibility arising from vehicle damage incurred
during the rental period. Approximately 3.3% of Avis' revenue during 1998 was
generated by the sale of loss damage waivers. The U.S. Congress has from time
to time considered legislation that would regulate the conditions under which
loss damage waivers may be sold by vehicle rental companies. Approximately 40
states have considered legislation affecting the loss damage waivers. To date,
24 states have enacted legislation which requires disclosure to each customer
at the time of rental that damage to the rented vehicle may be covered by the
customer's personal automobile insurance and that loss damage waivers may not
be necessary. In addition, in the late 1980's, New York enacted legislation
which eliminated Avis' right to offer loss damage waivers for sale and limited
potential customer liability to $100. California and Nevada have capped rates
that may be charged for loss damage waivers at $9.00 and $10.00 per day,
respectively. Texas requires that the rate charged for loss damage waivers be
reasonably related to the direct cost of the repairs. In Illinois, Avis is
permitted to sell loss damage waivers at fixed rates. If, however, the
customer elects not to purchase the loss damage waiver, the customer's
liability is limited to $9,000 unless the customer violates the prohibited use
terms of the rental agreement, in which case the customer is liable for the
fair market value of the vehicle or the cost of the repairs, whichever is
less. Adoption of national or additional state legislation affecting or
limiting the sale of loss damage waivers could result in the loss of this
revenue source and additional limitations on customers' liability could
increase Avis' costs.
Avis is also subject to regulation under the insurance statutes, including
insurance holding company statutes, of the jurisdictions in which Avis'
insurance company subsidiaries are
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domiciled. These regulations vary from state to state, but generally require
insurance holding companies and insurers that are subsidiaries of insurance
holding companies to register and file certain reports including information
concerning their capital structure, ownership, financial condition and general
business operations with the state regulatory authority, and require prior
regulatory agency approval of changes in control of an insurer and
intercorporate transfers of assets within the holding company structure.
Pathfinder, as a licensed stock insurance company in the State of
Colorado, is subject to the applicable rules and regulations of the Colorado
Insurance Department. The Colorado Insurance Law provides that no person may
acquire control of Avis Rent A Car, and thus indirect control of Pathfinder,
unless it has obtained prior approval of the Colorado Insurance Commissioner
for such acquisition. "Control" is generally presumed to exist through the
ownership of 10% or more of the voting securities of a Colorado domestic
insurance company or of any company which controls a Colorado domestic
insurance company. Any purchaser of 10% or more of Avis Rent A Car's
outstanding voting equity would be presumed to have acquired control of it,
unless such presumption is rebutted by a showing that such control does not in
fact exist. Accordingly, any purchase of voting equity representing 10% or
more of Avis Rent A Car's voting power would require prior approval by the
Colorado Insurance Department.
Global Excess is subject to Bermuda Insurance Laws, which require Global
Excess to file a Bermuda statutory financial return in the form prescribed by
Bermuda Insurance Laws. Any transfer of shares of Global Excess by Avis will
require the approval of the Bermuda Monetary Authority, Foreign Exchange
Control. In addition, Constellation is required to file an annual financial
return in accordance with Barbados Insurance Regulations.
The payment of dividends to Avis by Avis' insurance company subsidiaries,
Pathfinder, Global Excess and Constellation, are restricted by government
regulations in Colorado, Bermuda and Barbados affecting insurance companies
domiciled in those jurisdictions.
EMPLOYEES
Avis has approximately 19,000 employees worldwide, of whom approximately
18,000 serve in various capacities at its rental locations, with the balance
engaged in executive, financial, sales and marketing, and administrative
capacities. Approximately one-third of Avis' employees are represented by
various unions under contracts expiring at various dates. No local union
represents more than 3.5% of Avis' employees. Avis believes its relationships
with its employees are good.
PROPERTIES
Avis leases or has concessions relating to space at 507 locations in the
United States and 161 locations outside the United States. Of those locations,
208 in the United States and 67 outside the United States are at airports.
Typically, an airport receives a percentage of vehicle rental revenues, with a
guaranteed minimum. Because there is a limit to the number of vehicle rental
locations in an airport, vehicle rental companies frequently bid for the
available locations, usually on the basis of the size of the guaranteed
minimums. Avis and other vehicle lease firms also lease parking space at or
near airports and at their other vehicle rental locations.
Avis leases almost all of its vehicle rental facilities. The airport
facilities are located on airport property owned by airport authorities or
located near the airport in locations convenient for bus transport of
customers to and from the airport. Avis' airport locations serve as the
administrative headquarters for Avis' non-airport locations nearest to those
airport locations and, as a general rule, each airport location includes
vehicle storage areas, a vehicle maintenance facility, a car wash, a refueling
station and rental and return facilities. Avis' non-airport facilities
generally consist of a limited parking facility as well as a rental and return
counter and are often subject to long-term leases with renewal options.
Certain of these leases also have purchase options at the end of their terms.
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Avis' principal offices are in Garden City, New York where it leases
approximately 250,000 square feet under a sublease agreement with Cendant
through the year 2015. The Avis reservation system is operated by Cendant from
leased space in Tulsa, Oklahoma, where we sublease for certain marketing
activities. Avis maintains terminal network facilities which Avis uses in
connection with the Wizard System in Garden City and Tulsa. Avis also leases
approximately 58,000 square feet in a building owned by Cendant in Virginia
Beach, Virginia that serves as a satellite administrative and reservation
facility.
LEGAL MATTERS
From time to time, Avis is subject to routine litigation incidental to its
business. Avis maintains insurance policies that cover most of the actions
brought against it. Avis is not currently involved in any legal proceeding which
Avis believes would have a material adverse effect upon its financial condition
or results of operations.
VMS
INDUSTRY OVERVIEW
VEHICLE LEASING INDUSTRY. Management estimates that corporations in the
United States, Canada, the United Kingdom and Germany (the markets in which VMS
currently competes) made expenditures of over $125 billion in 1998 with respect
to their vehicle fleets for depreciation and interest, management and
operations. These expenditures are driven by growth in the number of vehicles
operated by these companies. The U.S., Canadian, U.K. and German vehicle leasing
markets are highly fragmented. Management estimates that in 1998, approximately
61% of the combined U.S. and Canadian and a significant portion of the U.K. and
German vehicle leasing markets were unserved by third-party fleet management
companies, which we believe indicates a significant market opportunity.
Management believes that growth in the third-party vehicle leasing industry is
principally driven by a general trend toward outsourcing. As companies focus on
their core competencies and competition drives corporate cost reduction efforts,
we believe that they are more likely to rely on third-party fleet management
companies.
FUEL CARD INDUSTRY. Management estimates that corporate vehicle fleets in
the United States, Canada, the United Kingdom and Germany (the markets in which
VMS currently competes) made fuel expenditures of over $85 billion in 1998. The
growth of the fuel card industry has been driven by corporations seeking to
control costs and monitor corporate credit card usage. Technological advances
have enabled fuel card providers to penetrate this market with point-of-sale
networks, information management products and enhanced customer services. With
increased competition, major oil companies are further driving growth in the
industry by accepting independent fuel cards in addition to their own private
label cards. We believe that significant expansion opportunities remain, as
management estimates that approximately 45% of both the U.S. and U.K. fueling
markets remain unpenetrated by fuel card providers. In addition, many major oil
companies outsource their private label fuel card processing services to
third-party processors.
PRODUCTS AND SERVICES
VMS' vehicle management services are divided into two principal categories:
(1) asset-based products and services and (2) fee-based products and services.
Asset-based products are the services clients require to acquire, lease and
dispose of a vehicle. VMS leases more than 350,000 units on a worldwide basis
through both open-end and closed-end lease structures. As is market convention,
financing of the vehicle leases is directly linked to several other asset-based
products and services, such as vehicle acquisition, title and registration,
vehicle remarketing, and vehicle management consultation, including fleet policy
and vehicle recommendation.
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Fee-based products are designed to allow clients to effectively manage costs
and enhance driver productivity. VMS' main fee-based products are fuel services,
maintenance services and accident management. VMS also offers a variety of other
fee-based vehicle management products and services, including
acquisition/remarketing of non-leased vehicles under management, vehicle
management outsourcing, and miscellaneous fee-based services. In 1998, VMS bore
the credit risk with respect to 95% of its total fuel card charge volume and
100% of its maintenance card charge volume. Customer defaults in 1998 as a
percentage of total VMS billings were approximately 0.06%. Payments in respect
of fuel cards and maintenance cards are generally due within 15 to 30 days of
billing.
Leasing and directly-related products and services are frequently combined
with other related fee-based products and services such as accident management,
vehicle maintenance cards and fuel cards. Through use of these related services,
customers (1) receive access to VMS' broad network of vehicle-related suppliers
and (2) are able to access comprehensive information on total fleet operating
costs and characteristics, enabling better management of total fleet operations.
VMS frequently cross-sells its asset-based and fee-based products and services.
Management estimates that approximately 65% of North American and 100% of U.K.
leasing customers use at least one fee-based product or service.
The following chart sets forth the products and services provided by VMS
through PHH North America, PHH Europe and WEX:
<TABLE>
<CAPTION>
PHH
NORTH AMERICA PHH EUROPE WEX
--------------------- ------------------- -----
<S> <C> <C> <C>
ASSET-BASED
Vehicle Leasing.......................................................... X X
Vehicle Acquisition...................................................... X X
Vehicle Remarketing...................................................... X X
Fleet Management Consultation............................................ X X
Title and Registration Services.......................................... X X
FEE-BASED
Fuel Cards and Related Services.......................................... X X X
Maintenance Cards and Related Services................................... X X X
Accident Management Services............................................. X X X
Vehicle Acquisition/Disposition.......................................... X X
Data Polling/Loyalty..................................................... X
Directed Vehicle Rental.................................................. X X
Fleet Administration..................................................... X X
Customized Expense Reporting............................................. X X
Re-titling and Re-registration........................................... X X
</TABLE>
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The following charts set forth, for each of PHH North America, PHH Europe
and WEX, the percentage of 1998 net revenues (after Fleet Costs with respect to
PHH North America and PHH Europe) attributable to asset-based and fee-based
services:
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PHH NORTH AMERICA PHH EUROPE WRIGHT EXPRESS
<S> <C> <C> <C> <C> <C>
Fee-Based 31% 16% 0%
Asset-Based 69% 84% 100%
</TABLE>
ASSET-BASED PRODUCTS AND SERVICES
VEHICLE LEASING
Vehicle leases can be either open-end or closed-end. Open-end leases can be
structured on either a fixed rate or floating rate basis (where the interest
component of the lease payment changes month to month based upon an index)
depending upon client preference. Open-end leases are typically structured with
a 12 month minimum lease term, with month to month renewals thereafter. Open-end
leases are typically pursuant to a contract whereby VMS agrees to lease vehicles
to a customer in exchange for an interest markup and a separate monthly
management fee that covers a variety of related services (e.g., vehicle
remarketing, title and registration, etc.). The residual risk on the value of
the vehicle at the end of the lease term remains with the lessee under an
open-end lease, except for a small amount which is retained by VMS. The average
open-end leased vehicle remains in service for approximately 36 months.
Closed-end leases are structured with a fixed term with the lessor retaining the
vehicle residual risk. The most prevalent closed-end lease terms are 24 months,
36 months, and 48 months.
In North America, VMS offers customers a range of open-end vehicle leasing
products, representing 96% of the vehicles financed by VMX in North America.
VMS' total North American vehicle leasing revenues were approximately $95.6
million after fleet costs in 1998, consisting of $59.5 million of net interest
income and $36.1 million of leasing management fees. VMS' North American vehicle
lease portfolio has grown from $2.85 billion, representing 272,000 vehicles, in
1996 to $2.96 billion, representing 283,000, vehicles in 1998.
In North America, VMS generally structures open-end leases on a floating
rate basis (approximately 82% of total current North American portfolio), but
occasionally structures them under fixed rate terms. Interest payments under
floating rate leases vary month to month in accordance with changes in rates of
typically one-month commercial paper plus the agreed upon spread. Interest
payments under fixed rate leases are typically priced as a spread to two-year
treasury bills and remain constant for the life of the lease. The lessee under a
floating rate lease generally has the option to convert it to a fixed-rate lease
on 30 days notice to VMS.
In Europe, VMS offers customers traditional closed-end leases, representing
89% of the book value of total vehicles financed by VMS in Europe, and, to a
lesser extent, open-end vehicle leasing
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products. The closed-end lease structure is preferred in Europe due to certain
accounting regulations which permit off-balance sheet treatment only for
closed-end leases. VMS utilizes independent third party valuations and internal
projections to set the residuals utilized for its closed-end leases. Closed-end
lease revenues consist of the net interest spread over VMS' cost of funds
implicit in the lease and any gain generated on VMS' residual position. VMS'
total European vehicle leasing revenues (excluding sales of residual positions
on closed-end leases) were approximately $26.0 million in 1998.
VMS' European vehicle lease portfolio has grown from $505 million,
representing approximately 31,000 vehicles, in 1996 to $824 million,
representing approximately 53,000 vehicles, in 1998. The market in the United
Kingdom has seen a considerable shift towards closed-end leases in recent years
driven by clients' desire for off-balance sheet financing.
In order to maintain a strong overall credit risk portfolio and minimize bad
debt write-offs, VMS conducts extensive credit and financial analyses prior to
underwriting a lease or granting an extension, and monitors each customer's
credit and collection performance.
VEHICLE ACQUISITION
VMS uses its relationships with major vehicle manufacturers, including the
"Big 3" (General Motors, Ford and Chrysler) in North America and General Motors,
Ford and Rover Group Limited in Europe, to facilitate the efficient purchase and
convenient delivery of leased vehicles.
In North America, VMS assisted customers with the purchase of approximately
95,500 vehicles in 1998. In the United States, VMS typically orders vehicles to
be custom built by the manufacturer through dealers (principally its two owned
dealerships). In 1998, approximately 29%, 39%, and 30% of vehicles were
purchased through Chrysler, Ford and General Motors, respectively. VMS received
net fees from manufacturers as well as other fees approximating $40.3 million in
1998 in exchange for facilitating vehicle purchases. The vehicle acquisition
process through the manufacturers generally takes 4 to 6 weeks and is utilized
on approximately 81% of the vehicles purchased by VMS in the united states. VMS
purchases the remaining 19% of U.S. Vehicles "off-the-lot" generally in order to
satisfy customers' turnaround time requirements. VMS generally charges customers
a "network" fee for these purchases in order to offset the loss of
manufacturers' revenues.
In Canada, which accounts for approximately 11% of VMS' North American
vehicle orders, VMS primarily orders vehicles through negotiated contracts with
third-party dealerships. On Canadian orders, VMS receives (1) a network fee from
the customer, and (2) in certain cases a discount from the individual
third-party dealership. In all cases, VMS arranges to have vehicles delivered to
dealerships located near customers' fleet drivers.
In the United Kingdom, VMS typically orders vehicles to be built to its
customers' specifications through its preferred network of selected dealers
(unlike the situation in the United States, VMS does not own any vehicle
dealerships in Europe). In 1998, approximately 25%, 15%, and 12% of vehicles
were purchased from General Motors, Ford and Rover, respectively. VMS receives
fees from customers and, in certain cases, receives revenue directly from the
vehicle manufacturers in the form of rebates linked to purchased volumes. In
1998, almost 25,000 new vehicles were purchased for customers in the United
Kingdom.
VEHICLE REMARKETING
In North America, VMS sells used vehicles for vehicle leasing customers
across the United States and Canada (where it owns two vehicle remarketing
centers located near Toronto and Montreal) through a wide range of remarketing
channels, such as independent and franchised dealers, dealer auctions, public
auctions, and salvage dealers, as well as to dealers themselves.
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Approximately 95,000 used vehicles under VMS leases were re-sold by it in 1998.
In Europe, VMS sells used vehicles (both open-end leased and company-owned),
primarily through auctions as well as dealer groups. VMS vehicles often command
a premium when resold because of, among other things, VMS' reputation for
maintaining its vehicles. In both North America and Europe, VMS handles the
complete administrative and documentation aspects of used vehicle sales, and it
also organizes programs whereby used vehicles are sold to customers' employees.
For leased vehicles under management, vehicle remarketing services are provided
as part of the lease contract and thus do not generally generate additional
fees.
FLEET MANAGEMENT CONSULTATION
In North America, VMS provides customers with comprehensive fleet consulting
services, including fleet policy analysis and recommendations, tax and
regulatory analysis, benchmarking analysis, and vehicle recommendations and
specifications. VMS provides consulting services based mainly on (1) the
extensive knowledge and experience of its North American sales, marketing and
customer relations employees, and (2) its comprehensive vehicle management
database which evaluates vehicles and driver productivity based on performance,
cost and other criteria.
TITLE AND REGISTRATION SERVICES
In North America, VMS provides vehicle title administration services for
customers when they initially lease vehicles in the U.S. and Canada. VMS relies
upon the extensive knowledge of its experienced employees regarding
administrative vehicle requirements and its established widespread network of
contacts to successfully deliver such services.
FEE-BASED PRODUCTS AND SERVICES
FUEL CARDS AND RELATED SERVICES
VMS provides customers with fuel card programs which facilitate the payment,
monitoring, and control of fuel purchases. Fuel is typically the single largest
fleet-related operating expense, generally accounting for over 70% of total
operating expenses. By using fuel cards, VMS' customers receive the following
benefits from the fuel card: (1) access to more fuel brands and outlets than
other private label corporate fuel cards, (2) point-of-sale processing
technology for fuel card transactions that enhances customers' monitoring of
purchases, and (3) consolidated billing and access to other information on fuel
card transactions, which assists customers with evaluation of overall fleet
performance and costs.
In North America, VMS provides fuel services through both WEX and PHH North
America. WEX is a leading provider of fuel cards and related services such as
information management and payment processing to car, van and truck fleets
throughout North America. WEX provides fuel cards and related value-added
services primarily through three distribution channels: (1) its proprietary
"universal card", (2) private label cards, and (3) co-branded cards marketing.
Total cards outstanding have increased from 519,000 in 1994 to approximately 1.6
million in 1998 due to the success of the co-brand and private label partners'
marketing programs, as well as successful targeted marketing of large fleets
with WEX's universal card.
WEX's proprietary universal card is sold directly to fleet customers and is
accepted by all of the major petroleum marketers, representing approximately
130,000 of the 160,000 fueling sites throughout the united states. Approximately
579,000 universal cards were outstanding at December 31, 1998. The universal
card provides fleet operators with access to the gas station of their choice and
also provides them with a consolidated statement that reports detailed
purchasing activity, including the items purchased, date and time of purchase,
odometer reading, cost and vehicle performance information.
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WEX has developed approximately 20 private label fuel card relationships
with regional and national fuel oil marketers, including Mobil, Circle K, Gulf,
Crown, Fina and Imperial Oil Ltd. (Esso Canada) as a value-added service for the
marketers' fleet customers. The fuel oil marketers outsource all or part of
their fleet fuel card programs to WEX. Management believes that WEX's private
label cards and services enhance an individual oil company's gallon sales volume
and brand awareness, while also providing a full range of financial and
information processing services to the fleet fuel card customer. Approximately
474,000 private label cards were outstanding at December 31, 1998.
Under the co-branded marketing approach, WEX fuel cards are issued in
conjunction with commercial vehicle leasing companies, vehicle manufacturers,
associations and other sponsoring entities. These cards allow WEX's partners and
customers to add fuel cards and related services to their product lines and
thereby offer more integrated vehicle management solutions to customers. WEX has
approximately 20 co-brand partners, including over half of the national
commercial leasing concerns such as GE Capital Fleet Services, Enterprise Fleet
Services, Wheels Inc. and Automotive Rentals Inc. Approximately 530,000 WEX fuel
cards were outstanding under co-branded marketing programs at December 31, 1998.
WEX's fuel cards generate revenue from four primary sources: discount fees,
processing fees, card fees and other fees. WEX generates revenue through driver
purchases of fuel or maintenance services under universal, co-branded or private
label-funded fuel cards at merchant sites. A funded card is one in which WEX
pays the fuel merchant and holds the accounts receivable on its balance sheet
until collecting from its customers. WEX has generally negotiated three-year to
five-year contracts with merchant oil companies and service providers that sell
fuel and services to fleet customers. These contracts include a discount fee
percentage (payable to WEX) that is applied to dollar purchase volume.
Processing fees are primarily generated when a private label-unfunded charge
card (i.e. accounts receivable are held on the balance sheet of the private
label partner instead of WEX) is used at a merchant location. In lieu of the
discount fee payable by the fueling merchant which is typically earned by WEX on
a funded charge card, on unfunded cards, a fee is charged per transaction
processed, payable to WEX by the private label customer. In addition, certain
co-brand relationships include a transaction-based fee which is reflected in
this revenue category. WEX's revenue also includes monthly and transaction-based
card fees billed to both universal card customers and private label and co-brand
partners. Other revenue earned by WEX includes fees related to additional
processing services which leverage WEX's sophisticated electronic network system
to provide customized information to customers (e.g., fuel use, costs,
regulatory standards, and fuel trends, etc.). Other fees also include
miscellaneous finance charges and marketing services provided to private label
customers.
PHH North America also provides fuel cards, principally to existing
leasing-related customers. At December 31, 1998, there were approximately
290,000 cards outstanding (plus an additional 17,000 "one cards", which are
discussed below) in North America, including 72,000 in Canada. With respect to
approximately 63% of PHH North America's fuel card volume, a percentage of the
amount charged on such cards is deducted from amounts remitted to the fuel
company and kept as revenue by PHH North America.
In 1997, PHH North America (in partnership with MasterCard) initiated a
trial issuance of a co-branded, multi-purpose (e.g., fuel, maintenance, travel
and entertainment, etc.) corporate card for its customers. The card targets the
22% of corporate fleet managers that are also responsible for management of
travel and entertainment expenses. The "one card" product combines travel and
entertainment and corporate purchasing capability of the MasterCard platform
with PHH North America's fuel and maintenance card functionality. The response
to the "one card" has been
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favorable, and management expects to significantly increase the volume of "one
cards" outstanding by the end of 1999. The product's competitive advantage is
based on linking a corporate customers three major business spending categories
through the card to PHH North America's Spin data warehouse, thereby giving
customers the ability to access detailed integrated information on a "real-time"
basis.
PHH Europe manages over 1.2 million fuel cards. Its own brands include All
Star-TM- (approximately 600,000 cards outstanding) and Dial
Card-TM-(approximately 450,000 cards outstanding), which are accepted at over
12,000 fueling sites in the United Kingdom. In return for a fee, PHH Europe also
provides processing support for approximately 100,000 fuel cards on behalf of
third parties on a private label basis and approximately 45,000 local account
cards on behalf of oil companies (the latter's usage being restricted to use at
the particular oil company's branded sites only).
A percentage of the amount charged on each fuel card is deducted from
amounts remitted to retail fueling merchants and kept as revenue by PHH Europe.
Total fuel purchased on PHH Europe's fuel cards in 1998 equaled approximately $3
billion, representing approximately 610 million gallons of fuel. In addition,
PHH Europe receives an annual per card fee negotiated on a per customer basis.
MAINTENANCE CARDS AND RELATED SERVICES
VMS offers customers vehicle maintenance charge cards that are used to
facilitate repairs and maintenance payments. The vehicle maintenance cards
provide customers with benefits such as (1) negotiated discounts of up to 40%
off full retail prices through VMS' supplier network, (2) access to VMS'
in-house team of over 124 certified maintenance experts that monitor each card
transaction for policy compliance, reasonableness, and cost effectiveness and
(3) inclusion of vehicle maintenance card transactions in a consolidated
information and billing database that helps evaluate overall fleet performance
and costs. VMS maintains an extensive network of service providers in the United
States, Canada and the United Kingdom to improve ease of use by the client's
drivers.
In North America, the number of VMS vehicle maintenance charge cards issued
and outstanding has grown from 247,000 in 1996 to 282,000 at December 31, 1998,
with approximately 210,000 cards issued and outstanding in the U.S. and an
additional 72,000 cards in Canada. Cards are used at VMS' North American network
of over 72,000 preferred vehicle-related suppliers. The network includes over
34,000 "national account" suppliers, including Goodyear Tire & Rubber,
Firestone, Jiffy Lube and Safelite Glass. Total 1998 North American maintenance
card charge volume for VMS was $160.7 million in 1998, representing an increase
of 7.8% over 1997. In exchange for channeling significant business to key
suppliers and facilitating purchases and prompt payments by its customers, VMS
receives a percentage discount on each maintenance card transaction from the
participating preferred supplier. North American customers also pay VMS a
monthly fee.
In conjunction with its maintenance cards, VMS serves its North American
customers through utilization of a market-leading maintenance management system.
Each time a VMS maintenance card is used for a purchase exceeding an agreed-upon
dollar limit at an authorized vehicle-related supplier location, the supplier's
maintenance personnel are required to review the order by phone with one of VMS'
ASE certified mechanics. Prior to authorizing each maintenance purchase, the
maintenance specialist considers the particular vehicle's maintenance history
and warranty status and the customer's particular maintenance spending policy.
This process improves compliance with the customer's maintenance policies while
reducing operating costs and enhancing overall fleet maintenance levels.
Subsequent to each transaction, maintenance card activity is stored in the Spin
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data warehouse, thereby assisting in the comprehensive long-term tracking of
each vehicle and driver.
In Europe, VMS offers "FleetCards-TM-" that are used to facilitate repair
and maintenance payments. At December 31, 1998, VMS had over 137,000 cards
outstanding in Europe, and total charge volume in 1998 was $156 million. In
exchange for facilitating purchase and prompt payments by its European
customers, VMS receives a fee on each maintenance transaction from its network
of maintenance providers. Revenues also include a monthly per card fee.
With the FleetCard, clients are able to control maintenance costs by having
one of VMS' qualified technicians (who access the full service history of the
vehicle in VMS' computerized database) intervene to monitor the transactions and
significantly increase the likelihood that only necessary maintenance
transactions occur, taking into consideration factors such as the particular
vehicle's maintenance history and the customer's specific maintenance policies.
In addition to this assistance, clients receive benefits such as (1) substantial
discounts through the unit's network of 12,500 suppliers (one of the largest
networks in the industry), and (2) additional cost savings through an overall
evaluation of fleet performance.
In Europe, VMS also provides a specialized truck fleet maintenance program
that has approximately 16,500 units under management, as well as commercial
closed-end leases and rental services.
ACCIDENT MANAGEMENT SERVICES
VMS provides clients with comprehensive accident management services such as
(1) providing prompt assistance after receiving the initial accident report from
the driver (i.e. facilitating emergency towing services and car rental
assistance, etc.), (2) organizing the entire vehicle appraisal and repair
process through a network of preferred repair and body shops, (3) coordinating
and negotiating potential accident claims and (4) entering accident and repair
information into the data warehouse for future management use. Customers receive
benefits from these accident management services such as (1) convenient,
coordinated 24-hour assistance from VMS' call centers, (2) access to VMS'
leverage with the repair and body shops included in their preferred supplier
network (one of the largest in the industry), which typically provides customers
with favorable repair terms, (3) expertise of VMS' damage specialists, who
monitor vehicle appraisals and repairs for cost-efficiency and compliance with
each customer's specific repair policy, (4) services of VMS' claims experts, who
assess subrogation potential and, if necessary, attempt to negotiate maximum
recovery, and (5) significant additional information on vehicle and driver
performance (i.e., accident and claims history, etc.) that is consolidated into
the SPIN data warehouse or the European data warehouse, as applicable, and can
be used to help manage customers' overall vehicle management costs.
In North America, VMS provides customers with comprehensive accident
management services. The number of units served has grown from 101,000 in 1996
to 140,000 at December 31, 1998. In North America, customers generally pay VMS a
fee for accident management services on a per-incident basis. VMS also retains a
percentage of any subrogation recovery. In exchange for facilitating repair
purchases and prompt payments by its customers, VMS typically also receives a
negotiated discount on repair expenditures directly from the preferred repair
and body shops. Approximately 25,000 incidents are serviced by VMS in North
America per annum.
VMS also provides comprehensive accident management services in Europe. The
number of cards issued by VMS in Europe has grown from 98,500 in 1996 to 187,800
at December 31, 1998. In Europe, customers generally pay VMS a fee either on a
per-incident or per-unit-per-month basis for accident management services. In
addition, in exchange for facilitating repair purchases and prompt payments by
its customer, VMS also typically receives a discount on repair expenditures from
the preferred repair and body shops. Approximately 96,000 incidents are serviced
by VMS in Europe per annum.
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VEHICLE ACQUISITION/DISPOSITION
In North America, VMS acquires and disposes of vehicles for fleet customers
which it does not finance. Revenues are generated from associated manufacturers'
fees, and, in certain cases, from a separate fee for acquisition and disposal
paid by the customer. Approximately 10,000 units were acquired or disposed of in
1998.
In Canada, VMS also sells vehicles for its Canadian fleet and certain third
parties, such as insurance companies that do not have fleets, through its two
owned remarketing centers in Canada. Approximately 21,000 third party vehicles
and approximately 4,500 VMS vehicles were sold under this program in 1998.
At December 31, 1998, VMS also managed nearly 91,000 units through its total
outsourcing service called fleet administrative services ("FAS"). Through FAS,
VMS provides full service fleet administration functions, including policy
management, vehicle selection and responding to driver inquiries. VMS is
currently developing technology to allow FAS personnel to interact more directly
with drivers of fleet vehicles.
DATA POLLING/LOYALTY
In Europe VMS owns a system with data polling capability (i.e. the
electronic capture of card transaction data from point-of-sale-terminals) and
accordingly, VMS supplies its own polling data for certain of its cards, thus
limiting the need to purchase such data from banks or other third parties. In
addition to using such data internally, VMS also sells it directly to customers,
building on the advantage of a more customized, independent and generally
lower-cost service than is available from bank-owned competitors. VMS polls
approximately $2.35 billion of card transactions each year from sites across the
United Kingdom, making it the United Kingdom's largest independent data polling
bureau and electronic payment processor. VMS is able to provide point-of-sale
terminal supply, rental, and management and expert processing advice and
support, and it receives weekly fees per terminal polled, rental fees for the
terminals provided, and fees for management information reports provided to its
customers.
VMS has also developed its polling capability to capture information other
than card charge data. It has leveraged this capability to help corporations
manage loyalty programs (i.e. corporate incentive programs). For example, VMS
tracks telephone user talk time (capturing data on over 2 million calls daily)
for a wireless telecommunications company in the United Kingdom. The
telecommunications company awards heavy users with loyalty points that entitle
them to receive certain benefits.
DIRECTED VEHICLE RENTAL
In Europe, VMS sells car hire services as an adjunct to its vehicle
management and leasing services. The business handled over 97,000 rentals
(average duration 6 days) in 1998, an increase of 13.0% over 1997. It utilizes a
network of car hire suppliers including Avis, National, Hertz and Kennings and
does not take the risks of ownership of a car hire fleet itself. Revenues are
earned by negotiating volume discounts with the car hire suppliers and then
keeping a "mark-up" for VMS, while still providing an all-in price savings to
customers. PHH North America provides similar services.
OTHER SERVICES
In North America, VMS also offers customers a variety of other fee-based
services that are not directly related to vehicle leases including: (1)
customized vehicle expense reporting, (2) re-titling and re-registration
services, and (3) other miscellaneous vehicle management services.
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SALES AND MARKETING
GENERAL. VMS has over 560 professionals dedicated exclusively to its sales,
marketing and customer relations efforts. Management believes that this team of
experienced professionals, together with VMS' complementary information
technology have helped create both strong long-term customer relationships as
well as opportunities for new account penetration.
PHH NORTH AMERICA. PHH North America has over 270 professionals dedicated
exclusively to sales, marketing and customer relations. Approximately 40
professionals are directly responsible for prospective sales and marketing,
organized geographically and by targeted fleet sizes and in some cases by
industry/target market. The sales force compensation structure is approximately
60% salary and 40% commission, with overall compensation levels being
competitive with industry standards. Each salesperson is responsible for
marketing prospective customers with the entire range of PHH North America
products and services. Salesperson performance is measured on number of new unit
orders, fee-based revenues, and new account profitability.
Approximately 230 employees are dedicated to managing existing customer
accounts. In order to best service different customer groups, account executives
and their teams are organized primarily by geography and customers' fleet size.
On average, each tenured account executive is responsible for customers that
generate an aggregate of approximately $3.5 million in annual revenues. Account
executive performance is measured based on customer satisfaction and growth in
revenues and profitability. Working in teams with the account executives,
support professionals manage day-to-day administrative and related needs for
existing customers.
Increased technological capabilities and expectations have dramatically
changed the ways that vehicle management companies can interact with both
prospective and existing customers. Management believes that PHH North America's
technology gives its sales, marketing and customer relations professionals a
competitive advantage in providing quality products and services to both
prospective and existing accounts. PHH North America's technology enables its
sales, marketing and customer relations professionals to: (1) sell an integrated
set of products and services that are billed and analyzed from the same
consolidated information database, (2) respond quickly and efficiently to
customers' information requests through use of the SPIN data warehouse, (3)
dedicate additional time to new product and account development, as customers
learn to access and manipulate information on their own through PHH Interactive
on the internet, and (4) structure competitive bid pricing and other customer
initiatives to manage risk-adjusted profitability, through use of a proprietary
activity-based costing model.
PHH EUROPE. PHH Europe has over 150 professionals dedicated exclusively to
sales, marketing and customer relations. Approximately 50 professionals are
directly responsible for prospective sales and marketing, organized
geographically and by product segment. The sales force compensation structure is
approximately 50% salary and 50% commission, with overall compensation levels
being competitive with industry standards. Each salesperson is responsible for
marketing prospective customers with the entire range of vehicle management
products and services, but dedicated sales forces are focused on particular
customer segments, like trucks, fuel, etc. Salesperson performance is measured
based on new revenue generation.
Approximately 91 employees are dedicated to managing existing customer
accounts. In order to best service different customer groups, account executives
and their teams are organized primarily by size and geography. Top U.K.
customers, typically generating revenues in excess of $1 million, are managed by
group account directors, with intermediate size clients supported by account
managers, and small fleet size clients serviced by both office-based (by
telephone) and field-based representatives. Account executive performance is
measured based on customer satisfaction and penetration and growth in revenues
and profitability.
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WEX. The WEX sales and marketing effort is organized by distribution
channel, with the majority of resources focused on development of the Universal
Card channel. Within this channel, teams are organized by fleet size to improve
coverage of each customer segment. In particular, broad-based coverage is
afforded to developing the small fleet segment (i.e. fleets of 10 to 30
vehicles), while dedicated sales effort is focused on large, more easily
identified fleets.
With respect to the co-brand and private label channels, increasing cards
outstanding is more the result of sales efforts by the co-brand or private label
partner, rather than direct marketing efforts by WEX. In some cases, private
label partners pay WEX to help market the cards.
As the discount percentage received from fuel merchants is the same
irrespective of the applicable distribution channel, the primary pricing
decision to be made by WEX relative to each bid situation concerns the amount of
the card fee to be charged. Sales representatives utilize a model that evaluates
the overall economics associated with each customer to determine the appropriate
card fee.
LEGAL MATTERS
VMS currently is a defendant in several lawsuits, none of which is expected
to have a material adverse effect on its financial condition or results of
operations.
PHH North America is regularly named as a defendant in lawsuits arising from
accidents involving leased vehicles. In accordance with the terms of PHH North
America's standard lease agreements, lessees are required to provide physical
damage and liability insurance and to defend and hold harmless PHH North America
entities in the event of any such litigation. Although PHH Europe also has this
contractual protection, it is rarely named as a defendant in this type of
litigation. We intend to obtain insurance coverage for VMS similar to that which
Avis currently has.
In addition, Harpur is the defendant in a lawsuit filed by Richbell
Information Services Inc., The Richbell Group Limited and David Elias, claiming
damages in the amount of $240 million for allegedly conspiring to defraud Mr.
Elias of his interest in H-G Holdings, Inc., the former parent of Harpur.
Pursuant to the Merger Agreement, PHH Corporation and PHH Holdings have agreed
to provide the defense of this claim, and to indemnify Avis Rent A Car and Avis
Fleet for any damages they may suffer in connection with such claim, to the
extent such damages exceed $500,000.
TECHNOLOGY
PHH NORTH AMERICA. With the introduction of the SPIN data warehouse and PHH
Interactive, an Internet-based vehicle management program, PHH North America
became the first company in its industry to offer full capabilities in fleet
data warehousing, reporting and retrieval via the Internet. Recently, PHH North
America was nominated for a Computer World Smithsonian Award for its innovative
creation of a data warehouse with Internet access.
PHH North America initiated the development of SPIN in 1996 and has since
gathered and consolidated a large amount of historical fleet data, which used to
be clustered in various vehicle management departments and mainframe computers.
Management believes that SPIN is the largest data warehouse in the industry with
750 gigabytes of allocated space and contains years of essential data, including
vehicle acquisition costs, maintenance/repair history, accident information,
expense reports, driver history, safety records and used vehicle sales reports.
The SPIN data warehouse resides partially on a mainframe computer owned by
Cendant and partially on a local area network at PHH North America's
headquarters in Hunt Valley, MD.
The value of SPIN to customers and PHH North America was further enhanced by
the recent introduction of PHH Interactive, which provides customers "real-time"
access to the essential data of their own fleet contained in SPIN, down to the
vehicle unit level. Through PHH Interactive, vital
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statistics can be easily generated directly by customers in customized reports
to accommodate the particular business needs of each customer. Fleet managers
can also gauge the performance of their fleets by benchmarking their own
statistics against industry composites available from the SPIN database. As a
result, PHH Interactive creates value for customers by transforming raw data
into usable information. PHH Interactive was internally developed by
VMS-affiliated web designers and developers, operations experts and customer
service professionals, and tested extensively with customers before being
officially introduced. The system registers an average of 70,000 hits per day.
PHH EUROPE. PHH Europe's operations utilize Cendant's Garden City, New York
data center, which utilizes the latest IBM mainframes and EMC storage devices.
This infrastructure is connected across the Atlantic by multiple leased
circuits. Within Europe, PHH Europe has a network of terminals which forms one
of the largest independent credit card data collection operations in the United
Kingdom and extends through Ireland and Germany.
PHH Europe has developed significant databases which aggregate years of
essential data including vehicle acquisition costs, maintenance/repair history,
accident information, expense reports, driver history, safety records, and used
vehicle sales reports. Most customer transactions are fed into these reporting
databases for analysis and reporting to PHH Europe customers. The system allows
for the production of special output (magnetic tape and disk files with
transaction data) for clients who wish to do their own analysis. Extracts are
also produced to update Fleetcom, an on-line system for clients who require an
interactive screen-based reporting capability. Updates to Fleetcom are provided
weekly or monthly, depending on client needs.
PHH Europe has also incorporated additional forms of technology into its
operations in order to streamline processes and reduce customer costs. For
example, in providing accident management services, PHH Europe eliminates, in
many cases, the need for an insurance adjuster to visit the vehicle prior to
authorizing repairs. This is accomplished by incorporating digital camera
technology at various preferred repair sites which provide electronic images
directly to VMS-affiliated repair professionals via their computers. Such
accident management professionals can then examine the damage on-line and make a
better determination as to the required action. Additionally, these images are
saved in PHH Europe's database for future use.
WEX. WEX's processing platform interfaces with a merchant card network to
provide transaction authorization, and prompts for data capture (e.g., mileage,
type of fuel, etc.) at the point-of-sale. This merchant network then provides
WEX with the relevant transactional information, which is stored in WEX's
systems, and processed to produce management information reporting for
customers.
COMPETITION
PHH NORTH AMERICA. PHH North America primarily competes for vehicle leasing
customers throughout North America with several large players, including GE
Capital Fleet Services, Automotive Rentals Inc., U.S. Fleet Leasing, Wheels
Inc., and Lease Plan USA. Like PHH North America, each of these competitors
packages certain related services (vehicle acquisition, vehicle remarketing,
title registration, etc.) with each lease. The top five participants focus on
larger corporate customers and management estimates that they account for almost
40% of all U.S. managed vehicles. A large group of additional competitors also
competes in the vehicle leasing market including BankAmerica Corporation,
through NationsBanc Leasing, but typically services the smaller, regional fleet
market segments.
As a result of the moderate overall growth in vehicle leasing, many players
focus on growing primarily through increasing share of the large corporate
fleets that already have established vehicle leasing or vehicle management
partners. Participants that rely solely on traditional vehicle financing
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as a means of winning and/or maintaining accounts are facing intense competition
for their vehicles under management. Competitors are consequently expected to
focus on development of more value-added vehicle management products and
services as a means of increasing share of large corporate fleets and driving
customer retention.
With regard to fee-based services, PHH North America competes with different
companies with respect to various services. For example, consolidated service
corporation and Salex Holding Corporation participate in the vehicle maintenance
card sector and collision experts international competes in accident management.
In addition, WEX is the top ranked niche provider of proprietary fuel cards to
North American corporations, followed by Comcheck and Voyager Fleet Systems (PHH
North America would rank fourth in this sector based upon number of issued
cards). Many leasing-focused competitors provide fee-based fleet management
products and services through third-party arrangements with selected niche
suppliers. For example, many of PHH North America's competitors provide
customers with fuel cards through WEX or other suppliers. In addition, certain
vehicle fleets use lessors such as GE Capital Fleet Services for vehicle
financing while utilizing PHH North America and others for value-added services
such as accident management.
PHH EUROPE. With regard to fuel management, PHH Europe's main competitors
are fuel companies. PHH Europe manages over 1.2 million of the United Kingdom's
approximately 1.5 million fuel cards outstanding. PHH Europe has the only
multi-franchised fuel card available in the market in the United Kingdom. Fuel
companies are PHH Europe's primary competitors in fuel management.
With regard to other fleet management services, including leasing, PHH
Europe primarily competes throughout Europe and the United Kingdom with several
large players, including GE Capital Fleet Services, Lease Plan International,
Lex Service, Arriva, Dial and Swan International. While management believes that
these competitors focus more on providing closed-end leases, each is capable of
providing a full range of vehicle management services to customers. Various
other competitors also compete in the vehicle leasing market, focusing on
smaller, regional markets or specializing in providing particular services, like
maintenance management.
Competition is intense for the accounts of large corporations that already
have vehicle leasing or management partners. As a result, vehicle management
firms that rely solely on traditional vehicle financing as a means of winning
and/or maintaining accounts are facing intense competition for their vehicles
under management. Competitors are consequently expected to focus on the
development of more value-added vehicle management products and services as a
means of driving customer marketing and retention.
WEX. WEX competes primarily with other vehicle-based fuel cards (Voyager,
Comchek Fleet, Ceridian, etc.) and driver-based cards (Visa and MasterCard bank
cards, American Express, etc.). WEX also competes in serving small fleets with
vehicle-based cards issued by oil companies and niche players such as
FuelMan/GasCard.
EMPLOYEES
As of December 31, 1998 VMS had a total of approximately 3,125 employees, of
which 1,200 were employees of PHH North America (including 177 in Canada), 1,400
were employees of PHH Europe and 525 were employees of WEX. Management believes
that VMS' relations with its employees is good and does not anticipate any
disruptions in labor relations as a result of the VMS Acquisition. None of VMS'
employees are unionized.
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PROPERTIES
Each of PHH North America, PHH Europe and WEX has one primary
facility/headquarters and selected other satellite offices. All facilities are
leased with the exception of PHH Europe's headquarters in Swindon, United
Kingdom. The location and size of each of VMS' facilities is presented below.
VMS FACILITIES
<TABLE>
<CAPTION>
LOCATION SQUARE FOOTAGE
- --------------------------------------------------------------------------------------------- -------------------
<S> <C>
PHH North America(1)
Hunt Valley, Maryland........................................................................ 199,563
New York, New York........................................................................... 4,621
Oak Brook, Illinois.......................................................................... 4,977
Irvine, California........................................................................... 3,414
New York, New York........................................................................... 1,334
Mississauga, Canada.......................................................................... 31,532
Lachine, Canada.............................................................................. 13,135
Mississauga, Canada.......................................................................... 11,446
Calgary, Canada.............................................................................. 8,446
St. Laurent, Canada.......................................................................... 3,752
Vancouver, Canada............................................................................ 3,526
PHH EUROPE
Swindon, United Kingdom(2)................................................................... 148,352
Trowbridge, United Kingdom................................................................... 26,130
Birmingham, United Kingdom................................................................... 15,000
Manchester, United Kingdom................................................................... 11,500
Munich, Germany.............................................................................. 11,233
Dublin, Ireland.............................................................................. 4,000
WEX
South Portland, Maine........................................................................ 86,000
Murray, Utah................................................................................. 5,230
Scarborough, Maine........................................................................... 5,000
</TABLE>
- ------------------------
(1) Does not include two vehicle dealerships located in North Carolina and
Virginia.
(2) Swindon, United Kingdom includes 19,352 square feet of leased offices.
Concurrently with the closing of the VMS Acquisition, VMS LLC moved its
chief executive office to Garden City, New York. VMS LLC maintains a
regional/processing office in Hunt Valley, Maryland.
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MANAGEMENT
The following table sets forth information regarding current executive
officers and directors of Avis Rent A Car as well as selected officers of VMS:
<TABLE>
<CAPTION>
NAME POSITION(S)
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
EXECUTIVE OFFICERS OF AVIS RENT A CAR
F. Robert Salerno....................................... President and Chief Operating Officer--Rental Car Group
and Director
Kevin M. Sheehan........................................ President--Corporate and Business Affairs, Chief
Financial Officer and Director
Mark E. Miller.......................................... President and Chief Operating Officer--Vehicle
Management Services Group
Thomas J. Byrnes........................................ Senior Vice President--Sales of Avis
Maria M. Miller......................................... Senior Vice President--Marketing of Avis
Michael P. Collins...................................... Vice President--International of Avis
Richard S. Jacobson..................................... Vice President--Tax of Avis
Gerard J. Kennell....................................... Vice President and Treasurer of Avis
James A. Keyes.......................................... Vice President--HR, Staffing and Diversity of Avis
Karen C. Sclafani....................................... Vice President, General Counsel and Secretary of Avis
Timothy M. Shanley...................................... Vice President and Controller of Avis
OTHER EXECUTIVE OFFICERS
John Cullum............................................. President of PHH Europe
Michael E. Dubyak....................................... President and Chief Executive Officer of WEX
Neil J. Cashen.......................................... Senior Vice President, PHH North America Finance and
Planning
David Bird.............................................. Managing Director of PHH Europe
NON-EXECUTIVE DIRECTORS OF AVIS RENT A CAR
W. Alun Cathcart........................................ Director
Leonard S. Coleman, Jr. ................................ Director
Alfonse M. D'Amato...................................... Director
Martin L. Edelman....................................... Director
Deborah L. Harmon....................................... Director
Stephen P. Holmes....................................... Director
Michael J. Kennedy...................................... Director
Michael P. Monaco....................................... Director
</TABLE>
EXECUTIVE OFFICERS OF AVIS RENT A CAR
MR. SALERNO, age 48, was appointed President and Chief Operating
Officer--Rental Car Group in August 1999. Mr. Salerno continues to be President
of ARACS, a position he has held since November 1996. Additionally, Mr. Salerno
has been a director of Avis Rent A Car since May 29, 1997. From September 1995
to November 1996, Mr. Salerno was Executive Vice President of Operations of
Avis, Inc., the predecessor of Avis Rent A Car, and ARACS. From July 1990 to
September 1995, Mr. Salerno was Senior Vice President and General Manager of
Avis, Inc. and ARACS.
MR. SHEEHAN, age 46, was made President--Corporate and Business Affairs in
August 1999. Mr. Sheehan continues as the Chief Financial Officer of Avis Rent A
Car and ARACS, a position he has held since December 1996. Mr. Sheehan has also
been a director of Avis Rent A Car since
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June 1999. Mr. Sheehan had been Executive Vice President of Avis Rent A Car
since December 1996. From September 1996 to September 1997, Mr. Sheehan was a
Senior Vice President of HFS. From December 1994 to September 1996, Mr. Sheehan
was Chief Financial Officer for STT Video Partners, a joint venture between Time
Warner, Telecommunications, Inc., Sega of America and HBO. Prior thereto, he was
with Reliance Group Holdings, Inc., an insurance holding company, and some of
its affiliated companies for ten years and was involved with the formation of
the Spanish language television network, Telemundo Group, Inc. and from 1991
through 1994 was Senior Vice President--Finance and Controller.
MR. MILLER, age 40, was appointed President and Chief Operating
Officer--Vehicle Management Services Group in August 1999. Mr. Miller joined PHH
North America in 1997 as President. His previous experience includes positions
as President of GE Capital Financial, a unit of GE specializing in the issuance
of commercial payment systems, Senior Vice President of World Travel Partners
(the world's third largest travel management company), and Vice President of
Strategic Sales for Corporate Services at American Express.
MR. BYRNES, age 54, has been Senior Vice President--Sales of Avis Rent A Car
and ARACS since February 1998 and Vice President--Sales North America for Avis
Rent A Car or its predecessor and ARACS since 1987.
MS. MILLER, age 43, has been Senior Vice President--Marketing of Avis Rent A
Car since February 1998. From January 1997 to February 1998, Ms. Miller was the
principal in her own consulting firm, which provided marketing consulting
services to small and mid-sized businesses and nonprofit organizations. From
1987 to 1995, Ms. Miller held various positions with American Express Company
including Vice President, Platinum Card Operations from September 1993 to
October 1995 and Vice President, Small Business Services Marketing from December
1990 to August 1993.
MR. COLLINS, age 52, has been Vice President--International of Avis Rent A
Car or its predecessor and ARACS and General Manager of their international
operations since 1987.
MR. JACOBSON, age 55, has been Vice President--Tax of Avis Rent A Car and
ARACS since September 1998. From November 1997 until August 1998, Mr. Jacobson
was Staff Vice President of ARACS and for more than five years prior thereto he
was employed by ARACS as Director of Corporate Tax.
MR. KENNELL, age 54, has been Vice President and Treasurer of Avis Rent A
Car or its predecessor and ARACS since February 1987.
MR. KEYES, age 53, has been Vice President--HR, Staffing and Diversity of
Avis Rent A Car since March 1999 and of ARACS since January 1999. From July 1997
until December 1998, Mr. Keyes was Vice President--Staffing, Diversity &
Management Development of ARACS. From June 1993 until December 1996, Mr. Keyes
was Corporate Director of Human Relations at The Dun and Bradstreet Corporation.
MS. SCLAFANI, age 47, has been Vice President, General Counsel and Secretary
of Avis Rent A Car and ARACS since August 1998. From April 1990 until March
1997, Ms. Sclafani was Vice President, Deputy General Counsel and Assistant
Secretary of Avis, Inc. and ARACS. In March 1997, Ms. Sclafani was elected Vice
President and Secretary of Avis Rent A Car.
MR. SHANLEY, age 50, has been Vice President and Controller of Avis Rent A
Car and ARACS since November 1996. From November 1989 to November 1996, Mr.
Shanley was Vice President-- Planning and Analysis of Avis, Inc. and ARACS.
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OTHER EXECUTIVE OFFICERS
MR. CULLUM, age 54, has been President of PHH Europe since 1982 and has full
operating responsibility for all PHH Europe operations in Europe. He joined PHH
Europe in 1982 from Ford Motor Company where he held the position of Finance
Director of its European Credit subsidiaries.
MR. DUBYAK, age 48, has been with WEX since 1986 and was appointed President
and Chief Executive Officer in September, 1998. Prior to assuming this role, he
served as Executive Vice President responsible for sales, marketing, and the
development and management of private label and co-brand relationships in the
United States. Mr. Dubyak initially brought to WEX over a decade of experience
in the petroleum industry. He held a variety of management positions with
Pennzoil Company and Reserve Petroleum Company where, immediately prior to
joining WEX, he served as a Senior Vice President.
MR. CASHEN, age 44, has been Senior Vice President of PHH North America
Finance and Planning since July 1997 and is responsible for the direction of all
financial management and business planning activities related to PHH North
America's domestic fleet operations. Mr. Cashen joined PHH North America in 1979
as a Credit Manager. He has held positions as Vice President and Controller,
Vice President of Business Planning and Analysis and Director of Corporate
Planning and Business Development.
MR. BIRD, age 40, has been Managing Director of PHH Europe since 1994 and is
responsible for both the financial and network function of the European group
and operations of the ClaimsPlus, Cendant Business Partners and Overdrive
business units. He joined PHH Europe originally in 1986, worked for Lease Plan
in finance for 4 years and returned to PHH Europe in 1994.
NON-EXECUTIVE DIRECTORS OF AVIS RENT A CAR
Each director of Avis Rent A Car holds office until the next annual meeting
of stockholders or until his or her respective successor has been duly elected
and qualified or until his or her earlier death, resignation or removal.
MR. CATHCART, age 55, has been a Director of Avis Rent A Car since September
1997. Mr. Cathcart has been non-Executive Chairman of Avis Europe plc since
April 1, 1999. From January 1, 1999 until April 1, 1999 Mr. Cathcart served as
Executive Chairman of Avis Europe plc and for more than five years prior thereto
Mr. Cathcart was Chairman and Chief Executive of Avis Europe plc.
MR. COLEMAN, age 50, has been a Director of Avis Rent A Car since September
1997. Mr. Coleman has been President of the National League of Professional
Baseball Clubs since March 1994. From 1992 to March 1994, Mr. Coleman served as
Executive Director--Market Development of Major League Baseball. Mr. Coleman
also is a director of the following corporations which file reports pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"): Cendant,
H.J. Heinz Company, New Jersey Resources, The Omnicom Group and Owens Corning.
SEN. D'AMATO, age 61, has been a Director of Avis Rent A Car since June 1999
and has been Managing Director of Park Strategies, a business consulting firm in
New York City, since its formation in January 1999. From January 1981 until
January 4, 1999, Sen. D'Amato served in the United States Senate representing
the State of New York where he was Chairman of the Committee on Banking, Housing
and Urban Affairs from 1995 until he left office.
MR. EDELMAN, age 58, has been Interim Chairman of the Board since December
1998 and a Director of Avis Rent A Car since September 1997. From January 1996
to March 1998, Mr. Edelman
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served as President and a director of Chartwell Leisure, Inc. He was a partner
with Battle Fowler, a New York City law firm, from 1972 through 1993 and since
January 1, 1994 has been Of Counsel to that firm. Mr. Edelman is also a partner
of Chartwell Hotels Associates, Chartwell Leisure Associates L.P., Chartwell
Leisure Associates L.P. II and of certain of their respective affiliates. Mr.
Edelman also serves as a director of the following corporations which file
reports pursuant to the Exchange Act: Arcadia Realty and Capital Trust, each a
real estate investment trust, and Cendant.
MS. HARMON, age 40, has been a Director of Avis Rent A Car since September
1997. Ms. Harmon has been a Principal in the Office of the President at JER Real
Estate Partners, L.P., an institutional, private equity fund for investment in
real estate assets, since 1991. Prior to joining JER, Ms. Harmon served as
Managing Director of the Real Estate Finance Group at Bankers Trust Company.
MR. HOLMES, age 42, has been a Director of Avis Rent A Car since October
1996. Mr. Holmes was appointed as Vice Chairman of Cendant in December 1997 and
from September 1996 through December 1997 Mr. Holmes served as Vice Chairman of
HFS, the predecessor company of Cendant. From July 1990 through September 1996,
Mr. Holmes served as Executive Vice President, Treasurer and Chief Financial
Officer of HFS. Mr. Holmes also serves as a director of Avis Europe plc and as a
director of the following corporations which file reports pursuant to the
Exchange Act: Cendant and PHH Corporation.
MR. KENNEDY, age 62, has been a Director of Avis Rent A Car since September
1997. Mr. Kennedy has been an attorney with his own law firm since 1976.
MR. MONACO, age 51, has been a Director of Avis Rent A Car since May 1997.
Mr. Monaco has been a Vice Chairman of Cendant since December 1997 and Chief
Executive Officer of the Alliance Marketing Division of Cendant since November
1998. From December 1997 until November 1998, Mr. Monaco was Chief Financial
Officer of Cendant and from October 1996 to December 1997, Mr. Monaco served as
Vice Chairman and Chief Financial Officer of HFS. Mr. Monaco served as Executive
Vice President and Chief Financial Officer of the American Express Company from
September 1990 to June 1996. Mr. Monaco is a director of Cendant, which files
reports pursuant to the Exchange Act.
COMPENSATION OF DIRECTORS
Non-employee directors receive an annual retainer of $30,000, plus $4,000
for chairing a committee and $2,000 for serving as a member of a committee other
than Chair. Non-employee directors also are paid $1,000 for each Board meeting
attended and $500 ($1,000 for committee chair) for each Board committee meeting
if held on the same day as a Board meeting and $1,000 ($2,000 for committee
chair) for each Board committee meeting attended on a day on which there is no
Board meeting. Non-employee directors are reimbursed for expenses incurred in
attending meetings of the Board of Directors and committees.
Under Avis' 1997 Stock Option Plan (the "Plan"), each non-employee director
is granted options to purchase 50,000 shares of Class A Common Stock on the date
of his or her initial election to the Board of Directors. Such options have an
exercise price of the fair market value on the date of grant, vest over a
five-year period from the date of grant at the rate of 20% per year, and have
other terms which are the same as all other options granted under the Plan.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the 1996, 1997 and 1998 cash and non-cash
compensation awarded to or earned by Avis' Chief Executive Officer and Avis'
four other most highly compensated executive officers:
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
--------------------------------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)(1) ($)(2)
- ---------------------------------- ----------------------- --------- --------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
F. Robert Salerno................. 1996 244,288 103,825 -- 13,947
President & Chief Operating 1997 336,346 351,752 533,200 6,197
Officer--Rental 1998 356,730 420,000 392,500 11,844
Car Group
Kevin M. Sheehan.................. 1997 264,413 289,330 355,500 4,155
President--Corporate and 1998 279,950 302,501 265,000 12,011
Business Affairs and Chief
Financial Officer
Thomas J. Byrnes.................. 1996 145,509 37,665 -- 7,041
Senior Vice President-- Sales 1997 162,692 108,331 71,100 7,738
1998 196,769 170,176 10,000 10,917
R. Craig Hoenshell(3) 1997 468,462 568,800 639,840 18,536
Chairman & Chief Executive 1998 623,845 812,501 74,000 37,090
Officer
Kevin P. Carey(3)................. 1997 169,711 132,000 106,620 9,151
Senior Vice President-- Human 1998 212,786 210,000 12,000 13,829
Resources
</TABLE>
- ------------------------
(1) Amounts listed represent options to acquire Class A Common Stock.
(2) Includes the value of group term life insurance and Avis' matching
contribution to 401(k) or deferred compensation plans.
(3) Mr. Hoenshell resigned from his office as Chairman and Chief Executive
Officer of Avis Rent A Car effective December 31, 1998, but remains a Senior
Advisor to Avis Rent A Car until October 6, 2000. Mr. Carey ceased to be
employed by Avis Rent A Car on December 31, 1998. Securities shown are net
of options forfeited upon such resignation and cessation of employment.
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<PAGE>
OPTION GRANTS TABLE
The following table describes the options to acquire shares of Class A
Common Stock granted to Avis' Chief Executive Officer and certain other
executive officers in the last fiscal year:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS EMPLOYEES PRICE PER EXPIRATION PRESENT
NAME GRANTED IN FISCAL YEAR SHARES($)(1) DATE VALUE($)(2)
- ------------------------------------------ ------------ ----------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
F. Robert Salerno......................... 300,000 24.2% 21.38 12/16/08 3,268,530
92,500 7.5% 24.00 6/4/08 1,131,562
Kevin M. Sheehan.......................... 200,000 16.1% 21.38 12/16/08 2,179,020
65,000 5.2% 24.00 6/4/08 795,152
Thomas J. Byrnes.......................... 10,000 0.8% 24.00 6/4/08 122,331
R. Craig Hoenshell(3)..................... 74,000 6.0% 24.00 6/4/08 905,249
Kevin P. Carey(3)......................... 12,000 1.0% 24.00 6/4/08 146,797
</TABLE>
- ------------------------
(1) Options granted at $24.00 per share vest 20% per year beginning June 4,
1999. Options granted at $21.38 per share vest 50% on June 30, 2000 and 50%
on December 31, 2001.
(2) The amount shown in this column represents the Grant Date Present Value
using the "Black-Scholes" valuation method.
(3) Securities shown are net of options forfeited upon resignation from office
or cessation of employment with Avis Rent A Car.
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YEAR END OPTION VALUE TABLES
The following table describes the value of unexercised in-the-money options
to acquire Class A Common Stock held by Avis' Chief Executive Officer and
certain other executive officers at December 31, 1998:
<TABLE>
<CAPTION>
FY-END OPTION VALUES(1)
----------------------------------------------
<S> <C> <C>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
NAME OPTIONS AT FY-END(#) AT FY-END($)
- ----------------------------------------------------------------- ----------------------- ---------------------
F. Robert Salerno................................................ 925,700 4,694,283
Kevin M. Sheehan................................................. 620,500 3,130,395
Thomas J. Byrnes................................................. 81,100 513,109
R. Craig Hoenshell............................................... 713,840 4,614,510
Kevin P. Carey................................................... 118,620 768,878
</TABLE>
- ------------------------
(1) None of the options shown in the table were exercised during 1998.
DEFINED BENEFIT PLAN
Avis maintains a defined benefit pension plan for employees who met the
eligibility requirements as of December 31, 1983. The eligibility requirements
are non-union, full time employees hired prior to December 31, 1983 who were age
25 or above on January 1, 1985. The plan was amended to curtail all benefit
accruals and to add two years of credited service to the accrued benefit of each
participant employed by Avis on December 31, 1998. Avis recognized a gain of
$7.5 million as a result of this curtailment during the first quarter of Avis'
fiscal year ending December 31, 1999.
The plan provides that the benefit for each participant, payable monthly, be
equal to 1 1/2% of his or her final average compensation (average compensation
being the average of the highest five consecutive years of compensation in the
last ten years of employment) for each year of service, not to exceed 35, minus
1 3/7% of the estimated Social Security benefit for each year of service. In
general, the effect is to provide a participant who has worked for Avis for 35
years prior to retirement, with a pension, including Social Security, equal to
at least 52% of the average compensation (including bonus, overtime and
commissions) earned during the highest five consecutive years of his or her
employment.
To the extent that applicable federal laws limit a participant's pension
plan benefit to an amount less than the amount otherwise provided by the plan's
formula, Avis has adopted a retirement equalization benefit plan to compensate
the participant for the reductions in the retirement benefit. In light of the
curtailment of benefit accruals under Avis' defined benefit plan, no additional
employees will be designated as participants in this retirement equalization
benefit plan.
The following table shows the estimated annual pension benefit payable under
the plans under normal retirement in 1999 after selected periods of service
(assuming such employees and their spouses elect a straight life annuity rather
than a form of joint and survivor or other form of annuity, in which case the
benefits would generally be lower than shown in the following table). The
estimated maximum benefits for employees who retire in years other than 1999
will be different from the amount shown in the table because pension benefits
will be offset by different Social Security benefits; however, the benefit shown
in the table will not be reduced by the amount of Social Security benefits
actually paid.
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<PAGE>
PENSION PLAN TABLE
ESTIMATED ANNUAL PENSION BENEFIT(1)
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
ANNUAL PAY 15 20 25 30 35
- ----------- --------- --------- --------- --------- ---------
2$00,000... $ 39,194 $ 52,258 $ 65,323 $ 78,387 $ 91,452
250,000... 49,881 66,508 83,135 99,762 116,390
300,000... 60,569 80,758 100,948 121,137 141,327
350,000... 71,256 95,008 118,760 142,512 166,265
400,000... 81,944 109,258 136,573 163,887 191,202
450,000... 92,631 123,508 154,385 185,262 216,140
500,000... 103,919 137,758 172,198 206,637 241,077
</TABLE>
- ------------------------
(1) A portion of the benefit will be paid by Avis under Avis' retirement
equalization benefit plan, if the benefit exceeds the maximum pension
payable from the tax qualified retirement plan under federal law.
As of December 31, 1998, the specified named executives had the following
years of service under the defined benefit plan: Mr. Salerno, eighteen years,
seven months; Mr. Byrnes, thirty-two years, eleven months.
EMPLOYMENT CONTRACTS AND TERMINATION, SEVERANCE AND CHANGE OF CONTROL
ARRANGEMENTS
AVIS
Three named executive officers of Avis Rent A Car have written employment
agreements.
Mr. Hoenshell resigned from his office as Chairman and Chief Executive
Officer of Avis Rent A Car effective December 31, 1998. However, he remains
employed by Avis Rent A Car as a Senior Advisor under an employment agreement
which expires on October 6, 2000 and entitles him to a salary of $625,000 during
his period of employment and lump sum payments of $325,000 each on January 1,
1999 and October 6, 2000 as a retention incentive. If Mr. Hoenshell's employment
is terminated by Avis Rent A Car other than as a result of death, disability or
cause, or by the executive due to Avis' material breach, he is entitled to
receive in a lump sum the remainder of his salary and the remaining $325,000
incentive payment within 30 days following his termination.
Mr. Salerno and Mr. Byrnes have employment agreements with a predecessor
company which terminate on February 8, 2001 and September 20, 1999,
respectively. Under the terms of their agreements, Mr. Salerno and Mr. Byrnes
are entitled to receive an annual base salary of not less than $356,730 and
$196,769, respectively, which salary may be increased by Avis Rent A Car's Board
of Directors during the term of their agreements. If the employment of Mr.
Salerno is terminated by Avis for reasons other than "just cause" or if Mr.
Salerno terminates his employment for "good reason" (as each term is defined in
the agreement), he is entitled to receive his remaining salary and full bonus
and certain perquisites through the term of his agreement. However, if the
employment of Mr. Salerno is terminated by Avis on or after a change-in-control,
he is entitled to receive his remaining salary, full bonus and certain
perquisites under the agreement in a single lump sum within 30 days following
his termination. If the employment of Mr. Byrnes is terminated by Avis Rent A
Car as a result of his death, his estate is entitled to receive his salary for a
period of one year as a death benefit. If the employment of Mr. Byrnes is
terminated without "just
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<PAGE>
cause" (as defined in the agreement), he is entitled to receive his salary for a
period of one year and a pro rated share of his bonus for the year in which his
termination occurred.
VMS
Mr. Miller does not have a written employment agreement. However, Avis Rent
A Car will be obligated to pay him two times his annual base salary, currently
$420,000, in the event he is terminated without good reason or resigns for cause
within one year of the closing of the VMS Acquisition.
Mr. Dubyak has an "at will" employment agreement with WEX. Under the terms
of the agreement, if his employment is terminated by WEX for reasons other than
"cause" or if Mr. Dubyak terminates his employment due to an "adverse change"
(as each term is defined in the agreement), he is entitled to receive a one time
severance payment equal to one year of his then effective base salary, and a pro
rata payment of any bonus amount due for the year in which such termination
occurs to the extent such bonus was not already paid as well as certain
perquisites.
Mr. Cullum has an employment agreement with Cendant Business Answers
(Europe) PLC ("CBA") which may be terminated by either CBA or Mr. Cullum by
giving 6 months prior written notice to the other party, or by CBA without
notice if Mr. Cullum is found to have committed a gross default, misconduct or
breach materially detrimental to CBA or its subsidiaries. Under the terms of
this agreement, Mr. Cullum's annual base salary is reviewed annually on May 1st
at the discretion of CBA, and is currently L160,000. However, Avis Rent A Car
will be obligated to pay him two times his annual base salary in the event he is
terminated without good reason or resigns for cause within one year of the
closing of the VMS Acquisition.
Mr. Cashen does not have a written employment agreement. However, Avis Rent
A Car will be obligated to pay him two times his annual base salary, currently
$175,000, in the event he is terminated without good reason or resigns for cause
within one year of the closing of the VMS Acquisition.
Mr. Bird does not have a written employment agreement. However, Avis Rent A
Car will be obligated to pay him two times his annual base salary, currently
L100,000, in the event he is terminated without good reason or resigns for cause
within one year of the closing of the VMS Acquisition.
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<PAGE>
OWNERSHIP OF CAPITAL STOCK
The information set forth on the following table is furnished as of August
1, 1999 (except as otherwise noted) with respect to any person (including any
"group" as that term is used in Section 13(d)(3) of the Exchange Act) who is
known to New Avis to be the beneficial owner of more than 5% of any class of
Avis Rent A Car's voting securities, and as to those shares of Avis Rent A Car's
equity securities beneficially owned by each of its directors and nominees for
director, its current named executive officers, and all of its executive
officers and directors as a group.
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE OF
BENEFICIAL PERCENT OF
NAME OWNERSHIP CLASS
- -------------------------------------------------------------------------------- ------------- -----------------
<S> <C> <C>
PRINCIPAL STOCKHOLDERS
Cendant Corporation(1).......................................................... 5,885,800 18.9%(2)
6 Sylvan Way
Parsippany, NJ 07054
T. Rowe Price Associates, Inc.(3)............................................... 2,993,000 9.6%
100 E. Pratt Street
Baltimore, MD 21202
DIRECTORS AND EXECUTIVE OFFICERS(4)(5)
Thomas J. Byrnes................................................................ 16,220 *
W. Alun Cathcart................................................................ 20,000 *
Leonard S. Coleman, Jr.......................................................... 20,000 *
Alfonse M. D'Amato.............................................................. 0 *
Martin L. Edelman............................................................... 20,000 *
Deborah L. Harmon............................................................... 20,000 *
Stephen P. Holmes............................................................... 21,000 *
Michael J. Kennedy.............................................................. 20,000 *
Michael P. Monaco............................................................... 21,000 *
F. Robert Salerno............................................................... 238,780 *
Kevin M. Sheehan................................................................ 159,200 *
DIRECTORS AND EXECUTIVE OFFICERS AS A
GROUP(5) (19 persons)......................................................... 649,073 2.0%
</TABLE>
- ------------------------
* Less than 1%
(1) Cendant Corporation beneficially owns 5,885,800 shares of Class A Common
Stock after giving effect to Avis' repurchase of 1,614,200 shares of Class A
Common Stock in 1999, which shares are held of record by its indirect
wholly-owned subsidiary, Cendant Car Rental Holdings, Inc.
(2) Cendant Corporation beneficially owns 7,200,000 shares of Series A
Preferred, each of which is convertible, under certain circumstances into
Class B Common Stock. The Class B Common Stock is non-voting, but is
convertible into Class A Common Stock by Cendant Corporation or its
affiliates to the extent that the ownership by Cendant Corporation and its
affiliates of Class A Common Stock would not exceed 20% of the total
outstanding. In addition, upon transfer to anyone other than Cendant
Corporation or one of its affiliates, the Class B Common Stock automatically
converts into Class A Common Stock. Furthermore, under certain
circumstances, all of the Class B Common Stock held by Cendant Corporation
or its affiliates may be converted into Class A Common Stock. If this had
happened on June 30, 1999, Cendant Corporation's beneficial ownership of
Class A Common Stock would have been approximately 34% of the total then
outstanding. Additionally, as a holder of Series A Preferred, Cendant
Corporation will receive shares of Series B Preferred issued as dividends on
the Series A
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<PAGE>
Preferred. Until the fifth anniversary of the date of issuance, dividends on
the Series B Preferred may be paid in kind, thereafter, dividends must be
paid in cash. Holders of Series B Preferred may convert their Series B
Preferred into Class B Common Stock if Avis Fleet defaults in certain of its
obligations under the Series A Preferred or the Series B Preferred. Series B
Preferred shares automatically convert into Class B Common Stock upon the
bankruptcy or insolvency of Avis Fleet or any of its Significant
Subsidiaries. As of the Closing Date, no shares of Series B Preferred had
been issued. See "Description of Avis Fleet Preferred Stock and Class B
Common Stock."
(3) Based upon the information contained in a Schedule 13G dated February 12,
1999 by T. Rowe Price Associates, Inc. ("T. Rowe"). T. Rowe beneficially
owns 2,993,000 shares of Avis' Class A Common Stock with sole voting or
investment power with respect to only 400 shares of Class A Common Stock.
These securities are owned by various individuals and institutional
investors for which T. Rowe serves as investment adviser with power to
direct investments and/or sole power to vote the securities. For purposes of
the reporting requirements of the Exchange Act, T. Rowe is deemed to be a
beneficial owner of such securities; however, T. Rowe expressly disclaims
that it is, in fact, the beneficial owner of such securities.
(4) Includes shares which could be acquired within 60 days of August 1, 1999
through the exercise of options to purchase Class A Common Stock under Avis'
1997 Stock Option Plan as follows: Mr. Byrnes-16,220; Messrs. Cathcart,
Coleman, Edelman, Holmes, Kennedy, and Monaco and Ms. Harmon-20,000 each;
Mr. Salerno-231,780; Mr. Sheehan-155,200 and all directors and executive
officers as a group-634,273. In addition, within 60 days of August 1, 1999,
under the 1997 Stock Option Plan Mr. Hoenshell could acquire 256,162 shares
of Avis' Class A Common Stock and Mr. Carey could acquire 11,882 shares of
Avis' Class A Common Stock.
(5) Excludes shares owned by Mr. Hoenshell and Mr. Carey. As of March 20, 1999,
Mr. Hoenshell owned 20,100 shares of Avis' Class A Common Stock and Mr.
Carey owned 3,000 shares of Avis' Class A Common Stock.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
RELATIONSHIP WITH CENDANT
Cendant, which beneficially owns approximately 19% of Avis' outstanding
Class A Common Stock and would own, if it had converted all the Avis Fleet
Preferred Stock as of June 30, 1999, approximately 34% of the common equity of
New Avis (although its voting interest would be limited, in most instances, to
20%), was formed through the merger of HFS and CUC International Inc. in
December 1997. Cendant is a major international provider of consumer and
business services. Cendant operates in four principal divisions: Travel
Services, Real Estate Services, Alliance Marketing and Other Consumer and
Business Services. In Travel Services, Cendant is the leading franchisor of
hotels and rental car agencies worldwide; the largest provider of vacation
exchange services; a leading vehicle management company; the United Kingdom's
largest private car park operator; and a leading motorist assistance group in
the United Kingdom. In Real Estate Services, Cendant is the world's largest
franchisor of residential real estate brokerage offices, a major provider of
mortgage services to consumers and a global leader in corporate employee
relocation. Through Alliance Marketing, Cendant provides access to insurance,
travel, shopping, auto, and other services, primarily through direct marketing
to customers of its affinity partners. Cendant's Other Consumer and Business
Services include the tax preparation services franchise, information technology
services, car park and vehicle emergency support and rescue services in the
United Kingdom, Cendant information services, financial products and other
consumer related services.
In connection with Avis Rent A Car's stock repurchase program, on January
15, 1999 Avis Rent A Car repurchased 1.3 million shares of Class A Common Stock
from Cendant at a cost of $31.5 million, and on April 26, 1999 purchased an
additional 314,200 shares at a cost of $9.3 million.
We are party to various agreements with Cendant that were entered into when
Cendant beneficially owned all of Avis Rent A Car's outstanding Class A Common
Stock. The agreements summarized below set forth our ongoing responsibilities to
Cendant.
SEPARATION AGREEMENT
In connection with Avis Rent A Car's IPO on September 24, 1997, Avis Rent A
Car and the Franchisor, a wholly-owned subsidiary of Cendant, entered into a
Separation Agreement which provides for, among other things, the assumption by
Avis Rent A Car of all liabilities relating to the vehicle rental business,
other than liabilities related to alleged acts of illegal discrimination against
customers in the rental of vehicles which are alleged to have occurred prior to
the IPO, and the allocation between Avis Rent A Car and the Franchisor of
certain other liabilities and certain indemnification obligations of Avis Rent A
Car and the Franchisor.
CROSS-INDEMNIFICATION. Subject to certain exceptions, Avis Rent A Car has
agreed to indemnify the Franchisor and its subsidiaries against any loss,
liability or expense incurred or suffered by the Franchisor or its subsidiaries
arising out of or related to the failure by Avis Rent A Car to perform or
otherwise discharge liabilities allocated to and assumed by Avis Rent A Car
under the Separation Agreement, and the Franchisor has agreed to indemnify Avis
Rent A Car and its subsidiaries against any loss, liability or expense incurred
or suffered by Avis Rent A Car or its subsidiaries arising out of or related to
the failure by the Franchisor to perform or otherwise discharge the liabilities
retained by the Franchisor under the Separation Agreement, including any
liabilities arising out of alleged acts of illegal discrimination against
customers in the rental of vehicles which are alleged to have occurred prior to
the IPO. The Separation Agreement also includes procedures for notice and
payment of indemnification claims and provides that the indemnifying party may
assume the defense of a claim or suit brought by a third party.
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<PAGE>
MASTER LICENSE AGREEMENT
Avis' status as an Avis System franchisee is governed by the Master License
Agreement. Pursuant to the Master License Agreement, ARACS has agreed to pay the
Franchisor a monthly base royalty of 3.0% of ARACS' gross revenue. In addition,
ARACS has agreed to pay a supplemental royalty of 1.0% of gross revenue payable
quarterly in arrears which will increase periodically to a maximum of 1.5% in
2003 (the "Supplemental Fee"). These fees have been paid by ARACS since January
1, 1997. Until July 30, 2002, the Supplemental Fee, or a portion thereof, may be
deferred if ARACS does not attain certain financial targets. Any Supplemental
Fees that are deferred will bear interest at a market rate until paid and will
be expressly subordinated to indebtedness of ARACS. The royalties charged to
ARACS for the twelve months ended December 31, 1998 amounted to $91.9 million.
Additionally, ARACS is required to spend at least 1.2% of its gross revenues on
advertising.
ARACS has the exclusive right to open Avis franchises in 28 selected
standard metropolitan statistical areas in the United States, in territories
outside the United States that are not currently licensed to other Avis System
franchisees and in territories that ARACS purchases from existing franchisees
that have exclusivity. ARACS has the non-exclusive right to open new franchises
in any other market not currently served by another Avis System franchisee. In
the markets where ARACS has a non-exclusive right to open new franchises, ARACS
will have a right of first refusal to develop such area prior to the
Franchisor's granting a license to a third party. In the event Cendant acquires
another car rental company, ARACS has a right of first refusal to negotiate a
grant of a license to operate the rental locations for such car rental company
within any territory in which ARACS operates.
The Master License Agreement provides the Franchisor with significant rights
regarding the business and operations of ARACS. ARACS is required to operate
each of its Avis franchises in accordance with certain standards contained in
the Avis operating manual (the "Operating Manual"). Pursuant to the Master
License Agreement, the Franchisor may impose certain guidelines relating to the
Avis System, the vehicle rental operations and the amount of advertising and
promotional expenditures. In general, the Master License Agreement provides that
ARACS may not (1) engage in any other vehicle rental business or (2) disclose
the terms of the Operating Manual or any other confidential information relating
to the Avis System to any third party. In addition, ARACS agreed not to use any
of the licensed trademarks other than in its vehicle rental business without the
Franchisor's consent.
The Master License Agreement will terminate without offering ARACS an
opportunity to cure its default, if (A) certain bankruptcy and insolvency events
occur, (B) ARACS or Avis Rent A Car purports to transfer any of its rights and
obligations under the Master License Agreement or in the case of Avis Rent A
Car, more than 10% of the equity interests in ARACS, without compliance with the
terms of the Master License Agreement, (C) ARACS competes with the Franchisor in
violation of the Master License Agreement, (D) ARACS discloses the confidential
information of the Franchisor in violation of the Master License Agreement, (E)
ARACS challenges Wizard Co.'s rights to the licensed proprietary marks or (F)
ARACS receives three or more notices of termination for Curable Defaults (as
defined) which are cured or not cured (A through F are collectively, the
"Non-Curable Defaults"); provided that, except for (A) above, the Franchisor
must give ARACS 30 days notice of such Non-Curable Default. The Franchisor may
also terminate the Master License Agreement if ARACS (1) fails, refuses or
neglects to promptly pay monies owing to the Franchisor or Cendant under certain
specified agreements, (2) misuses or makes any unauthorized use of the licensed
proprietary marks or otherwise materially impairs the goodwill associated with
such marks, (3) engages in any business or markets any service or product under
a name or mark which, in the Franchisor's opinion, is similar to the licensed
proprietary marks, (4) fails to maintain material compliance with the standards
prescribed by the Franchisor in the Master License Agreement, in
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<PAGE>
the Operating Manual or otherwise in writing or (5) with respect to any
facility, fails to maintain compliance with the standards or procedures
prescribed by the Franchisor at such facility (collectively, the "Curable
Defaults"); PROVIDED, HOWEVER, that ARACS will have 30 days (10 days in the case
of (1) above) after its receipt from the Franchisor of written notice of such
default to remedy such default and, PROVIDED, FURTHER, that other than with
respect to (1) above, in the event such default is not cured within 30 days but
ARACS has commenced to cure such default within 30 days and is diligently
prosecuting such cure to completion, ARACS will have up to an additional 60 days
to cure such default. In the event of a termination of the agreement, the
Franchisor has the option to acquire ARACS's rental locations, leases and fleet
for fair value.
REGISTRATION RIGHTS AGREEMENT
In connection with the IPO, Avis Rent A Car entered into a registration
rights agreement, pursuant to which Cendant and certain transferees of Class A
Common Stock held by the Franchisor (the "Holders") have the right to require
Avis Rent A Car to register all or part of the Class A Common Stock owned by
such Holders under the Securities Act (a "Demand Registration"); provided that
Avis Rent A Car must postpone giving effect to a Demand Registration up to a
period of 30 days if Avis Rent A Car believes such registration might have a
material adverse effect on any plan or proposal by Avis with respect to any
financing, acquisition, recapitalization, reorganization or other material
transaction, or Avis Rent A Car is in possession of material non-public
information that, if publicly disclosed, could result in a material disruption
of a major corporate development or transaction then pending or in progress or
in other material adverse consequences to Avis Rent A Car. Cendant has advised
Avis Rent A Car that it does not have any present intention to request any such
registration. In addition, the Holders have the right to participate in
registrations by Avis Rent A Car of Class A Common Stock (a "Piggyback
Registration"). The Holders will pay all out-of-pocket expenses incurred in
connection with any Demand Registration. Avis Rent A Car will pay any expenses
incurred in connection with a Piggyback Registration, except for underwriting
discounts, commissions and expenses attributable to the shares of Class A Common
Stock sold by such Holders. Cendant has exercised its rights under this
agreement. Accordingly, Avis Rent A Car has filed a registration statement with
respect to the Class A Common Stock owned by Cendant.
COMPUTER SERVICES AGREEMENT
The Wizard System, together with the associated back office and accounting
systems, is owned and operated by Cendant at a computer center in Garden City,
New York. ARACS purchases use of the Wizard System for the purpose of processing
reservation and rental transactions, and for accounting purposes, under the
terms of a computer services agreement entered into with Cendant in connection
with the IPO. The computer services agreement provides ARACS with access to all
functions of the Wizard System. ARACS participates in the funding of the
development costs for any new features which it agrees with other relevant users
to be desirable. Once developed, any such additional features also become
available to ARACS. Cendant charges ARACS the full cost of providing computer
services each month. The method of calculating costs chargeable to ARACS varies
depending on the service being provided. In 1998, ARACS paid a total of $35.8
million under the computer services agreement to Cendant. The computer services
agreement is coterminous with the Master License Agreement. Cendant may
terminate the agreement if, among other things, ARACS fails to pay any amount
due within 10 days of notice from Cendant and there has been a similar default
within the past six months. However, Cendant has agreed to provide services to
ARACS for a period of up to twelve months in the event the computer services
agreement is terminated in accordance with certain provisions thereof.
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RESERVATION SERVICES AGREEMENT
In connection with the IPO, ARACS entered into a reservation services
agreement with Cendant, pursuant to which Cendant agreed to operate and maintain
(directly or by subcontracting with affiliates or one or more third parties)
reservation center services consistent with the services historically provided
to ARACS. ARACS is obligated to obtain and maintain at its vehicle rental
locations the computer equipment and communication equipment and service
required to participate in the reservation system. ARACS agreed to pay Cendant
(A) a per call charge for each call received in the call centers operated by
Cendant for the Avis System, (B) for manually entered transactions, a per
booking charge for every booking made through direct electronic interface with
the global distribution systems utilized by the airlines and (C) a per booking
charge for every booking made through an internet connection for the Avis
System. Such fees are subject to adjustment annually to reflect the cost of
providing such service. In 1998, ARACS paid a total of $49.9 million under the
reservation services agreement to Cendant. The reservation services agreement
will terminate upon the termination of the Master License Agreement, unless
earlier terminated in accordance with the terms thereof.
PURCHASING SERVICES AGREEMENT
In connection with the IPO, Cendant and ARACS entered into a purchasing
services agreement pursuant to which Cendant agreed, with the assistance of
ARACS, to identify vendors and programs which would benefit ARACS and pursue
establishing a preferred alliance program with such vendors for the benefit of
ARACS. Any commissions, related access fees or other amounts paid by preferred
alliance partners in connection with an agreement relating to sales to ARACS
will be shared by the parties.
CALL TRANSFER AGREEMENT
ARACS and Cendant are parties to a call transfer agreement pursuant to which
Cendant agreed to transfer telephone calls from its lodging customers if such
customers wish to rent vehicles. Pursuant to the call transfer agreement, ARACS
has agreed to pay to Cendant a fee of $1.75 per call transferred to ARACS by
Cendant. Further, ARACS has agreed to pay to Cendant a fee of $8.00 for each car
rental that results from a call transferred by Cendant. ARACS has guaranteed
that it will pay Cendant no less than $2.25 million in recurring fees during
each of the five years of the contract term which expires on March 4, 2002.
ARACS recorded $2.6 million in fees payable to Cendant for the fiscal year ended
December 31, 1998.
TAX DISAFFILIATION AGREEMENT
In connection with the IPO, Avis Rent A Car and Cendant entered into a tax
disaffiliation agreement that sets forth each party's rights and obligations
with respect to payments and refunds, if any, for taxes relating to taxable
periods before and after the IPO and related matters such as the filing of tax
returns and the conduct of audits and other proceedings involving claims made by
taxing authorities.
On or prior to October 17, 1996, the Franchisor was the common parent of an
affiliated group of corporations within the meaning of Section 1504(a) of the
Internal Revenue Code of 1986, as amended, whose members included the
Franchisor, Avis Rent A Car and certain of their respective subsidiaries (the
"Old Avis Group"). Generally, under the tax disaffiliation agreement, Avis Rent
A Car agreed to indemnify Cendant for (i) taxes of or attributable to the Old
Avis Group, any member of the Old Avis Group and any nonconsolidated subsidiary
of the Franchisor for any period or portion thereof ending on or before October
17, 1996, (ii) taxes incurred pursuant to Section 1.1502-6 of the U.S. Treasury
regulations (or similar provisions under state, local or foreign
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law imposing several liability upon members of a consolidated, combined,
affiliated or unitary group) as a result of any member of the Old Avis Group
having been a member of another affiliated group, (iii) taxes of or attributable
to Avis Rent A Car and its subsidiaries for periods or portions thereof
beginning the day after October 17, 1996 and (iv) transfer taxes incurred as a
result of the transactions contemplated by the IPO.
LEASE AGREEMENTS
Avis and Cendant currently share three facilities which are located in (i)
Virginia Beach, Virginia, (ii) Tulsa, Oklahoma and (iii) Garden City, New York.
The Virginia Beach property is owned by Cendant. The Garden City property (which
houses Avis' principal executive offices) and the Tulsa property are each owned
by third parties unrelated to Avis or Cendant and are leased by Cendant.
In connection with the IPO, ARACS and Cendant entered into a lease or a
sublease agreement with respect to each property, as applicable. Cendant leases
space at its Virginia Beach property to ARACS pursuant to a lease agreement. The
lease agreement has a term of 18 years and requires ARACS to pay Cendant its
proportionate share, based on allocated space, of the cost of operating such
facility which in 1998, totalled $1.2 million. In addition, Cendant subleases
space at its Tulsa and Garden City properties to ARACS pursuant to sublease
agreements for each respective property. The sublease agreement for the Garden
City property terminates in 2015, or upon the earlier termination of the Master
License Agreement. The sublease agreement for the Tulsa property terminates in
2001, or upon the earlier termination of the Master License Agreement. Both
sublease agreements require ARACS to reimburse Cendant for its proportionate
share, based on allocated space, of the rent and other charges required under
Cendant's existing leases relating to such properties, together with its
proportionate share, based on allocated space, of the cost of operating such
facilities which, in 1998, totalled $3.3 million and $1.2 million for the Garden
City and Tulsa properties, respectively.
INFORMATION TECHNOLOGY SERVICES AGREEMENT
In connection with the VMS Acquisition, PHH Vehicle Management Services, LLC
and Cendant entered into an information technology services agreement whereby
Cendant agreed to provide VMS with certain information technology services.
These services include: management and operation of the data center facility;
file service activities to allow Cendant to maintain, retrieve and back-up VMS
data; performing tape library management; ensuring information security;
capacity planning and management; physical security at the data center; change
management and control; service request management; business resumption and
disaster recovery; systems operations; technical support; and wide area network
services, including design, access, engineering and management; reports,
capacity planning and management and operations.
This agreement has an initial term of 30 months and will then be
automatically extended unless terminated by either party at any time after the
18th month by providing one year's written notice. Cendant has the right to
terminate the agreement on twelve month's notice if Cendant determines to cease
providing these services to all of its customers. During the first 18 months,
VMS will be charged Cendant's actual cost for the provision of the services.
After that time, VMS will be charged actual cost plus 25%. Cendant retains
exclusive property rights in all Cendant software used in the fulfillment of its
obligations under this agreement.
AVIS CORPORATE SERVICES TRANSITION AGREEMENT
In connection with the VMS Acquisition, Avis Fleet and Cendant entered into
the Avis corporate services transition agreement whereby Cendant agreed to
provide Avis Fleet with certain services. These services include: the provision
and administration of employee benefits; processing of
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corporate accounts payable, payroll and tax filings; cash management reporting;
risk management support services for the invoicing and underwriting of
insurance; fixed asset administration; credit risk management and corporate
financial systems. This agreement expires on December 31, 1999 with most
services terminating prior to that date, except that Cendant must continue to
provide corporate financial systems services until December 31, 2000. The
initial terms of service for corporate payroll, accounts payable and fixed asset
administration, however, expire on September 30, 1999. Upon mutual written
agreement, the parties may extend the term of any or all of the services for
additional, successive six month terms.
CENDANT CORPORATE SERVICES TRANSITION AGREEMENT
Avis Fleet and PHH Corporation entered into a corporate services transition
agreement dated as of June 30, 1999 whereby Avis Fleet agreed to provide PHH
Corporation with certain services. These services include: operating the general
ledger, accounts payable and receivable operations for PHH Corporation on the
Avis Fleet mainframe; continuing technical support; facilities management;
provision of certain health and fringe benefits; the billing, processing and
funding arrangements for relocation transactions provided by PHH Corporation to
clients in the Republic of Ireland; location and retrieval of archived files;
and the servicing of equipment leases. The agreement expires on December 31,
1999 unless earlier terminated by the parties, except that Avis Fleet must
continue to service the equipment leases until such leases have terminated and
Avis Fleet must locate and make available archived files until June 30, 2005.
The parties may, upon mutual written agreement, extend the term of any or all of
the services for additional, successive six month terms.
VMS ACQUISITION REGISTRATION RIGHTS AGREEMENT
In connection with the VMS Acquisition, Avis Rent A Car, Avis Fleet, PHH
Corporation and PHH Holdings entered into a registration rights agreement dated
as of June 30, 1999 pursuant to which PHH Corporation and its transferees (the
"Holders") will have the right to require Avis Rent A Car to register under the
Securities Act all or part of any of the following Class A Common Stock
beneficially owned by any such Holder: (x) Class A Common Stock issued to PHH
Corporation upon exchange of Class B Common Stock and (y) Class A Common Stock
acquired by PHH Corporation, Cendant, PHH Holdings or any other affiliate of PHH
Corporation in the open market at a time when any of the aforementioned entities
was deemed to be an affiliate of Avis Rent A Car and then transferred to a
Holder (a "Demand Registration"). Avis Rent A Car may postpone giving effect to
a Demand Registration for a period of up to 30 days if Avis Rent A Car believes
such registration might have a material adverse effect on any plan or proposal
by Avis Rent A Car with respect to any financing, acquisition, recapitalization,
reorganization, or other material transaction, or Avis Rent A Car is in
possession of material non-public information that, if publicly disclosed, could
result in a material disruption of a major corporate development or transaction
then pending or in progress or in other material adverse consequences to Avis
Rent A Car. If any Holder of securities to be covered by a Demand Registration
desires to sell the securities in an underwritten offering, such Holder has the
right to select an investment banking firm and Avis Rent A Car must enter into
underwriting agreements with the selected firm. In addition, the Holders will
have the right, subject to certain limitations, to participate in underwritten
registrations by Avis Rent A Car of Class A Common Stock.
TRADEMARK LICENSE AGREEMENT
In connection with the VMS Acquisition, PHH Holdings and Avis Fleet entered
into a trademark license agreement dated as of June 30, 1999 whereby Avis Fleet
obtained a perpetual, worldwide, royalty-free, exclusive right and license to
use certain licensed marks owned by PHH Holdings,
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including the PHH name and logo, in connection with the operation of its
business. Avis Fleet may also sublicense the marks. PHH Holdings, however,
retains the right to use and permit others to use the marks in connection with
any and all products and services other than vehicle management and fuel card
products and services. PHH Holdings has the right to inspect and monitor the use
of the marks by Avis Fleet.
TRANSITIONAL LICENSE AGREEMENT
In connection with the VMS Acquisition, Cendant and Avis Fleet entered into
a transitional license agreement dated as of June 30, 1999 whereby Avis Fleet
obtained a license to use certain licensed marks owned by Cendant, including the
Cendant name and logo, to sell off, deplete or dispose of, existing inventory of
products and business materials used by Cendant in connection with the vehicle
management and fuel card businesses. The agreement terminates upon the earlier
of (i) the depletion or disposal of all existing inventory or products and
business materials using the licensed marks or (ii) the first anniversary of the
agreement.
STOCKHOLDERS' AGREEMENT
In connection with the VMS Acquisition, Avis Rent A Car, Avis Fleet and PHH
Corporation entered into a stockholders' agreement dated as of June 30, 1999
whereby PHH Corporation agreed to cause Cendant Car Rental, Inc. to vote all
shares of Avis Rent A Car owned by it in favor of amending the Certificate of
Incorporation of Avis Rent A Car to permit the issuance of the Class B Common
Stock and the Class A Common Stock into which it may be converted. In return,
Avis Rent A Car covenanted to maintain specified levels of paid-in capital and
common equity and to take all actions necessary to effectuate the conversion of
Series A Preferred Stock into Class B Common Stock and the exchange of Class B
Common Stock for Class A Common Stock. Additionally, Avis Fleet covenanted to
deliver certain financial information to PHH Corporation. This agreement
terminates on the earliest of (a) the redemption of the Series A Preferred Stock
acquired by PHH Corporation by Avis Fleet and (b) the tenth anniversary of the
agreement.
INSTRUMENT OF ASSUMPTION
In connection with the VMS Acquisition, Avis Fleet executed an instrument of
assumption dated as of June 30, 1999 whereby Avis Fleet assumed and agreed to
perform, pay or discharge in accordance with their terms, to the extent not
previously performed, paid or discharged, all liabilities and obligations of PHH
Holdings arising out of or related to the indebtedness of PHH Holdings to PHH
Corporation, which may not exceed an aggregate principal amount of
$1,438,000,000, pursuant to a loan agreement dated January 13, 1999 between PHH
Holdings and PHH Corporation.
UNDERTAKING
In connection with the VMS Acquisition, Avis Fleet executed an undertaking
dated as of June 30, 1999 whereby Avis Fleet undertook, assumed and agreed to
perform, pay or discharge in accordance with their terms, to the extent not
previously performed, paid or discharged, all liabilities and obligations of VMS
as of the effective time of the VMS Acquisition and all debts, liabilities and
obligations of VMS after the closing of the VMS Acquisition.
NON-COMPETITION AGREEMENT
In connection with the VMS Acquisition, Avis Rent A Car, Avis Fleet, PHH
Holdings and PHH Corporation entered into a non-competition agreement dated as
of June 30, 1999 whereby PHH Holdings and PHH Corporation agreed that for a five
year period, they would not, and would cause
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each of their respective affiliates not to, directly or indirectly, engage in or
own any interest in any business that engages in the vehicle fleet management or
fuel card businesses or markets any product or services that directly compete
with the businesses of VMS. This restriction contains exceptions for:
investments in under five percent of a publicly traded company; existing
products and services; acquisitions of a business which derives under 15% of its
revenue from businesses which compete with VMS; and business of an entity that
acquires control of Cendant. Additionally, for a two year period from the
closing of the VMS Acquisition, PHH Holdings and PHH Corporation are also barred
from soliciting for employment any person who is at such time a VMS employee.
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DESCRIPTION OF AVIS FLEET PREFERRED STOCK AND CLASS B COMMON STOCK
SERIES A PREFERRED STOCK
A total of 7,200,000 shares of Series A Preferred were issued upon
consummation of the VMS Acquisition and are currently outstanding. Holders of
Series A Preferred are not entitled to preemptive rights. The Series A Preferred
has an aggregate liquidation preference of $360 million or $50 per share (the
"Series A Liquidation Preference"). Each share of Series A Preferred shall
accrue dividends at a rate per annum of 5% of the Series A Liquidation
Preference, payable semi-annually in arrears. In addition, if Avis Rent A Car is
unable to obtain the consent of its Shareholders to amend its charter by June
2000 to issue Class B Common Stock and Class A Common Stock issuable in exchange
for the Class B Common Stock, the dividend rate on the Series A Preferred will
increase to 12%, with retroactive effect to the date of issuance. Until the
fifth anniversary of the issuance of the Series A Preferred, these dividends may
be paid in Series B Preferred Stock at the discretion of Avis Fleet. The Series
A Preferred is also entitled to special annual dividends at a rate of 2% of the
Series A Liquidation Preference per annum, payable in cash annually on February
15(th) of each year, in the event that Avis Fleet achieves targeted consolidated
EBITDA levels. Upon liquidation, and after payment of all amounts owed to all
classes of capital stock ranked senior to the Series A Preferred, holders of
shares of Series A Preferred will receive the Series A Liquidation Preference of
such shares plus accrued and unpaid dividends.
The Series A Preferred ranks (1) junior to the Series C Preferred, PARI
PASSU to the Series B Preferred (as defined), and senior to Avis Fleet's common
stock in right of payment of the Series A Preferred dividends and special
dividends; and (2) junior to the Series C Preferred, PARI PASSU to the Series B
Preferred, and senior to Avis Fleet's common stock in right of payment of the
Series A Liquidation Preference. The Series A Preferred may be redeemed at any
time in whole or in part on or after the fifth anniversary of its date of
issuance and is mandatorily redeemable by Avis Fleet on the eleventh anniversary
of its date of issuance for an amount per share equal to the Series A
Liquidation Preference plus accrued and unpaid dividends (the "Series A
Redemption Price").
Holders of the Series A Preferred may cause Avis Fleet to redeem their
shares for cash, upon the bankruptcy or insolvency of Avis Rent A Car or a
change in control with respect to Avis Rent A Car or ARACS (a "Preferred Stock
Change of Control"), in an amount equal to either (1) the Series A Redemption
Price per share redeemed or (2) the kind and amount of securities, cash or other
assets which the holder of such Series A Preferred would have owned immediately
after the consolidation, merger, transfer or lease constituting a Preferred
Stock Change in Control if the holder had exercised its conversion option
immediately before the effective date (or, if applicable, record date) of such
transaction.
The holders of the Series A Preferred may convert shares of Series A
Preferred into shares of Class B Common Stock once specified levels of 12-month
consolidated EBITDA of Avis Rent A Car have been reached and the average closing
price of Class A Common Stock for a specified period shall have exceeded the
Performance Conversion Price. Such conversion shall be at a rate (the
"Performance Conversion Rate") obtained by dividing the per share Series A
Liquidation Preference by $50 (as adjusted for antidilution protection, the
"Performance Conversion Price").
On or after the fifth anniversary of the closing date of the VMS
Acquisition, if the share price of the Class A Common Stock has exceeded an
amount equal to 110% of the Performance Conversion Price for 20 trading days
within a period of 30 consecutive days ending within five trading days of notice
of conversion given by Avis Fleet, then the Series A Preferred will be converted
into Class B Common Stock at the Performance Conversion Rate. Upon the
bankruptcy or insolvency of Avis Fleet or any of its Significant Subsidiaries,
as defined in Rule 1-02(w) of Regulation S-X, the Series A Preferred shall
automatically convert into Class B Common Stock at the Series A Market
Conversion Rate.
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Additionally, holders of Series A Preferred may convert their Series A
Preferred into Class B Common Stock at the Series A Market Conversion Rate if
Avis Fleet: (1) fails to make a redemption payment on the Series A Preferred or
the Series B Preferred, (2) fails to pay dividends when due on either the Series
A Preferred or the Series B Preferred, (3) takes actions requiring consents of
holders of the Series A Preferred or the Series B Preferred without obtaining
such consents or (4) issues additional shares of the Series A Preferred or
Series B Preferred, or reissues shares of either, in violation of their terms.
The Series A Market Conversion Rate equals the quotient obtained by
dividing: (1) the per share Series A Liquidation Preference by (2) the average
closing price per share of Class A Common Stock for the 30 trading days
immediately preceding the date of the holder's conversion notice or the date on
which the bankruptcy case commences, as applicable. The Market Conversion Rate
is subject to customary adjustment under certain circumstances.
Upon any merger, consolidation, combination or reclassification of Avis
Fleet, (1) before the second anniversary of the date of issuance, Avis Fleet
must survive such transaction and remain a Texas corporation, and, following
such transaction, the Series A Preferred must remain outstanding, unaffected by
such transaction and (2) after the second anniversary of the Closing Date, each
holder of the Series A Preferred may, at its option, receive, other than in
connection with any such merger, consolidation or reclassification after which
100% of the common stock of Avis Fleet remains directly or indirectly owned by
Avis Rent A Car, (a) cash in an amount no less than the Series A Redemption
Price per share, or (b) the kind and amount of securities, cash or other assets
which the holder of such Series A Preferred would have owned immediately after
the consolidation, merger, transfer or lease constituting a Preferred Stock
Change in Control if the holder had exercised its conversion option immediately
before the effective date (or, if applicable, record date) of such transaction.
Without the affirmative vote of the holders of a majority of the outstanding
shares of Series A Preferred, Avis Fleet shall not (1) authorize or issue any
security ranking senior to the Series A Preferred as to dividends or on
liquidation (other than the Series C Preferred); (2) amend the articles of
incorporation or certificate of designations in a manner adverse to the holders
of the Series A Preferred; (3) authorize the issuance of additional shares of
Series A Preferred; or (4) reincorporate Avis Fleet in a jurisdiction other than
Texas prior to the second anniversary of the date of issuance. Holders of Series
A Preferred are not entitled to voting rights, except under certain
circumstances. In those circumstances where the holders of Series A Preferred
have a right to vote, each holder of a share of Series A Preferred shall be
entitled to one vote per share.
Shares of Series A Preferred shall be freely transferable. Shares of Series
A Preferred reacquired in any manner shall be retired and may not be reissued as
shares of Series A Preferred.
SERIES B PREFERRED STOCK
Series B Cumulative PIK Preferred Stock (the "Series B Preferred") will be
issued as dividends to the Series A Preferred holders by Avis Fleet. No shares
of Series B Preferred are currently outstanding. Holders of the Series B
Preferred are not entitled to preemptive rights. The Series B Preferred has a
liquidation preference of $50 per share (the "Series B Liquidation Preference").
Each share of Series B Preferred Stock shall accrue dividends at a rate per
annum of 5% of the Series B Liquidation Preference, payable in cash
semi-annually in arrears. In addition, if Avis Rent A Car is unable to obtain
the consent of its shareholders to amend its charter by June 2000 to issue Class
B Common Stock and Class A Common Stock issuable in exchange for the Class B
Common Stock, the dividend rate on the Series B Preferred will increase to 12%,
with retroactive effect to the date of issuance. Until the fifth anniversary of
the date of issuance, dividends may, at the discretion of Avis Fleet be paid in
kind; thereafter, dividends must be paid in cash. Upon
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liquidation, and after payment of all amounts owed to all classes of capital
stock ranked senior to the Series B Preferred, holders of shares of Series B
Preferred will receive the Series B Liquidation Preference of such shares plus
accrued and unpaid dividends.
The Series B Preferred has the same ranking as the Series A Preferred. The
Series B Preferred may be redeemed by Avis Fleet, in whole or in part, on or
after the fifth anniversary of the date of issuance, and must be redeemed in
whole upon the eleventh anniversary of the date of issuance for an amount per
share equal to the Series B Liquidation Preference plus accrued and unpaid
dividends (the "Series B Redemption Price").
Holders of the Series B Preferred may cause Avis Fleet to redeem their
shares for cash, upon the bankruptcy or insolvency of Avis Fleet or Avis Rent A
Car or a Preferred Stock Change in Control, at the Series B Redemption Price.
Upon any merger, consolidation, combination or reclassification of Avis Fleet,
other than in connection with any such merger, consolidation or reclassification
after which 100% of the common stock of Avis Fleet remains directly or
indirectly owned by Avis Rent A Car, each holder of the Series B Preferred will
receive on account of such holder's shares cash in an amount no less then the
Series B Redemption Price per share.
Upon the bankruptcy or insolvency of Avis Fleet or any of its Significant
Subsidiaries, the Series B Preferred shall automatically convert into Class B
Common Stock at the Series B Market Conversion Rate.
Additionally, holders of Series B Preferred Stock may convert their Series B
Preferred Stock into Class B Common Stock at the Series B Market Conversion Rate
if Avis Fleet: (1) fails to make a redemption payment on the Series A Preferred
or the Series B Preferred, (2) fails to pay dividends when due on either the
Series A Preferred or the Series B Preferred, (3) takes actions requiring
consents of holders of the Series A Preferred or the Series B Preferred without
obtaining such consents or (4) issues additional shares of the Series A
Preferred or Series B Preferred, or reissues shares of either, in violation of
their terms.
The Series B Market Conversion Rate equals the quotient obtained by
dividing: (1) the per share Series B Liquidation Preference by (2) the average
closing price per share of Avis Rent A Car Common Stock for the 30 trading days
immediately preceding the date of the holder's conversion notice or the date on
which the bankruptcy case commences, as applicable. The Market Conversion Rate
is subject to customary adjustment under certain circumstances.
Holders of Series B Preferred will have voting rights analogous to those of
the holders of the Series A Preferred. Shares of Series B Preferred shall be
freely transferable. Shares of Series B Preferred reacquired in any manner shall
be retired and may not be reissued as shares of Series B Preferred.
SERIES C PREFERRED STOCK
A total of 40,000 shares of Series C Preferred were issued upon consummation
of the VMS Acquisition and are currently outstanding. Holders of the Series C
Preferred are not entitled to preemptive rights. The Series C Preferred has an
aggregate liquidation preference of $2,000,000 or $50 per share (the "Series C
Liquidation Preference"). Each share of Series C Preferred Stock shall accrue
dividends at a rate per annum to be agreed upon, payable in cash semi-annually
in arrears. Upon liquidation, and after payment of amounts, if any, owed to all
classes of capital stock ranked senior to the Series C Preferred, holders of
shares of Series C Preferred will receive the Series C Liquidation Preference of
such shares plus accrued and unpaid dividends. The Series C Preferred ranks (1)
senior to the Series A Preferred and senior to the Class A Common Stock in right
of payment of the Series C Preferred dividends; and (2) senior to the Series A
Preferred and senior to Avis Fleet's common stock in right of payment of the
Series C Liquidation Preference. The Series C
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Preferred may be redeemed by Avis Fleet, in whole or in part, on or after the
fifth anniversary of the date of issuance, and must be redeemed in whole upon
the seventh anniversary of the date of issuance, in each case for an amount per
share equal to the Series C Liquidation Preference plus accrued and unpaid
dividends (the "Series C Redemption Price").
Holders of the Series C Preferred may cause Avis Fleet to redeem their
shares for cash, upon (i) the bankruptcy or insolvency of Avis Rent A Car, (ii)
a Preferred Stock Change in Control or (iii) notice given by a holder after the
second anniversary of the issuance of the Series C Preferred, in each case in an
amount equal to the Series C Redemption Price.
Upon any merger, consolidation, combination or reclassification of Avis
Fleet, other than in connection with any such merger, consolidation or
reclassification after which 100% of the common stock of Avis Fleet remains
directly or indirectly owned by Avis Rent A Car, (1) before the second
anniversary of the issuance of the Series C Preferred, Avis Fleet must survive
such transaction and remain a Texas corporation, and, following such
transaction, the Series C Preferred must remain outstanding, unaffected by such
transaction, or (2) after the second anniversary of the issuance of the Series C
Preferred, holders of the Series C Preferred may receive only cash consideration
in an amount not less than the Series C Redemption Price.
Holders of Series C Preferred are not entitled to voting rights, except
under certain circumstances. Without the affirmative vote of the holders of a
majority of the outstanding shares of Series C Preferred, Avis Fleet may not
take certain specified actions that would adversely affect the rights of the
holders of the Series C Preferred. Shares of Series C Preferred reacquired in
any manner will be retired and may not be reissued as shares of Series C
Preferred.
CLASS B COMMON STOCK
In the event that Avis Rent A Car obtains the consent of its Shareholders to
amend its charter by June 2000 to issue Class B Common Stock, Avis Rent A Car
will authorize and reserve for issuance shares of Class B Common Stock to be
issued upon the conversion of the Series A Preferred or the Series B Preferred.
The Class B Common Stock will rank (1) junior to any class or series of
preferred stock of Avis Rent A Car and (2) pari passu with the Class A Common
Stock in right of payment of dividends and on liquidation. The Class B Common
Stock is nonvoting.
At any time that the beneficial ownership by Cendant, together with any
affiliate of Cendant (Cendant and such affiliates, the "Cendant Affiliates"), of
the Class A Common Stock is less than 20% of the voting power of the outstanding
shares of Class A Common Stock, the Cendant Affiliates shall have the right to
convert shares of Class B Common Stock into Class A Common Stock on a
share-for-share basis in an amount such that the ownership by the Cendant
Affiliates of the Class A Common Stock does not exceed 20% of the voting power
of the outstanding shares of Class A Common Stock after giving effect to such
conversion.
The Cendant Affiliates shall have the right to convert the Class B Common
Stock into shares of Class A Common Stock on a share-for-share basis upon the
occurrence of (1) a bankruptcy or insolvency of Avis Rent A Car and (2) a
Preferred Stock Change of Control, other than any Preferred Stock Change of
Control that is caused solely by the sale by the Cendant Affiliates of its
shares of Class A Common Stock or Class B Common Stock.
Upon the transfer, sale or disposition for value to any person other than
the Cendant Affiliates, each share of Class B Common Stock shall be
automatically exchanged for the Class A Common Stock on a share-for-share basis.
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Holders of Class B Common Stock will not be entitled to any voting rights,
except under certain circumstances. In those circumstances where the holders of
Class B Common Stock have a right to vote, each holder of a share of Class B
Common Stock shall be entitled to one vote per share.
Other than upon conversion of the Series A Preferred or the Series B
Preferred Stock, no additional shares of Class B Common Stock may be issued.
Shares of Class B Common Stock shall be freely transferable. Shares of Class B
Common Stock reacquired in any manner shall be retired and may not be reissued
as shares of Class B Common Stock.
In connection with the VMS Acquisition, Avis Rent A Car entered into a
registration rights agreement, pursuant to which Cendant and certain transferees
of Class B Common Stock and Class A Common Stock converted from the Class B
Common Stock held by Cendant (the "Holders") will have the right to require Avis
Rent A Car to register all or part of the Class A Common Stock owned by such
Holders under the Securities Act (an "Acquisition Demand Registration");
provided that Avis Rent A Car may postpone giving effect to an Acquisition
Demand Registration for a period of up to 30 days if Avis Rent A Car believes
such registration might have a material adverse effect on any plan or proposal
by Avis with respect to any financing, acquisition, recapitalization,
reorganization or other material transaction, or Avis Rent A Car is in
possession of material non-public information that, if publicly disclosed, could
result in a material disruption of a major corporate development or transaction
then pending or in progress or in other material adverse consequences to Avis
Rent A Car. In addition, the Holders will have the right to participate in
registrations by Avis Rent A Car of Class A Common Stock (an "Acquisition
Piggyback Registration"). The Holders will pay all out-of-pocket expenses
incurred in connection with any Acquisition Piggyback Registration, except for
underwriting discounts, commissions and expenses attributable to the shares of
Class A Common Stock sold by such Holders.
DESCRIPTION OF OTHER INDEBTEDNESS
THE NEW CREDIT FACILITY
In connection with the VMS Acquisition, Avis Rent A Car entered into the New
Credit Facility. The following summary of the material provisions of the New
Credit Facility does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the terms of the New Credit Facility.
Under the New Credit Facility, a syndicate of lenders led by The Chase
Manhattan Bank have made a total of $1.35 billion available to us in the form of
a $250.0 million Term A Loan, a $375.0 million Term B Loan, a $375.0 million
Term C Loan, and a Revolving Credit Facility of up to $350.0 million. On the
date of the consummation of the VMS Acquisition (the "Acquisition Closing
Date"), Avis Rent A Car borrowed the full $1.0 billion under the Term A Loan,
Term B Loan and Term C Loan and $73.0 million under the Revolving Credit
Facility and used those borrowings to finance a portion of the VMS Acquisition
and to repay and terminate ARACS' existing bank credit facilities. The loans
under the New Credit Facility bear interest at variable rates at a fixed margin
above either The Chase Manhattan Bank's alternative base rate or the Eurodollar
rate.
All borrowings by Avis Rent A Car under the New Credit Facility are
guaranteed by each U.S. subsidiary of Avis Rent A Car, including Avis Fleet, but
excluding its banking, insurance and special purpose financing subsidiaries.
The New Credit Facility is secured by a first-priority perfected lien on
substantially all of the tangible and intangible assets of Avis Rent A Car and
each guarantor under the New Credit Facility except to the extent that such
assets secure either of the ABS Facilities, and by a pledge of all of
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the capital stock of each of Avis Rent A Car's U.S. subsidiaries and 65% of the
capital stock of all first-tier non-U.S. subsidiaries.
Avis Rent A Car may voluntarily prepay some or all of obligations under the
New Credit Facility, but in some cases such voluntary prepayment will require
the payment of a premium. In addition, the loans under the New Credit Facility
are subject to mandatory prepayment under certain circumstances, including if
Avis Rent A Car generates excess cash flow. Avis Rent A Car must apply 50% of
excess cash flow to repay outstanding term loans for each fiscal year commencing
with the 2000 fiscal year.
REVOLVING CREDIT FACILITY. Pursuant to the Revolving Credit Facility, up to
$350.0 million may be borrowed, repaid and reborrowed by us from time to time.
Credit enhancement letters of credit of up to $225,000,000 in the aggregate and
other standby letters of credit of up to $75,000,000 in the aggregate are
available under the Revolving Credit Facility. At Avis' option, loans under the
Revolving Credit Facility bear interest at either The Chase Manhattan Bank's
alternate base rate or the Eurodollar rate, plus, in each case, the applicable
margin. The initial applicable margin will be 2.75% in the case of Eurodollar
loans and 1.75% in the case of alternate base rate loans. The Revolving Credit
Facility terminates six years after the closing date of the New Credit Facility.
TERM A LOAN. The $250.0 million Term A Loan was made available in a single
borrowing that occurred on the Acquisition Closing Date, and once repaid, cannot
be reborrowed. The Term A Loan bears interest at the same optional rates as the
Revolving Credit Facility and matures on the sixth anniversary of the closing of
the New Credit Facility. Avis Rent A Car must make mandatory repayments of
principal on the Term A Loan in quarterly installments.
TERM B LOAN. The $375.0 million Term B Loan was made available in a single
borrowing that occurred on the Acquisition Closing Date, and once repaid, cannot
be reborrowed. At Avis Rent A Car's option, the Term B Loan bears interest at
either The Chase Manhattan Bank's alternative base rate plus 2.25% or its
Eurodollar rate plus 3.25%. The Term B Loan matures on the seventh anniversary
of the closing of the New Credit Facility. Avis Rent A Car must make nominal
repayments of principal on the Term B Loan on a quarterly basis through the
maturity date of the Term A Loan and quarterly payments of the balance during
the last year that the Term B Loan is outstanding.
TERM C LOAN. The $375.0 million Term C Loan was made available in a single
borrowing that occurred on the Acquisition Closing Date, and once repaid, cannot
be reborrowed. At Avis Rent A Car's option, the Term C Loan bears interest at
either The Chase Manhattan Bank's alternative base rate plus 2.50% or its
Eurodollar rate plus 3.50%. The Term C Loan matures on the eighth anniversary of
the closing of the New Credit Facility. Avis Rent A Car must make nominal
repayments of principal on the Term C Loan on a quarterly basis through the
maturity date of the Term B Loan and quarterly payments of the balance during
the last year that the Term C Loan is outstanding.
In addition to paying interest on the outstanding principal under the New
Credit Facility, Avis Rent A Car will be required to pay a commitment fee to the
lenders under the Revolving Credit Facility-in respect of unutilized commitments
thereunder at a rate equal to 0.5% per annum on the average daily unused portion
of the Revolving Credit Facility, payable quarterly in arrears.
The New Credit Facility contains negative covenants limiting our ability to,
among other things, incur debt, create liens, guarantee obligations, pay
dividends, make distributions or stock repurchases, make loans and advances,
modify the Avis franchise agreements, engage in sales and lease backs, change
Avis' fiscal year, agree to negative pledge clauses, change our lines of
business, make investments or capital expenditures, engage in transactions with
affiliates, sell assets, and engage in mergers or acquisitions. Except on terms
satisfactory to the required lenders,
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we will also be restricted from refinancing, defeasing, repurchasing or repaying
its subordinated debt.
The New Credit Facility requires us to maintain certain financial ratios,
including maximum leverage ratios (decreasing from 5.75 to 1.00 in the third
quarter of fiscal 1999 to 3.00 to 1.00 commencing with the fourth quarter of
fiscal 2004 for the remainder of the term of the loans) and minimum interest
coverage ratios (increasing from 2.00 to 1.00 in the third quarter of fiscal
1999 to 3.25 to 1.00 commencing with the fourth quarter of fiscal 2004 for the
remainder of the term of the loans) and minimum Adjusted EDITDA coverage ratios
(increasing from 1.10 to 1.00 in the fourth quarter of fiscal 1999 to 1.25 to
1.00 commencing with the fourth quarter of fiscal 2003 for the remainder of the
term of the loans). Failure to satisfy any of these financial covenants
constitutes an event of default under the New Credit Facility. The New Credit
Facility also includes other customary events of default, including, without
limitation, a cross-default to New Avis' other material indebtedness or certain
changes in control.
VEHICLE-RELATED INDEBTEDNESS
AVIS ABS FACILITY. The Avis ABS Facility is a domestic integrated financing
program that provides for up to $3.75 billion in financing for vehicles covered
by Repurchase Programs, with up to 25% of the Avis ABS Facility available for
vehicles not covered by Repurchase Programs. The Avis ABS Facility consists of
Variable Funding Notes and Medium Term Notes that were issued by AESOP Funding
II, L.L.C. ("AFC-II"), an indirect subsidiary of ARACS, pursuant to an Amended
and Restated Base Indenture dated July 30, 1997 between AFC-II and Harris Trust
and Savings Bank, as trustee.
On July 30, 1997 AFC-II issued $800,000,000 of 6.22% Medium Term Notes due
July 2000, $850,000,000 of 6.40% Medium Term Notes due July 2002 and
$990,699,000 of Variable Funding Notes with an average rate of 5.9% in 1997 and
5.6% in 1998. On February 26, 1998 AFC-II issued additional $600,000,000 of
6.14% Medium Term Notes due February 2005, the proceeds of which were used to
repay borrowings under the Variable Funding Notes.
The Variable Funding Notes and the Medium Term Notes are indirectly secured
by, among other things, a first priority security interest in Avis' fleet. The
Variable Funding Notes support the issuance by a special purpose company of
commercial paper notes that are rated A-1 by S&P and P-1 by Moody's. The Medium
Term Notes are guaranteed under a surety bond issued by MBIA and as a result are
rated AAA by S&P and Aaa by Moody's. All series of Medium Term Notes rank
equally in right of payment among themselves and with the Variable Funding
Notes.
AFC-II uses the proceeds from the sale of the Variable Funding Notes and the
Medium Term Notes to provide loans to AESOP Leasing L.P. and AESOP Leasing Corp.
II for their purchase of vehicles that are then leased to ARACS. In connection
with the Avis ABS Facility, ARACS has entered into operating lease and finance
lease agreements with AESOP Leasing L.P. and AESOP Leasing Corp. II for the
leasing of vehicles for the conduct of Avis' rental car business.
At June 30, 1999, Avis had approximately $3.72 billion of debt outstanding
under the Avis ABS Facility. In addition, at June 30, 1999, it had approximately
$34 million of additional credit available for vehicle purchases.
INTERIM VMS ABS FACILITY. We refinanced VMS' fleet debt using the proceeds
of approximately $3.5 billion of asset-backed securities issued pursuant to the
Interim VMS ABS Offering. The Interim VMS ABS Facility currently consists of (i)
up to $2.5 billion of Domestic VFNs, (ii) up to $236 million of Domestic
Preferred Membership Interests and (iii) up to $829 million of U.K. Advances.
The domestic securities comprising the Interim VMS ABS Offering (the "Domestic
Asset-Backed Securities") were issued by a bankruptcy remote special purpose
entity (the "Domestic ABS
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Issuer") and placed initially with a single multi-seller commercial paper
conduit, and thereafter may be syndicated to one or more other bank sponsored
conduits (collectively the "CP Conduits").
The Domestic Asset-Backed Securities are backed by, among other things, the
following assets of the D.L. Peterson Trust, a bankruptcy-remote special purpose
Delaware business trust: VMS' domestic vehicle fleet, VMS' domestic vehicle
lease portfolio and a portion of the receivables generated from VMS' domestic
fee-based products and services (the "Domestic ABS Assets"). U.K. Advances are
backed by, among other things, a first priority security interest in VMS'
European vehicle fleet, vehicle lease portfolio and fee-based receivables.
The CP Conduits acquire Domestic VFNs, Domestic Preferred Membership
Interests and U.K. Advances using the proceeds of commercial paper issuances. In
addition, from time to time, the Domestic ABS Issuer may issue medium-term notes
secured by the Domestic ABS Assets, using the proceeds of any such offerings to
reduce the amount of Domestic VFNs then outstanding.
The Domestic ABS Issuer is required to maintain certain amounts on deposit
in an account with the indenture trustee for the Domestic Asset-Backed
Securities. These amounts will increase if the performance of the lease
portfolio deteriorates or lease rates decline in relation to the cost of funds
increase in certain events.
OTHER INTERNATIONAL INDEBTEDNESS. At December 31, 1998, Avis had available
letters of credit/ overdraft agreements for its international operations
totaling $29.8 million. The collateral for certain of these agreements consists
of a pledge of cash balances in the amount of $25 million. At December 31, 1998,
Avis had outstanding letters of credit under these facilities totaling $26.7
million. In addition, for certain of its international operations, Avis had
available unused lines of credit aggregating $227.1 million at December 31,
1998.
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DESCRIPTION OF NOTES
Avis Rent A Car, Inc. will issue the notes under the Indenture (the
"Indenture") among itself, the Subsidiary Guarantors and The Bank of New York,
as trustee (the "Trustee"). The terms of the notes include those expressly set
forth in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
This description of notes is intended to be a useful overview of the
material provisions of the notes and the Indenture. Since this description of
notes is only a summary, you should refer to the Indenture for a complete
description of the obligations of Avis Rent A Car, Inc. and your rights.
The section entitled "Certain Definitions" includes the definitions of the
capitalized terms used in this description.
GENERAL
THE NOTES. The notes:
- are general unsecured, senior subordinated obligations of Avis Rent A Car;
- are limited to an aggregate principal amount of $500.0 million;
- mature on May 1, 2009;
- will be issued in denominations of $1,000 and integral multiples of
$1,000;
- will be represented by one or more registered notes in global form, but in
certain circumstances may be represented by notes in definitive form. See
"Book-Entry; Delivery and Form";
- are subordinated in right of payment to all existing and future Senior
Indebtedness of Avis Rent A Car;
- rank equally in right of payment to any future Senior Subordinated
Indebtedness of Avis Rent A Car;
- are unconditionally guaranteed on a senior subordinated basis by Avis Rent
A Car System, Inc. and each other Domestic Subsidiary of Avis Rent A Car
that guarantees the Senior Credit Facilities. See "Subsidiary Guarantees";
and
- are eligible for trading in the PORTAL market.
INTEREST. Interest on the notes will compound semi-annually and:
- accrue at the rate of 11% per annum;
- accrue from the date of issuance or the most recent interest payment date;
- be payable in cash semi-annually in arrears on May 1 and November 1 and
commencing on November 1, 1999;
- be payable to the holders of record on the April 15 and October 15
immediately preceding the related interest payment dates; and
- be computed on the basis of a 360-day year comprised of twelve 30-day
months.
PAYMENTS ON THE NOTES
Principal of, premium, if any, and interest on the notes will be payable,
and the notes may be exchanged or transferred, at the office or agency of Avis
Rent A Car in the Borough of Manhattan, The City of New York (which initially
will be the corporate trust office of the Trustee in New York,
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New York), except that, at the option of Avis Rent A Car, payment of interest
may be made by check mailed to the address of the holders as such address
appears in the Note Register. Payment of principal of, premium, if any, and
interest on, notes in global form registered in the name of or held by the
Depositary or its nominee will be made in immediately available funds to the
Depositary or its nominee, as the case may be, as the registered holder of such
global note. No service charge will be made for any registration of transfer or
exchange of notes, but Avis Rent A Car may require payment of a sum sufficient
to cover any transfer tax or other similar governmental charge payable in
connection therewith.
PAYING AGENT AND REGISTRAR
The Trustee will initially act as Paying Agent and Registrar. Avis Rent A
Car may change the Paying Agent or Registrar without prior notice to the Holder
of the notes, and Avis Rent A Car or any of its Restricted Subsidiaries may act
as Paying Agent or Registrar.
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and Avis Rent A Car may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. Avis Rent A Car is not required to transfer or exchange any note
selected for redemption. Also, Avis Rent A Car is not required to transfer or
exchange any note for a period of 15 days before a selection of notes to be
redeemed.
The registered Holder of a note will be treated as the owner of it for all
purposes.
OPTIONAL REDEMPTION
Except as described below, the notes are not redeemable until May 1, 2004.
On and after May 1, 2004, Avis Rent A Car may redeem all or a part of the notes
upon not less than 30 nor more than 60 days' notice, at the following redemption
prices (expressed as a percentage of principal amount) plus accrued and unpaid
interest thereon, if any, to the applicable redemption date (subject to the
right of holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the twelve-month
period beginning on May 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ------------------------------------------------------------------------------------- -----------
<S> <C>
2004................................................................................. 105.500%
2005................................................................................. 103.667%
2006................................................................................. 101.833%
2007 and thereafter.................................................................. 100.000%
</TABLE>
Prior to May 1, 2002, Avis Rent A Car may on one or more occasions redeem up
to 35% of the original principal amount of the notes with the Net Cash Proceeds
of one or more Public Equity Offerings at a redemption price of 111.000% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
provided that:
(1) there is a Public Market at the time of such redemption;
(2) at least 65% of the original aggregate principal amount of the notes
remains outstanding after each such redemption; and
(3) the redemption occurs within 60 days after the closing of such Public
Equity Offering (together, the "Equity Clawback").
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In the case of any partial redemption, selection of the notes for redemption
will be made by the Trustee on a pro rata basis, by lot or by such other method
as the Trustee in its sole discretion will deem to be fair and appropriate,
although no note of $1,000 in original principal amount or less will be redeemed
in part. If any note is to be redeemed in part only, the notice of redemption
relating to such note will state the portion of the principal amount thereof to
be redeemed. A new note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the holder thereof upon cancellation of
the original note.
RANKING AND SUBORDINATION
The payment of the principal of, premium, if any, and interest on the notes
and any other payment obligations in respect of the notes (including any
obligation to repurchase the notes) will be subordinated to the prior payment in
full in cash or Cash Equivalents when due of all Senior Indebtedness of Avis
Rent A Car. However, payment from the money or the proceeds of U.S. Government
Obligations held in any defeasance trust (as described under "--Defeasance"
below) is not subordinate to any Senior Indebtedness or subject to these
restrictions.
As a result of the subordination provisions described below, holders of the
notes may recover less than creditors of Avis Rent A Car who are holders of
Senior Indebtedness in the event of an insolvency, bankruptcy, reorganization,
receivership or similar proceedings relating to Avis Rent A Car. Moreover, the
notes will be structurally subordinated to the liabilities of non-guarantor
Subsidiaries of Avis Rent A Car.
At June 30, 1999, after giving effect to the Transactions:
- outstanding Indebtedness to which the notes were contractually or
structurally subordinated (which amount does not include an additional
$92.2 million available under the New Credit Facility after giving effect
to $184.8 million of issued but outstanding letters of credit) was $8.5
billion, all of which was secured;
- Avis Rent A Car had no Senior Subordinated Indebtedness other than the
notes; and
- Restricted Subsidiaries, including Securitization Entities, had $10.6
billion of total liabilities (including $7.4 billion of Permitted Vehicle
Indebtedness).
Although the Indenture will limit the amount of indebtedness that Avis Rent
A Car and its Restricted Subsidiaries may incur, such indebtedness may be
substantial and all of it may be Senior Indebtedness or Guarantor Senior
Indebtedness or Indebtedness of Subsidiaries that do not issue a Subsidiary
Guarantee in favor of the Holders of the notes, as the case may be.
Only Indebtedness of Avis Rent A Car that is Senior Indebtedness will rank
senior to the notes in accordance with the provisions of the Indenture. The
notes will in all respects rank equally with all other Senior Subordinated
Indebtedness of Avis Rent A Car. Unsecured Indebtedness is not deemed to be
subordinate or junior to Secured Indebtedness merely because it is unsecured. As
described in "--Limitation on layering," Avis Rent A Car may not incur any
indebtedness that is senior in right of payment to the notes, but junior in
right of payment to Senior Indebtedness.
Avis Rent A Car may not pay principal of, premium, if any, or interest on,
or other payment obligations in respect of, the notes or make any deposit
pursuant to the provisions described under "--Defeasance" below and may not
otherwise purchase, redeem or retire any notes (collectively, "pay the notes")
if:
(1) any Senior Indebtedness is not paid when due in cash or Cash
Equivalents; or
(2) any other default on Senior Indebtedness occurs and the maturity of such
Senior Indebtedness is accelerated in accordance with its terms unless,
in either case, the default
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has been cured or waived and any such acceleration has been rescinded or
such Senior Indebtedness has been paid in full in cash or Cash
Equivalents.
However, Avis Rent A Car may pay the notes if Avis Rent A Car and the
Trustee receive written notice approving such payment from the Representative of
the Senior Indebtedness with respect to which either of the events set forth in
clause (1) or (2) of the immediately preceding sentence has occurred and is
continuing.
Avis Rent A Car also will not be permitted to pay the notes for a Payment
Blockage Period (as defined below) during the continuance of any default, other
than a default described in clause (1) or (2) of the preceding paragraph, on any
Designated Senior Indebtedness that permits the holders of the Designated Senior
Indebtedness to accelerate its maturity immediately without either further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods.
A "Payment Blockage Period" commences on the receipt by the Trustee (with a
copy to Avis Rent A Car) of written notice (a "Blockage Notice") of a default of
the kind described in the immediately preceding paragraph from the
Representative of the holders of such Designated Senior Indebtedness specifying
an election to effect a Payment Blockage Period and ends 179 days thereafter.
The Payment Blockage Period will end earlier if such Payment Blockage Period is
terminated:
(1) by written notice to the Trustee and Avis Rent A Car from the Person or
Persons who gave such Blockage Notice;
(2) because the default giving rise to such Blockage Notice is no longer
continuing; or
(3) because such Designated Senior Indebtedness has been repaid in full.
Avis Rent A Car may resume payments on the notes after the end of the
Payment Blockage Period, unless the holders of such Designated Senior
Indebtedness or the Representative of such holders have accelerated the maturity
of such Designated Senior Indebtedness. Not more than one Blockage Notice may be
given in any consecutive 360-day period, irrespective of the number of defaults
with respect to Designated Senior Indebtedness during such period.
In the event of:
(1) a total or partial liquidation or a dissolution of Avis Rent A Car;
(2) a reorganization, bankruptcy, insolvency, receivership of or similar
proceeding relating to Avis Rent A Car or its property; or
(3) an assignment for the benefit of creditors or marshaling of Avis Rent A
Car's assets and liabilities, then
the holders of Senior Indebtedness will be entitled to receive payment in full
in cash or Cash Equivalents in respect of Senior Indebtedness (including
interest accruing after, or which would accrue but for, the commencement of any
proceeding at the rate specified in the applicable Senior Indebtedness, whether
or not a claim for such interest would be allowed) before the holders of the
notes will be entitled to receive any payment or distribution, in the event of
any payment or distribution of the assets or securities of Avis Rent A Car. In
addition, until the Senior Indebtedness is paid in full in cash or Cash
Equivalents, any payment or distribution to which holders of the notes would be
entitled but for the subordination provisions of the Indenture will be made to
holders of the Senior Indebtedness as their interests may appear. If a payment
or distribution is made to holders of the notes that, due to the subordination
provisions, should not have been made to them, such holders are required to hold
it in trust for the holders of Senior Indebtedness and pay it over to them as
their interests may appear.
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If payment of the notes is accelerated because of an Event of Default, Avis
Rent A Car or the Trustee will promptly notify the holders of the Designated
Senior Indebtedness or the Representative of such holders of the acceleration.
Avis Rent A Car may not pay the notes until five Business Days after such
holders or the Representative of the Designated Senior Indebtedness receives
notice of such acceleration and, thereafter, may pay the notes only if the
subordination provisions of the Indenture otherwise permit payment at that time.
SUBSIDIARY GUARANTEES
The Subsidiary Guarantors will, jointly and severally, unconditionally
guarantee Avis Rent A Car's obligations under the notes and all obligations
under the Indenture. Each Subsidiary Guarantee will be subordinated to the prior
payment in full of all Guarantor Senior Indebtedness in the same manner and to
the same extent that the notes are subordinated to Senior Indebtedness. Each
Subsidiary Guarantee will rank equally with all other Guarantor Senior
Subordinated Indebtedness of that Subsidiary Guarantor. The Subsidiary
Guarantors will not be permitted to incur indebtedness that is junior in right
of payment to Guarantor Senior Indebtedness but senior in right of payment to
the Subsidiary Guarantee.
At June 30, 1999, after giving effect to the Transactions:
- outstanding Guarantor Senior Indebtedness was $1.4 million, all of which
was secured; and
- the Subsidiary Guarantors had no Guarantor Senior Subordinated
Indebtedness other than the Subsidiary Guarantees.
Although the Indenture will limit the amount of indebtedness that Avis Rent
A Car and its Restricted Subsidiaries may incur, such indebtedness may be
substantial and all of it may be Guarantor Senior Indebtedness.
The obligations of each Subsidiary Guarantor under its Subsidiary Guarantee
will be limited as necessary to prevent that Subsidiary Guarantee from
constituting a fraudulent conveyance or fraudulent transfer under applicable
law.
In the event a Subsidiary Guarantor is sold or disposed of (whether by
merger, consolidation, the sale of its Capital Stock or the sale of all or
substantially all of its assets (other than by lease)) and whether or not the
Subsidiary Guarantor is the surviving corporation in such transaction to a
Person which is not Avis Rent A Car or a Restricted Subsidiary of Avis Rent A
Car (other than a Securitization Entity), such Subsidiary Guarantor will be
released from its obligations under its Subsidiary Guarantee if:
(1) the sale or other disposition is in compliance with the Indenture,
including the covenants "--Limitation on Sales of Assets and Subsidiary
Stock" and "--Limitation on Sales of Capital Stock of Restricted
Subsidiaries"; and
(2) all the obligations of such Subsidiary Guarantor under the Senior Credit
Agreement and related documentation and any other agreements relating to
any other indebtedness of Avis Rent A Car or its remaining Restricted
Subsidiaries terminate upon consummation of such transaction.
In addition, a Subsidiary Guarantor will be released from its obligations
under the Indenture, and the Subsidiary Guarantee if Avis Rent A Car designates
such Subsidiary as an Unrestricted Subsidiary and such designation complies with
the other applicable provisions of the Indenture.
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CHANGE OF CONTROL
If a Change of Control occurs, each Holder will have the right to require
Avis Rent A Car to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of such holder's notes at a purchase price in cash equal to
101% of the principal amount of the notes plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date).
Within 30 days following any Change of Control, Avis Rent A Car will mail a
notice (the "Change of Control Offer") to each holder with a copy to the Trustee
stating:
(1) that a Change of Control has occurred and that such holder has the right
to require Avis Rent A Car to purchase such holder's notes at a purchase
price in cash equal to 101% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of purchase (subject to the
right of holders of record on a record date to receive interest on the
relevant interest payment date) (the "Change of Control Payment");
(2) the repurchase date (which shall be no earlier than 30 days nor later
than 60 days from the date such notice is mailed) (the "Change of Control
Payment Date"); and
(3) the procedures determined by Avis Rent A Car, consistent with the
Indenture, that a holder must follow in order to have its notes
repurchased.
On the Change of Control Payment Date, Avis Rent A Car will, to the extent
lawful:
(1) accept for payment all notes or portions thereof (equal to $1,000 or an
integral multiple thereof) properly tendered pursuant to the Change of
Control Offer;
(2) deposit with the paying agent an amount equal to the Change of Control
Payment in respect of all notes or portions thereof so tendered; and
(3) deliver or cause to be delivered to the Trustee the notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount of notes or portions thereof being purchased by Avis Rent A Car.
The paying agent will promptly mail to each holder of notes so tendered the
Change of Control Payment for such notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each holder
a new note equal in principal amount to any unpurchased portion of the notes
surrendered, if any; PROVIDED that each such new note will be in a principal
amount of $1,000 or an integral multiple thereof.
If the Change of Control Payment Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest, if any, will be paid to the Person in whose name a note is registered
at the close of business on such record date, and no additional interest will be
payable to holders who tender pursuant to the Change of Control Offer.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the holders to require that Avis Rent A Car repurchase or
redeem the notes in the event of a takeover, recapitalization or similar
transaction.
Prior to mailing a Change of Control Offer, and as a condition to such
mailing (i) all Senior Indebtedness must be repaid in full, or Avis Rent A Car
must offer to repay all Senior Indebtedness whose holders accept such offer or
(ii) the requisite holders of each issue of Senior Indebtedness shall have
consented to such Change of Control Offer being made. Avis Rent A Car covenants
to effect such repayment or obtain such consent within 30 days following any
Change of Control, it
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being a default of the Change of Control provision if Avis Rent A Car fails to
comply with such covenant. A default under the Indenture may result in a
cross-default under the Senior Credit Facilities. In the event of a default
under the Senior Credit Facilities, the subordination provisions of the
Indenture would likely restrict payments to the holders of the notes.
Avis Rent A Car will not be required to make a Change of Control Offer upon
a Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by Avis Rent A Car
and purchases all notes validly tendered and not withdrawn under such Change of
Control Offer.
Avis Rent A Car will comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of the Indenture, Avis Rent A Car will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations described in the Indenture by virtue
thereof.
Avis Rent A Car's ability to repurchase notes pursuant to a Change of
Control Offer may be limited by a number of factors. The occurrence of certain
of the events that constitute a Change of Control would constitute a default
under the Senior Credit Agreement. In addition, certain events that may
constitute a change of control under the Senior Credit Agreement and cause a
default may not constitute a Change of Control under the Indenture. Future
Indebtedness of Avis Rent A Car and its Subsidiaries may also contain
prohibitions of certain events that would constitute a Change of Control or
require such Indebtedness to be repurchased upon a Change of Control. Moreover,
the exercise by the holders of their right to require Avis Rent A Car to
repurchase the notes could cause a default under such Indebtedness, even if the
Change of Control itself does not, due to the financial effect of such
repurchase on Avis Rent A Car. Finally, Avis Rent A Car's ability to pay cash to
the holders upon a repurchase may be limited by Avis Rent A Car's then existing
financial resources. There can be no assurance that sufficient funds will be
available when necessary to make any required repurchases.
The Change of Control provisions described above may deter certain mergers,
tender offers and other takeover attempts involving Avis Rent A Car by
increasing the capital required to effectuate such transactions. The definition
of "Change of Control" includes a disposition of all or substantially all of the
property and assets of Avis Rent A Car and its Restricted Subsidiaries taken as
a whole to any Person. Although there is a limited body of case law interpreting
the phrase "substantially all", there is no precise established definition of
the phrase under applicable law. Accordingly, in certain circumstances there may
be a degree of uncertainty as to whether a particular transaction would involve
a disposition of "all or substantially all" of the property or assets of a
Person. As a result, it may be unclear as to whether a Change of Control has
occurred and whether a Holder of notes may require Avis Rent A Car to make an
offer to repurchase the notes as described above.
CERTAIN COVENANTS
LIMITATION ON INDEBTEDNESS
Avis Rent A Car will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness; PROVIDED, HOWEVER, that Avis Rent A Car
may Incur Indebtedness if on the date thereof:
(1) the Consolidated Coverage Ratio for Avis Rent A Car and its Restricted
Subsidiaries is at least 2.25 to 1.00; and
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(2) no Default or Event of Default will have occurred or be continuing or
would occur as a consequence thereof.
The first paragraph of this covenant will not prohibit the incurrence of the
following Indebtedness:
(1) Indebtedness Incurred by Avis Rent A Car pursuant to the Senior Credit
Facilities in an aggregate principal amount up to $1,500,000,000 less the
aggregate principal amount of all scheduled principal repayments when
made unless refinanced on or prior to the date of such repayment under
this clause (1) and all mandatory prepayments of principal thereof
permanently reducing the commitments thereunder;
(2) the Subsidiary Guarantees and other Guarantees by the Subsidiary
Guarantors of Indebtedness Incurred in accordance with the provisions of
the Indenture; PROVIDED that in the event such Indebtedness that is being
Guaranteed is (a) Senior Subordinated Indebtedness or Guarantor Senior
Subordinated Indebtedness, then the related Guarantee shall rank equally
in right of payment to the Subsidiary Guarantee or (b) a Subordinated
Obligation or a Guarantor Subordinated Obligation, then the related
Guarantee shall be subordinated in right of payment to the Subsidiary
Guarantee;
(3) Indebtedness of Avis Rent A Car owing to and held by any Wholly-Owned
Subsidiary (other than a Securitization Entity) or Indebtedness of a
Restricted Subsidiary owing to and held by Avis Rent A Car or any
Wholly-Owned Subsidiary (other than a Securitization Entity); PROVIDED,
HOWEVER,
(a) if Avis Rent A Car is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full
in cash of all obligations with respect to the notes; and
(b) (i) any subsequent issuance or transfer of Capital Stock or any other
event which results in any such Indebtedness being beneficially
held by a Person other than Avis Rent A Car or a Wholly-Owned
Subsidiary (other than a Securitization Entity) of Avis Rent A
Car; and
(ii) any sale or other transfer of any such Indebtedness to a Person
other than Avis Rent A Car or a Wholly-Owned Subsidiary (other
than a Securitization Entity) of Avis Rent A Car,
shall be deemed in each case, to constitute an Incurrence of such
Indebtedness by Avis Rent A Car or such Subsidiary, as the case may be;
(4) Indebtedness of Foreign Subsidiaries in an aggregate principal amount
that, when taken together with the principal amount of all other
Indebtedness Incurred pursuant to this clause (4) (and any Indebtedness
Incurred by Foreign Subsidiaries prior to the Issue Date to finance
working capital) and then outstanding, does not exceed $125.0 million;
(5) Indebtedness represented by (a) the notes and the Exchange notes, (b)
any Indebtedness (other than the Indebtedness described in clauses (1),
(2), (3), (4), (7), (8), (9), (10), (11), (12) and (13)) outstanding on
the Issue Date and (c) any Refinancing Indebtedness Incurred in respect
of any Indebtedness described in this clause (5) or clause (6) or
Incurred pursuant to the first paragraph of this covenant;
(6) Indebtedness of a Restricted Subsidiary Incurred and outstanding on the
date on which such Restricted Subsidiary was acquired by Avis Rent A Car
(other than Indebtedness Incurred (a) to provide all or any portion of
the funds utilized to consummate the transaction or series of related
transactions pursuant to which such Restricted Subsidiary
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became a Restricted Subsidiary or was otherwise acquired by Avis Rent A
Car or (b) otherwise in connection with, or in contemplation of, such
acquisition); PROVIDED, HOWEVER, that at the time such Restricted
Subsidiary (other than WEX Financial) is acquired by Avis Rent A Car,
Avis Rent A Car would have been able to Incur $1.00 of additional
Indebtedness pursuant to the first paragraph of this covenant after
giving effect to the Incurrence of such Indebtedness pursuant to this
clause (6);
(7) Indebtedness under Currency Agreements and Interest Rate Agreements;
PROVIDED, that in the case of Currency Agreements, such Currency
Agreements are related to business transactions of Avis Rent A Car or its
Restricted Subsidiaries entered into in the ordinary course of business
(including in connection with the incurrence of Permitted Vehicle
Indebtedness) or in the case of Currency Agreements and Interest Rate
Agreements, such Currency Agreements and Interest Rate Agreements are
entered into for bona fide hedging purposes of Avis Rent A Car or its
Restricted Subsidiaries (as determined in good faith by the Board of
Directors or senior management of Avis Rent A Car) and corresponding to
such Indebtedness of Avis Rent A Car or its Restricted Subsidiaries or in
the case of Permitted Vehicle Indebtedness, corresponding to Indebtedness
of Restricted Subsidiaries (but not exceeding the notional amount
thereof) Incurred without violation of the Indenture;
(8) Permitted Vehicle Indebtedness and Customer Lease Financing Loans;
(9) Indebtedness represented by Guarantees issued to airports and airport
and other governmental authorities for the construction of airport rental
or related facilities to be used by Avis Rent A Car or any Restricted
Subsidiary in the ordinary course of business that do not exceed for Avis
Rent A Car and all Restricted Subsidiaries in the aggregate $75.0 million
at any time outstanding;
(10) the incurrence by Avis Rent A Car or any of its Restricted Subsidiaries
of Indebtedness represented by Capitalized Lease Obligations, mortgage
financings or purchase money obligations with respect to assets other
than Capital Stock or other Investments, in each case incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvements of property used in the business of Avis
Rent A Car or such Restricted Subsidiary, in an aggregate principal
amount not to exceed $25.0 million at any time outstanding;
(11) Indebtedness incurred in respect of workers' compensation claims,
self-insurance obligations, performance, surety and similar bonds and
completion guarantees provided by Avis Rent A Car or a Restricted
Subsidiary in the ordinary course of business;
(12) Indebtedness arising from agreements of Avis Rent A Car or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with
the disposition of any business, assets or Capital Stock of a Restricted
Subsidiary or incurred in connection with a sale of Capital Stock of Avis
Rent A Car, PROVIDED that the maximum aggregate liability in respect of
all such Indebtedness shall at no time exceed the gross proceeds actually
received by Avis Rent A Car and its Restricted Subsidiaries in connection
with such disposition or sale;
(13) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument (except in the case
of daylight overdrafts) drawn against insufficient funds in the ordinary
course of business, PROVIDED, HOWEVER, that such Indebtedness is
extinguished within five business days of Incurrence;
(14) PHH Sub Preferred Stock with an aggregate liquidation preference not to
exceed $362.0 million;
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(15) Indebtedness Incurred by WEX Financial to fund WEX Financial's credit
card payables in the ordinary course of business, in an aggregate
principal amount not to exceed $20.0 million; provided that the total
capital ratio determined in accordance with regulations promulgated by
the Board of Governors of the Federal Reserve System (the "Total Capital
Ratio") of WEX Financial on the date of any such Incurrence shall equal
or exceed the Total Capital Ratio of WEX Financial on June 30, 1999
determined on the equivalent basis; and
(16) in addition to the items referred to in clauses (1) through (15) above,
Indebtedness of Avis Rent A Car and its Subsidiary Guarantors in an
aggregate outstanding principal amount which, when taken together with
the principal amount of all other Indebtedness Incurred pursuant to this
clause (16) and then outstanding, will not exceed $50.0 million.
Avis Rent A Car will not Incur any Indebtedness under the preceding
paragraph if the proceeds thereof are used, directly or indirectly, to refinance
any Subordinated Obligations of Avis Rent A Car unless such Indebtedness will be
subordinated to the notes to at least the same extent as such Subordinated
Obligations. No Subsidiary Guarantor will incur any indebtedness if the proceeds
thereof are used, directly or indirectly, to refinance any Guarantor
Subordinated Obligations of such Subsidiary Guarantor unless such Indebtedness
will be subordinated to the obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee to at least the same extent as such refinanced Guarantor
Subordinated Obligations. No Subsidiary Guarantor will incur any Indebtedness if
the proceeds thereof are used, directly or indirectly, to refinance any
Guarantor Senior Subordinated Indebtedness unless such refinancing Indebtedness
is either Guarantor Senior Subordinated Indebtedness or Guarantor Subordinated
Obligations. No Restricted Subsidiary may directly Incur any Indebtedness if the
proceeds are used to refinance Indebtedness of Avis Rent A Car.
For purposes of determining compliance with, and the outstanding principal
amount of any particular Indebtedness incurred pursuant to and in compliance
with, this covenant:
(1) in the event that Indebtedness meets the criteria of more than one of
the types of Indebtedness described in the first and second paragraphs of
this covenant, Avis Rent A Car, in its sole discretion, will classify
such item of Indebtedness on the date of Incurrence and only be required
to include the amount and type of such Indebtedness in one of such
clauses; and
(2) the amount of Indebtedness issued at a price that is less than the
principal amount thereof will be equal to the amount of the liability in
respect thereof determined in accordance with GAAP.
Accrual of interest, accrual of dividends, the accretion of accreted value,
the payment of interest in the form of additional Indebtedness and the payment
of dividends in the form of additional shares of Preferred Stock will not be
deemed to be an incurrence of Indebtedness for purposes of this covenant. The
amount of any Indebtedness outstanding as of any date shall be the accreted
value thereof in the case of any Indebtedness issued with original issue
discount.
In addition, Avis Rent A Car will not permit any of its Unrestricted
Subsidiaries to incur any Indebtedness or issue any shares of Disqualified
Stock, other than Non-Recourse Indebtedness. If at any time an Unrestricted
Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary
shall be deemed to be Incurred by a Restricted Subsidiary of Avis Rent A Car as
of such date (and, if such Indebtedness is not permitted to be Incurred as of
such date under this "Limitation on Indebtedness" covenant, Avis Rent A Car
shall be in Default of this covenant).
For purposes of determining compliance with any U.S. dollar-denominated
restriction on the Incurrence of Indebtedness, the U.S. dollar-equivalent
principal amount of Indebtedness denominated in a foreign currency shall be
calculated based on the relevant currency exchange
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rate in effect on the date such Indebtedness was Incurred, in the case of term
Indebtedness, or first committed, in the case of revolving credit Indebtedness;
PROVIDED that if such Indebtedness is Incurred to refinance other Indebtedness
denominated in a foreign currency, and such refinancing would cause the
applicable U.S. dollar-dominated restriction to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of such refinancing, such
U.S. dollar-dominated restriction shall be deemed not to have been exceeded so
long as the principal amount of such refinancing Indebtedness does not exceed
the principal amount of such Indebtedness being refinanced. The principal amount
of any Indebtedness incurred to refinance other Indebtedness, if Incurred in a
different currency from the Indebtedness being refinanced, shall be calculated
based on the currency exchange rate applicable to the currencies in which such
Refinancing Indebtedness is denominated that is in effect on the date of such
refinancing.
LIMITATION ON PERMITTED VEHICLE INDEBTEDNESS
The aggregate principal amount of outstanding Permitted Vehicle Indebtedness
held by Persons other than Avis Rent A Car and its Restricted Subsidiaries as of
the last calendar day of each month (the "Determination Date") shall not exceed
the net book value of the Permitted Vehicle Collateral securing Permitted
Vehicle Indebtedness held by Persons other than Avis Rent A Car and its
Restricted Subsidiaries on such Determination Date. Notwithstanding the
foregoing, if Avis Rent A Car is not in compliance with the preceding sentence
on any Determination Date, Avis Rent A Car will not be in breach thereof so long
as:
(1) within 25 days from the Determination Date (or if such day is not a
Business Day, on the next succeeding Business Day) Avis Rent A Car or its
Restricted Subsidiaries repay sufficient Permitted Vehicle Indebtedness
or deposits as collateral additional Permitted Vehicle Collateral so that
Avis Rent A Car would have been in compliance as of the Determination
Date assuming such repayment or deposit had been made on such date; or
(2) Avis Rent A Car delivers to the Trustee an Officers' Certificate setting
forth the amount of the shortfall within 25 days of such Determination
Date (or if such day is not a Business Day, on the next succeeding
Business Day) and within 50 days from the Determination Date (or if such
day is not a Business Day, on the next succeeding Business Day) Avis Rent
A Car (A) repays sufficient Permitted Vehicle Indebtedness, (B) deposits
as collateral additional Permitted Vehicle Collateral or (C) redesignates
sufficient Permitted Vehicle Indebtedness that is not secured by an
actual Lien on Permitted Vehicle Collateral to no longer constitute
Permitted Vehicle Indebtedness, in each case so that Avis Rent A Car
would have been in compliance as of the Determination Date assuming such
repayment, deposit or redesignation had been made on such date; provided,
however, that, in the case of a redesignation pursuant to clause (C)
above, on the date of such redesignation and after giving effect thereto
as if such redesignated Indebtedness were Incurred by Avis Rent A Car on
such date, Avis Rent A Car would have been able to Incur at least $1.00
of additional Indebtedness pursuant to the first paragraph under the
"Limitation on Indebtedness" covenant; provided further, however, that in
determining whether Avis Rent A Car would have been able to Incur such
$1.00 of additional Indebtedness, Avis Rent A Car shall be entitled to
exclude an amount of such redesignated Indebtedness equal to the amount
of Indebtedness Avis Rent A Car could have Incurred on such date pursuant
to clause (16) of the second paragraph of the "--Limitation on
Indebtedness" covenant, and such excluded amount shall be deemed to have
been Incurred pursuant to such clause (16) of the second paragraph.
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LIMITATION ON LAYERING
Avis Rent A Car will not Incur any Indebtedness if such Indebtedness is
subordinate or junior in ranking in any respect to any Senior Indebtedness
unless such Indebtedness is Senior Subordinated Indebtedness or is contractually
subordinated in right of payment to Senior Subordinated Indebtedness. No
Subsidiary Guarantor will Incur any Indebtedness if such Indebtedness is
contractually subordinate or junior in ranking in any respect to any Guarantor
Senior Indebtedness of such Subsidiary Guarantor unless such Indebtedness is
Guarantor Senior Subordinated Indebtedness of such Subsidiary Guarantor or is
contractually subordinated in right of payment to Guarantor Senior Subordinated
Indebtedness of such Subsidiary Guarantor.
LIMITATION ON RESTRICTED PAYMENTS
Avis Rent A Car will not, and will not permit any of its Restricted
Subsidiaries, directly or indirectly, to:
(1) declare or pay any dividend or make any distribution on or in respect of
its Capital Stock (including any payment in connection with any merger or
consolidation involving Avis Rent A Car or any of its Restricted
Subsidiaries) except:
(a) dividends or distributions payable in Capital Stock of Avis Rent A Car
(other than Disqualified Stock) or in options, warrants or other rights
to purchase such Capital Stock of Avis Rent A Car; and
(b) dividends or distributions payable to Avis Rent A Car or a Restricted
Subsidiary of Avis Rent A Car (and if such Restricted Subsidiary is not a
Wholly-Owned Subsidiary, to its other holders of common Capital Stock on
a pro rata basis);
(2) purchase, redeem, retire or otherwise acquire for value any Capital
Stock of Avis Rent A Car or any direct or indirect parent of Avis Rent A
Car held by Persons other than Avis Rent A Car or a Restricted Subsidiary
of Avis Rent A Car (other than in exchange for Capital Stock of Avis Rent
A Car (other than Disqualified Stock));
(3) purchase, repurchase, redeem, defease or otherwise acquire or retire for
value, prior to scheduled maturity, scheduled repayment or scheduled
sinking fund payment, any Subordinated Obligations or Guarantor
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations or Guarantor Subordinated
Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due
within one year of the date of purchase, repurchase or acquisition); or
(4) make any Restricted Investment in any Person;
(any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Restricted Investment
referred to in clauses (1) through (4) shall be referred to herein as a
"Restricted Payment"), if at the time Avis Rent A Car or such Restricted
Subsidiary makes such Restricted Payment:
(a) a Default shall have occurred and be continuing (or would result
therefrom); or
(b) Avis Rent A Car is not able to incur an additional $1.00 of
Indebtedness pursuant to the first paragraph under the "Limitation on
Indebtedness" covenant after giving effect to such Restricted
Payment; or
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(c) the aggregate amount of such Restricted Payment and all other
Restricted Payments declared or made subsequent to the Issue Date
would exceed the sum of:
(i) 50% of Consolidated Net Income for the period (treated as one
accounting period) commencing on January 1, 2000 to the end of
the most recent fiscal quarter ending prior to the date of such
Restricted Payment for which financial statements are in
existence (or, in case such Consolidated Net Income is a deficit,
minus 100% of such deficit);
(ii) 75% of the aggregate Net Cash Proceeds received by Avis Rent A
Car from the issue or sale of its Capital Stock (other than
Disqualified Stock) or other capital contributions subsequent to
the Issue Date (other than Net Cash Proceeds received from an
issuance or sale of such Capital Stock to a Subsidiary of Avis
Rent A Car or an employee stock ownership plan or similar trust
to the extent such sale to an employee stock ownership plan or
similar trust is financed by loans from or guaranteed by Avis
Rent A Car or any Restricted Subsidiary unless such loans have
been repaid with cash on or prior to the date of determination);
PROVIDED that 100% of such Net Cash Proceeds shall be included in
the calculation of this clause (c)(ii) to the extent applied to
repurchase notes pursuant to the Equity Clawback;
(iii) the amount by which Indebtedness of Avis Rent A Car is reduced
on Avis Rent A Car's balance sheet upon the conversion or
exchange (other than by a Subsidiary of Avis Rent A Car)
subsequent to the Issue Date of any Indebtedness of Avis Rent A
Car (other than PHH Sub Preferred Stock) convertible or
exchangeable for Capital Stock (other than Disqualified Stock) of
Avis Rent A Car (less the amount of any cash, or other property,
distributed by Avis Rent A Car upon such conversion or exchange);
and
(iv) the amount equal to the net reduction in Restricted Investments
made by Avis Rent A Car or any of its Restricted Subsidiaries in
any Person resulting from:
(A) repurchases or redemptions of such Restricted Investments by
such Person, proceeds realized upon the sale of such
Restricted Investment to an unaffiliated purchaser,
repayments of loans or advances or other transfers of assets
(including by way of dividend or distribution) by such Person
to Avis Rent A Car or any Restricted Subsidiary of Avis Rent
A Car; or
(B) the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the
definition of "Investment") not to exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously
made by Avis Rent A Car or any Restricted Subsidiary in such
Unrestricted Subsidiary,
which amount in each case under this clause (iv) was included in the
calculation of the amount of Restricted Payments; PROVIDED, HOWEVER,
that no amount will be included under this clause (iv) to the extent
it is already included in Consolidated Net Income.
The provisions of the preceding paragraph will not prohibit:
(1) any purchase or redemption of Capital Stock or Subordinated Obligations
of Avis Rent A Car made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of Avis Rent A Car (other
than Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary or an employee stock ownership plan or similar trust
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to the extent such sale to an employee stock ownership plan or similar
trust is financed by loans from or guaranteed by Avis Rent A Car or any
Restricted Subsidiary unless such loans have been repaid with cash on or
prior to the date of determination); PROVIDED, HOWEVER, that (a) such
purchase or redemption will be excluded in subsequent calculations of the
amount of Restricted Payments and (b) the Net Cash Proceeds from such
sale will be excluded from clause (c)(ii) of the preceding paragraph;
(2) any purchase or redemption of Subordinated Obligations of Avis Rent A
Car made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Subordinated Obligations of Avis Rent A Car that
qualifies as Refinancing Indebtedness; PROVIDED, HOWEVER, that such
purchase or redemption will be excluded in subsequent calculations of the
amount of Restricted Payments;
(3) so long as no Default or Event of Default has occurred and is
continuing, any purchase or redemption of Subordinated Obligations from
Net Available Cash to the extent permitted under "--Limitation on Sales
of Assets and Subsidiary Stock" below; PROVIDED, HOWEVER, that such
purchase or redemption will be excluded in subsequent calculations of the
amount of Restricted Payments;
(4) dividends paid within 60 days after the date of declaration if at such
date of declaration such dividend would have complied with this
provision; PROVIDED, HOWEVER, that such dividends will be included in
subsequent calculations of the amount of Restricted Payments;
(5) so long as no Default or Event of Default has occurred and is
continuing, the declaration and payment of dividends to holders of any
class or series of Disqualified Stock of Avis Rent A Car issued in
accordance with the terms of the Indenture to the extent such dividends
are included in the definition of "Consolidated Interest Expense";
PROVIDED that the payment of such dividends will be excluded from the
calculation of the amount of Restricted Payments;
(6) so long as no Default or Event of Default has occurred and is
continuing, the declaration and payment of dividends to holders of the
PHH Sub Preferred Stock issued in accordance with the terms of the
Indenture to the extent such dividends are included in the definition of
"Consolidated Interest Expense"; PROVIDED that the payment of such
dividends will be excluded from the calculation of the amount of
Restricted Payments;
(7) repurchases of Capital Stock deemed to occur upon the exercise of stock
options if such Capital Stock represents a portion of the exercise price
thereof; PROVIDED, HOWEVER, that such repurchases will be excluded from
subsequent calculations of the amount of Restricted Payments;
(8) Restricted Payments in an amount not to exceed $35.0 million; PROVIDED
that the amount of such Restricted Payments will be included in the
calculation of the amount of Restricted Payments;
(9) the redemption of Series C Preferred Stock issued on the Issue Date in
accordance with its terms but not to exceed $2.0 million; PROVIDED that
the amount of such Restricted Payment will be included in the calculation
of the amount of Restricted Payments; and
(10) any Restricted Payments made by a Securitization Entity to holders of
its Capital Stock.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of such Restricted Payment of the asset(s) or
securities proposed to be paid, transferred or issued by Avis Rent A Car or such
Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.
The fair market value of any cash Restricted Payment shall be its face amount
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and any non-cash Restricted Payment shall be determined conclusively by the
Board of Directors acting in good faith whose resolution with respect thereto
shall be delivered to the Trustee, such determination to be based upon an
opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing if such fair market value is estimated to exceed $10.0
million. Not later than the date of making any Restricted Payment, Avis Rent A
Car shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by the covenant "Restricted Payments" were computed,
together with a copy of any fairness opinion or appraisal required by the
Indenture.
LIMITATION ON LIENS
Avis Rent A Car will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur or suffer to exist any
Lien (other than Permitted Liens) upon any of its property or assets (including
Capital Stock), whether owned on the date of the Indenture or thereafter
acquired, securing any Senior Subordinated Indebtedness, Subordinated
Obligations, Guarantor Senior Subordinated Indebtedness or Guarantor
Subordinated Obligations, unless contemporaneously therewith effective provision
is made to secure the Indebtedness due under the Indenture and the notes or, in
respect of Liens on any Restricted Subsidiary's property or assets, any
Subsidiary Guarantee of such Restricted Subsidiary, equally and ratably with (or
prior to in the case of Liens with respect to Subordinated Obligations or
Guarantor Subordinated Obligations, as the case may be) the Indebtedness secured
by such Lien for so long as such Indebtedness is so secured.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES
Avis Rent A Car will not, and will not permit any Restricted Subsidiary to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or consensual restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock or
pay any Indebtedness or other obligations owed to Avis Rent A Car or any
Restricted Subsidiary;
(2) make any loans or advances to Avis Rent A Car or any Restricted
Subsidiary; or
(3) transfer any of its property or assets to Avis Rent A Car or any
Restricted Subsidiary.
The preceding provisions will not prohibit:
(i) any encumbrance or restriction pursuant to an agreement or certificates
of designation in effect at or entered into on the date of the
Indenture (including, without limitation, the Indenture, the Senior
Credit Facilities, and the PHH Sub Preferred Stock as in effect on such
date);
(ii) any encumbrance or restriction with respect to a Restricted Subsidiary
pursuant to an agreement relating to any Indebtedness Incurred by a
Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary was acquired by Avis Rent A Car (other than Indebtedness
Incurred as consideration in, or to provide all or any portion of the
funds utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by Avis Rent A Car or in
contemplation thereof) and outstanding on such date;
(iii) any encumbrance or restriction with respect to a Restricted Subsidiary
pursuant to an agreement effecting a refinancing of Indebtedness
Incurred pursuant to an agreement referred to in clause (i) or (ii) of
this paragraph or this clause (iii) or contained in any amendment to
an agreement referred to in clause (i) or (ii) of this paragraph or
this
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clause (iii); PROVIDED, HOWEVER, that the encumbrances and
restrictions with respect to such Restricted Subsidiary contained in
any such agreement or amendment are no less favorable in any material
respect to the Holders of the notes than the encumbrances and
restrictions contained in such agreements referred to in clauses (i)
and (ii) of this paragraph;
(iv) in the case of clause (3) of the first paragraph of this covenant, any
encumbrance or restriction:
(a) that restricts in a customary manner the subletting, assignment or
transfer of any property or asset that is subject to a lease, license
or similar contract, or the assignment or transfer of any such lease,
license or other contract;
(b) contained in mortgages, pledges or other security agreements
permitted under the Indenture securing Indebtedness of Avis Rent A
Car or a Restricted Subsidiary to the extent such encumbrances or
restrictions restrict the transfer of the property subject to such
mortgages, pledges or other security agreements; or
(c) pursuant to customary provisions restricting dispositions of real
property interests set forth in any reciprocal easement agreements of
Avis Rent A Car or any Restricted Subsidiary;
(v) purchase money obligations for property acquired in the ordinary course
of business that impose encumbrances or restrictions of the nature
described in clause (3) of the first paragraph of this covenant on the
property so acquired;
(vi) any Purchase Money Note or other Indebtedness or contractual
requirements incurred with respect to a Qualified Securitization
Transaction relating exclusively to a Securitization Entity that, in
the good faith determination of the Board of Directors, are necessary
to effect such Qualified Securitization Transaction;
(vii) any restriction with respect to a Restricted Subsidiary (or any of its
property or assets) imposed pursuant to an agreement entered into for
the direct or indirect sale or disposition of all or substantially all
the Capital Stock or assets of such Restricted Subsidiary (or the
property or assets that are subject to such restriction) pending the
closing of such sale or disposition;
(viii) restrictions on Foreign Subsidiaries pursuant to arrangements
governing Indebtedness of such Foreign Subsidiaries permitted pursuant
to clause (4) of the second paragraph of the covenant "Limitation on
Indebtedness";
(ix) restrictions on any Specified Financing Subsidiary pursuant to the
terms of the Customer Lease Financing Loans under which it is
obligated; and
(x) encumbrances or restrictions arising or existing by reason of applicable
law or any applicable rule, regulation or order, including, without
limitation, restrictions on the payment of dividends on Avis Rent A
Car's insurance company and/or banking Subsidiaries imposed by Federal
or state government regulations.
LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK
Avis Rent A Car will not, and will not permit any of its Restricted
Subsidiaries to, make any Asset Disposition UNLESS:
(1) Avis Rent A Car or such Restricted Subsidiary receives consideration at
the time of such Asset Disposition at least equal to the fair market
value, as determined in good faith by the
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Board of Directors (including as to the value of all non-cash
consideration), of the shares and assets subject to such Asset
Disposition;
(2) at least 75% of the consideration thereof received by Avis Rent A Car or
such Restricted Subsidiary, as the case may be, is in the form of cash or
Cash Equivalents; and
(3) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by Avis Rent A Car or such Restricted Subsidiary,
as the case may be:
(a) FIRST, to the extent Avis Rent A Car or any Restricted Subsidiary, as
the case may be, elects (or is required by the terms of any Senior
Indebtedness), to prepay, repay or purchase Senior Indebtedness or
Indebtedness (other than any Preferred Stock or Guarantor
Subordinated Obligation) of a Restricted Subsidiary that is a
Subsidiary Guarantor (in each case other than Indebtedness owed to
Avis Rent A Car or an Affiliate of Avis Rent A Car) within 360 days
from the later of the date of such Asset Disposition or the receipt
of such Net Available Cash; PROVIDED, HOWEVER, that, in connection
with any prepayment, repayment or purchase of Indebtedness pursuant
to this clause (a), Avis Rent A Car or such Restricted Subsidiary
will retire such Indebtedness and will cause the related commitment
(if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased; and
(b) SECOND, to the extent of the balance of such Net Available Cash after
application in accordance with clause (a), to the extent Avis Rent A
Car or such Restricted Subsidiary elects, to invest in Additional
Assets within 360 days from the later of the date of such Asset
Disposition or the receipt of such Net Available Cash.
Any Net Available Cash from Asset Sales that are not applied or invested as
provided in the preceding paragraph will be deemed to constitute "Excess
Proceeds." On the 361st day after an Asset Disposition, if the aggregate amount
of Excess Proceeds exceeds $10.0 million, Avis Rent A Car will be required to
make an offer ("Asset Sale Offer") to all holders of notes and to the extent
required by the terms thereof, to all holders of other Senior Subordinated
Indebtedness outstanding with similar provisions requiring Avis Rent A Car to
make an offer to purchase such Senior Subordinated Indebtedness with the
proceeds from any Asset Disposition ("Pari Passu Notes"), to purchase the
maximum principal amount of notes and any such Pari Passu Notes to which the
Asset Sale Offer applies that may be purchased out of the Excess Proceeds, at an
offer price in cash in an amount equal to 100% of the principal amount thereof
plus accrued and unpaid interest to the date of purchase, in accordance with the
procedures set forth in the Indenture or the agreements governing the Pari Passu
Notes, as applicable. To the extent that the aggregate amount of notes and Pari
Passu Notes so validly tendered and not properly withdrawn pursuant to an Asset
Sale Offer is less than the Excess Proceeds, Avis Rent A Car may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of notes surrendered by Holders thereof and other Pari Passu
Notes surrendered by holders or lenders thereof, collectively, exceeds the
amount of Excess Proceeds, the Trustee shall select the notes and Pari Passu
Notes to be purchased on a pro rata basis on the basis of the aggregate
principal amount of tendered notes and Pari Passu Notes. Upon completion of such
Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
The Asset Sale Offer will remain open for a period of 20 Business Days
following its commencement, except to the extent that a longer period is
required by applicable law (the "Asset Sale Offer Period"). No later than five
Business Days after the termination of the Asset Sale Offer Period (the "Asset
Sale Purchase Date"), Avis Rent A Car will purchase the principal amount of
notes and Pari Passu Notes required to be purchased pursuant to this covenant
(the "Asset Sale
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Offer Amount") or, if less than the Asset Sale Offer Amount has been so validly
tendered, all notes and Pari Passu Notes validly tendered in response to the
Asset Sale Offer.
If the Asset Sale Purchase Date is on or after an interest record date and
on or before the related interest payment date, any accrued and unpaid interest
will be paid to the Person in whose name a note is registered at the close of
business on such record date, and no additional interest will be payable to
Holders who tender notes pursuant to the Asset Sale Offer.
On or before the Asset Sale Purchase Date, Avis Rent A Car will, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Asset Sale Offer Amount of notes and Pari Passu Notes or portions thereof so
validly tendered and not properly withdrawn pursuant to the Asset Sale Offer, or
if less than the Asset Sale Offer Amount has been validly tendered and not
properly withdrawn, all notes and Pari Passu Notes so validly tendered and not
properly withdrawn. Avis Rent A Car will deliver to the Trustee an Officers'
Certificate stating that such notes or portions thereof were accepted for
payment by Avis Rent A Car in accordance with the terms of this covenant and, in
addition, Avis Rent A Car will deliver all certificates and notes required, if
any, by the agreements governing the Pari Passu Notes. Avis Rent A Car or the
Paying Agent, as the case may be, will promptly (but in any case not later than
five Business Days after the Asset Sale Purchase Date) mail or deliver to each
tendering Holder of notes or holder or lender of Pari Passu Notes, as the case
may be, an amount equal to the purchase price of the notes or Pari Passu Notes
so validly tendered and not properly withdrawn by such Holder or lender, as the
case may be, and accepted by Avis Rent A Car for purchase, and Avis Rent A Car
will promptly issue a replacement note, and the Trustee, upon delivery of an
Officers' Certificate from Avis Rent A Car will authenticate and mail or deliver
such replacement note to such Holder, in a principal amount equal to any
unpurchased portion of the note surrendered. In addition, Avis Rent A Car will
take any and all other actions required by the agreements governing the Pari
Passu Notes. Any note not so accepted will be promptly mailed or delivered by
Avis Rent A Car to the Holder thereof. Avis Rent A Car will publicly announce
the results of the Asset Sale Offer on the Asset Sale Purchase Date.
For the purposes of this covenant, the following will be deemed to be cash:
(1) the assumption by the transferee of Indebtedness (other than
Subordinated Obligations or Disqualified Stock) of Avis Rent A Car or
Indebtedness (other than Guarantor Subordinated Obligations or Preferred
Stock) of any Restricted Subsidiary of Avis Rent A Car and the release of
Avis Rent A Car or such Restricted Subsidiary from all liability on such
Indebtedness in connection with such Asset Disposition (in which case
Avis Rent A Car will, without further action, be deemed to have applied
such deemed cash to Indebtedness in accordance with clause (a) above);
and
(2) securities, notes or other obligations received by Avis Rent A Car or
any Restricted Subsidiary of Avis Rent A Car from the transferee that are
promptly converted by Avis Rent A Car or such Restricted Subsidiary into
cash.
Avis Rent A Car will comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of notes pursuant to the
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, Avis Rent A Car will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under the Indenture by virtue thereof.
LIMITATION ON AFFILIATE TRANSACTIONS
Avis Rent A Car will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or conduct any transaction
(including the purchase, sale, lease or exchange of
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any property or the rendering of any service) with any Affiliate of Avis Rent A
Car (an "Affiliate Transaction") UNLESS:
(1) the terms of such Affiliate Transaction are no less favorable to Avis
Rent A Car or such Restricted Subsidiary, as the case may be, than those
that could be obtained in a comparable transaction at the time of such
transaction in arm's- length dealings with a Person who is not such an
Affiliate;
(2) in the event such Affiliate Transaction involves an aggregate amount in
excess of $5 million, the terms of such transaction have been approved by
a majority of the members of the Board of Directors of Avis Rent A Car
having no personal stake in such transaction, if any (and such majority
determines that such Affiliate Transaction satisfies the criteria in
clause (1) above); and
(3) in the event such Affiliate Transaction involves an aggregate amount in
excess of $10 million, Avis Rent A Car has received a written opinion
from an independent investment banking firm of nationally recognized
standing stating that such Affiliate Transaction is not materially less
favorable to Avis Rent A Car or such Restricted Subsidiary, as the case
may be, than those that might reasonably have been obtained in a
comparable transaction at such time on an arm's-length basis with a
Person that is not an Affiliate.
The preceding paragraph will not apply to:
(1) any Restricted Payment (other than a Restricted Investment) permitted to
be made pursuant to the covenant described under "Limitation on
Restricted Payments";
(2) any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans and other
reasonable fees, compensation, benefits and indemnities paid or entered
into by Avis Rent A Car or its Restricted Subsidiaries in the ordinary
course of business to or with officers, directors or employees of Avis
Rent A Car and its Restricted Subsidiaries;
(3) loans or advances to employees in the ordinary course of business of
Avis Rent A Car or any of its Restricted Subsidiaries;
(4) any transaction between Avis Rent A Car and a Restricted Subsidiary
(other than a Securitization Entity) or between Restricted Subsidiaries
(other than a Securitization Entity);
(5) sales or other transfers or dispositions of Permitted Vehicle Collateral
customarily transferred in an asset securitization transaction to a
Securitization Entity in a Qualified Securitization Transaction,
acquisitions of Permitted Investments in connection with a Qualified
Securitization Transaction and performance of services in respect of
Permitted Vehicle Collateral in connection with a Qualified
Securitization Transaction;
(6) transactions under the Separation Agreement, Master License Agreement,
Registration Rights Agreement, Computer Services Agreement, Reservation
Services Agreement, Purchasing Services Agreement, Tax Disaffiliation
Agreement, lease agreements relating to facilities in Virginia Beach,
Virginia, Tulsa, Oklahoma and Garden City, New York and the VMS
Agreements, all as in effect on the Issue Date (including pursuant to any
amendment thereto or any replacement agreement thereof so long as any
such amendment or replacement agreement is not more disadvantageous to
the holders of the notes in any material respect than the original
agreement as in effect on the Issue Date); or
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(7) the payment of dividends on the PHH Sub Preferred Stock and the
conversion of the PHH Sub Preferred Stock in accordance with its terms as
in existence on the Issue Date.
LIMITATION ON SALE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
Avis Rent A Car will not, and will not permit any Restricted Subsidiary of
Avis Rent A Car to, transfer, convey, sell, lease or otherwise dispose of any
Voting Stock of any Restricted Subsidiary or to issue any Voting Stock of any
Restricted Subsidiary (other than, if necessary, shares of its Voting Stock
constituting directors' qualifying shares) to any Person except:
(1) to Avis Rent A Car or a Wholly-Owned Subsidiary (other than a
Securitization Entity); or
(2) in compliance with the covenant described under "--Limitation on Sales
of Assets and Subsidiary Stock" and immediately after giving effect to
such issuance or sale, such Restricted Subsidiary would continue to be a
Restricted Subsidiary.
Notwithstanding the preceding paragraph, Avis Rent A Car may sell all the
Voting Stock of a Restricted Subsidiary as long as Avis Rent A Car complies with
the terms of the covenant described under "--Limitation on Sales of Assets and
Subsidiary Stock".
COMMISSION REPORTS
Notwithstanding that Avis Rent A Car may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, to the extent permitted
by the Exchange Act, Avis Rent A Car will file with the Commission, and provide
the Trustee and the Holders of the notes with, the annual reports and the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) that are
specified in Sections 13 and 15(d) of the Exchange Act within the time periods
specified therein. In the event that Avis Rent A Car is not permitted to file
such reports, documents and information with the Commission pursuant to the
Exchange Act, Avis Rent A Car will nevertheless provide such Exchange Act
information to the Trustee and the holders of the notes as if Avis Rent A Car
were subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act within the time periods specified therein.
MERGER AND CONSOLIDATION
Avis Rent A Car will not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, UNLESS:
(1) the resulting, surviving or transferee Person (the "Successor Company")
will be a corporation, partnership, trust or limited liability company
organized and existing under the laws of the United States of America,
any State thereof or the District of Columbia and the Successor Company
(if not Avis Rent A Car) will expressly assume, by supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of Avis Rent A Car under the notes and
the Indenture;
(2) immediately after giving effect to such transaction (and treating any
Indebtedness that becomes an obligation of the Successor Company or any
Subsidiary of the Successor Company as a result of such transaction as
having been Incurred by the Successor Company or such Subsidiary at the
time of such transaction), no Default or Event of Default shall have
occurred and be continuing;
(3) immediately after giving effect to such transaction, the Successor
Company would be able to Incur at least an additional $1.00 of
Indebtedness pursuant to the first paragraph of the "Limitation on
Indebtedness" covenant;
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(4) each Subsidiary Guarantor (unless it is the other party to the
transactions above, in which case clause (1) shall apply) shall have by
supplemental indenture confirmed that its Subsidiary Guarantee shall
apply to such Person's obligations in respect of the Indenture and the
notes and its obligations under the Registration Rights Agreement shall
continue to be in effect; and
(5) Avis Rent A Car shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with the Indenture.
For purposes of this covenant, the sale, lease, conveyance, assignment,
transfer, or other disposition of all or substantially all of the properties and
assets of one or more Subsidiaries of Avis Rent A Car, which properties and
assets, if held by Avis Rent A Car instead of such Subsidiaries, would
constitute all or substantially all of the properties and assets of Avis Rent A
Car on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of Avis Rent A Car.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, Avis Rent A Car under the Indenture, but, in
the case of a lease of all or substantially all its assets, Avis Rent A Car will
not be released from the obligation to pay the principal of and interest on the
notes.
Although there is a limited body of case law interpreting the phrase
"substantially all", there is no precise established definition of the phrase
under applicable law. Accordingly, in certain circumstances there may be a
degree of uncertainty as to whether a particular transaction would involve "all
or substantially all" of the property or assets of a Person.
Notwithstanding the preceding clause (3), (x) any Restricted Subsidiary of
Avis Rent A Car may consolidate with, merge into or transfer all or part of its
properties and assets to Avis Rent A Car and (y) Avis Rent A Car may merge with
an Affiliate incorporated solely for the purpose of reincorporating Avis Rent A
Car in another jurisdiction to realize tax or other benefits.
FUTURE SUBSIDIARY GUARANTORS
After the Issue Date, Avis Rent A Car will cause (i) each Restricted
Subsidiary, other than an Excluded Subsidiary, created or acquired by Avis Rent
A Car or one or more of its Restricted Subsidiaries and (ii) each Restricted
Subsidiary, at any time such Restricted Subsidiary ceases to be an Excluded
Subsidiary, to execute and deliver to the Trustee a Subsidiary Guarantee
pursuant to which such Restricted Subsidiary will unconditionally Guarantee, on
a joint and several basis, the full and prompt payment of the principal of,
premium, if any and interest on the notes on a senior subordinated basis.
In addition, a Subsidiary Guarantor will be released from its obligations
under the Indenture and the Subsidiary Guarantee if Avis Rent A Car designates
such Subsidiary as an Unrestricted Subsidiary in accordance with the Indenture.
LIMITATION ON LINES OF BUSINESS
Avis Rent A Car will not, and will not permit any Restricted Subsidiary to,
engage in any business other than a Related Business.
PAYMENTS FOR CONSENT
Neither Avis Rent A Car nor any of its Restricted Subsidiaries will,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fees or otherwise, to any Holder of
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any notes for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of the Indenture or the notes unless such consideration
is offered to be paid or is paid to all Holders of the notes that consent, waive
or agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.
EVENTS OF DEFAULT
Each of the following is an Event of Default:
(1) default in any payment of interest or liquidated damages (as required by
the Registration Rights Agreement) on any note when due, continued for 30
days, whether or not such payment is prohibited by the provisions
described under "--Ranking and subordination";
(2) default in the payment of principal of or premium, if any, on any note
when due at its Stated Maturity, upon optional redemption, upon required
repurchase, upon declaration or otherwise, whether or not such payment is
prohibited by the provisions described under "Ranking and subordination";
(3) failure by Avis Rent A Car or any Subsidiary Guarantor to comply with
its obligations under "Certain covenants--Merger and Consolidation";
(4) failure by Avis Rent A Car to comply for 30 days after notice with any
of its obligations under the covenants described under "Change of
Control" above or under the covenants described under "Certain covenants"
above (in each case, other than a failure to purchase notes which will
constitute an Event of Default under clause (2) above and other than a
failure to comply with "Certain covenants--Merger and Consolidation"
which is covered by clause (3));
(5) failure by Avis Rent A Car to comply for 60 days after notice with its
other agreements contained in the Indenture;
(6) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Avis Rent A Car or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by Avis
Rent A Car or any of its Restricted Subsidiaries), other than
Indebtedness owed to Avis Rent A Car or a Restricted Subsidiary, whether
such Indebtedness or guarantee now exists, or is created after the date
of the Indenture, which default:
(a) is caused by a failure to pay principal on such Indebtedness at final
maturity (after giving effect to any applicable grace periods) ("payment
default"); or
(b) results in the acceleration of such Indebtedness prior to its maturity
(the "cross acceleration provision");
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a payment default or the maturity of which has been
so accelerated, aggregates $25.0 million or more;
(7) certain events of bankruptcy, insolvency or reorganization of Avis Rent
A Car or a Significant Subsidiary or group of Restricted Subsidiaries
that, taken together (as of the latest audited consolidated financial
statements for Avis Rent A Car and its Restricted Subsidiaries), would
constitute a Significant Subsidiary (the "bankruptcy provisions");
(8) failure by Avis Rent A Car or any Significant Subsidiary or group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for Avis Rent
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A Car and its Restricted Subsidiaries), would constitute a Significant
Subsidiary to pay final judgments aggregating in excess of $25.0 million
(net of any amounts that a reputable and creditworthy insurance company
has acknowledged liability for in writing), which judgments are not paid,
discharged or stayed for a period of 60 days (the "judgment default
provision"); or
(9) any Subsidiary Guarantee of a Significant Subsidiary or of a group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for Avis Rent A Car and its Restricted
Subsidiaries), would constitute a Significant Subsidiary ceases to be in
full force and effect (except as contemplated by the terms of the
Indenture) or is declared null and void in a judicial proceeding or any
Subsidiary Guarantor denies or disaffirms its obligations under the
Indenture or its Subsidiary Guarantee.
However, a default under clauses (4) and (5) of this paragraph will not
constitute an Event of Default until the Trustee or the holders of 25% in
principal amount of the outstanding notes notify Avis Rent A Car of the default
and Avis Rent A Car does not cure such default within the time specified in
clauses (4) and (5) of this paragraph after receipt of such notice.
If an Event of Default (other than an Event of Default described in clause
(7) above) occurs and is continuing, the Trustee by notice to Avis Rent A Car,
or the holders of at least 25% in principal amount of the outstanding notes by
notice to Avis Rent A Car and the Trustee, may, and the Trustee at the request
of such holders shall, declare the principal of, premium, if any, and accrued
and unpaid interest, if any, on all the Notes to be due and payable. Upon such a
declaration, such principal, premium and accrued and unpaid interest will be due
and payable immediately; PROVIDED, HOWEVER, that so long as any Indebtedness
permitted to be incurred under the Indenture as part of the Senior Credit
Agreement shall be outstanding, no such acceleration shall be effective until
the earlier of (x) acceleration of any such Indebtedness under the Senior Credit
Agreement or (y) five
business days after the giving of the acceleration notice to Avis Rent A Car and
the administrative agent under the Senior Credit Agreement of such acceleration.
In the event of a declaration of acceleration of the notes because an Event of
Default described in clause (6) under "Events of Default" has occurred and is
continuing, the declaration of acceleration of the notes shall be automatically
annulled if the Event of Default or payment default triggering such Event of
Default pursuant to clause (6) shall be remedied or cured by Avis Rent A Car or
a Restricted Subsidiary of Avis Rent A Car or waived by the holders of the
relevant Indebtedness within 20 days after the declaration of acceleration with
respect thereto and if (1) the annulment of the acceleration of the notes would
not conflict with any judgment or decree of a court of competent jurisdiction
and (2) all existing Events of Default, except nonpayment of principal, premium
or interest on the notes that became due solely because of the acceleration of
the notes, have been cured or waived. If an Event of Default described in clause
(7) above occurs and is continuing, the principal of, premium, if any, and
accrued and unpaid interest on all the notes will become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any holders. The holders of a majority in principal amount of the outstanding
notes may waive all past defaults (except with respect to nonpayment of
principal, premium or interest) and rescind any such acceleration with respect
to the notes and its consequences if (1) rescission would not conflict with any
judgment or decree of a court of competent jurisdiction and (2) all existing
Events of Default, other than the nonpayment of the principal of, premium, if
any, and interest on the notes that have become due solely by such declaration
of acceleration, have been cured or waived.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the holders unless such holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or
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expense. Except to enforce the right to receive payment of principal, premium,
if any, or interest when due, no holder may pursue any remedy with respect to
the Indenture or the notes UNLESS:
(1) such holder has previously given the Trustee notice that an Event of
Default is continuing;
(2) holders of at least 25% in principal amount of the outstanding notes
have requested the Trustee to pursue the remedy;
(3) such holders have offered the Trustee reasonable security or indemnity
against any loss, liability or expense;
(4) the Trustee has not complied with such request within 60 days after the
receipt of the request and the offer of security or indemnity; and
(5) the holders of a majority in principal amount of the outstanding notes
have not given the Trustee a direction that, in the opinion of the
Trustee, is inconsistent with such request within such 60-day period.
Subject to certain restrictions, the holders of a majority in principal
amount of the outstanding notes are given the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or the
Indenture or that the Trustee determines is unduly prejudicial to the rights of
any other holder or that would involve the Trustee in personal liability. Prior
to taking any action under the Indenture, the Trustee will be entitled to
indemnification satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder notice of the Default
within 90 days after it occurs. Except in the case of a Default in the payment
of principal of, premium, if any, or interest on any note, the Trustee may
withhold notice if and so long as a committee of trust officers of the Trustee
in good faith determines that withholding notice is in the interests of the
holders. In addition, Avis Rent A Car is required to deliver to the Trustee,
within 120 days after the end of each fiscal year, a certificate indicating
whether the signers thereof know of any Default that occurred during the
previous year. Avis Rent A Car also is required to deliver to the Trustee,
within 30 days after the occurrence thereof, written notice of any events which
would constitute certain Defaults, their status and what action Avis Rent A Car
is taking or proposes to take in respect thereof.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of Avis Rent A Car
with the intention of avoiding payment of the premium that Avis Rent A Car would
have had to pay if Avis Rent A Car then had elected to redeem the notes pursuant
to the optional redemption provisions of the Indenture or was required to
repurchase the notes, an equivalent premium shall also become and be immediately
due and payable to the extent permitted by law upon the acceleration of the
notes. If an Event of Default occurs prior to May 1, 2004 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of Avis Rent A
Car with the intention of avoiding the prohibition on redemption of the notes
prior to May 1, 2004, the premium specified in the Indenture shall also become
immediately due and payable to the extent permitted by law upon the acceleration
of the notes.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the consent
of the holders of a majority in principal amount of the notes then outstanding
(including without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, notes) and, subject to certain
exceptions, any past default or compliance with any provisions may be
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waived with the consent of the holders of a majority in principal amount of the
notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, notes).
However, without the consent of each holder of an outstanding note affected, no
amendment may, among other things:
(1) reduce the amount of notes whose holders must consent to an amendment;
(2) reduce the stated rate of or extend the stated time for payment of
interest on any note;
(3) reduce the principal of or extend the Stated Maturity of any note;
(4) reduce the premium payable upon the redemption or repurchase of any note
or change the time at which any note may be redeemed or repurchased as
described above under "Optional redemption," "Change of Control,"
"Certain covenants--Limitation on Sales of Assets and Subsidiary Stock"
or any similar provision;
(5) make any note payable in money other than that stated in the note;
(6) impair the right of any holder to receive payment of, premium, if any,
principal of and interest on such holder's notes on or after the due
dates therefor or to institute suit for the enforcement of any payment on
or with respect to such holder's notes; or
(7) make any change in the amendment provisions which require each holder's
consent or in the waiver provisions.
Without the consent of any holder, Avis Rent A Car and the Trustee may amend
the Indenture to:
(1) cure any ambiguity, omission, defect or inconsistency;
(2) provide for the assumption by a successor corporation, partnership,
trust or limited liability company of the obligations of Avis Rent A Car
under the Indenture;
(3) provide for uncertificated notes in addition to or in place of
certificated notes (PROVIDED that the uncertificated notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a
manner such that the uncertificated notes are described in Section 163(f)
(2) (B) of the Code);
(4) add Guarantees with respect to the notes;
(5) secure the notes;
(6) add to the covenants of Avis Rent A Car for the benefit of the holders
or surrender any right or power conferred upon Avis Rent A Car;
(7) make any change that does not adversely affect the rights of any holder;
or
(8) comply with any requirement of the Commission in connection with the
qualification of the Indenture under the Trust Indenture Act.
However, no amendment may be made to the subordination provisions of the
Indenture that adversely affects the rights of any holder of Senior Indebtedness
then outstanding unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent to such change.
The consent of the holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment. After an amendment under the
Indenture becomes effective, Avis Rent A Car is required to mail to the holders
a notice briefly describing such amendment. However, the failure to give such
notice to all the holders, or any defect therein, will not impair or affect the
validity of the amendment.
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DEFEASANCE
Avis Rent A Car at any time may terminate all its obligations under the
notes and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the notes, to replace mutilated, destroyed, lost or
stolen notes and to maintain a registrar and paying agent in respect of the
notes. If Avis Rent A Car exercises its legal defeasance option, the Subsidiary
Guarantees in effect at such time will terminate.
Avis Rent A Car at any time may terminate its obligations under covenants
described under "--Certain covenants" (other than "Merger and Consolidation"),
the operation of the cross-default upon a payment default, cross acceleration
provisions, the bankruptcy provisions with respect to Significant Subsidiaries,
the judgment default provision and the Subsidiary Guarantee provision described
under "Events of Default" above and the limitations contained in clause (3)
under "Certain covenants--Merger and Consolidation" above ("covenant
defeasance").
Avis Rent A Car may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If Avis Rent A Car exercises
its legal defeasance option, payment of the notes may not be accelerated because
of an Event of Default with respect thereto. If Avis Rent A Car exercises its
covenant defeasance option, payment of the notes may not be accelerated because
of an Event of Default specified in clause (4), (5), (6), (7) (with respect only
to Significant Subsidiaries), (8) or (9) under "--Events of Default" above or
because of the failure of Avis Rent A Car to comply with clause (3) under
"Certain covenants--Merger and Consolidation" above.
In order to exercise either defeasance option, Avis Rent A Car must
irrevocably deposit in trust (the "defeasance trust") with the Trustee money or
U.S. Government Obligations for the payment of principal, premium, if any, and
interest on the notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including delivery to the Trustee of an
Opinion of Counsel (subject to customary exceptions and exclusions) to the
effect that holders of the notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and defeasance and will
be subject to Federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had
not occurred. In the case of legal defeasance only, such Opinion of Counsel must
be based on a ruling of the Internal Revenue Service or other change in
applicable Federal income tax law.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Avis Rent A
Car, as such, shall have any liability for any obligations of Avis Rent A Car
under the notes, the Indenture or the Subsidiary Guarantees or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each holder by accepting a note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
CONCERNING THE TRUSTEE
The Bank of New York is the Trustee under the Indenture and has been
appointed by Avis Rent A Car as Registrar and Paying Agent with regard to the
notes.
GOVERNING LAW
The Indenture provides that it and the notes will be governed by, and
construed in accordance with, the laws of the State of New York.
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CERTAIN DEFINITIONS
"Avis Fleet" means Avis Fleet Leasing and Management Corporation and any
successor thereto.
"Additional Assets" means:
(1) any property or assets (other than Indebtedness and Capital Stock) to be
used by Avis Rent A Car or a Restricted Subsidiary in a Related Business;
(2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a
result of the acquisition of such Capital Stock by Avis Rent A Car or a
Restricted Subsidiary of Avis Rent A Car; or
(3) Capital Stock constituting a minority interest in any Person that at
such time is a Restricted Subsidiary of Avis Rent A Car;
PROVIDED, HOWEVER, that, in the case of clauses (2) and (3), such Restricted
Subsidiary is primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
PROVIDED that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"Asset Disposition" means any direct or indirect sale, lease (other than an
operating lease entered into in the ordinary course of business), transfer,
issuance or other disposition, or a series of related sales, leases, transfers,
issuances or dispositions that are part of a common plan, of shares of Capital
Stock of a Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by Avis Rent A Car or any of its Restricted Subsidiaries,
including any disposition by means of a merger, consolidation or similar
transaction.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Dispositions:
(1) a disposition by a Restricted Subsidiary to Avis Rent A Car or by Avis
Rent A Car or a Restricted Subsidiary to a Wholly-Owned Subsidiary (other
than a Securitization Entity);
(2) the sale of Cash Equivalents in the ordinary course of business;
(3) a disposition of inventory or Eligible Vehicles in the ordinary course
of business;
(4) a disposition of obsolete or worn out equipment or equipment that is no
longer useful in the conduct of the business of Avis Rent A Car and its
Restricted Subsidiaries (other than Eligible Vehicles) and that is
disposed of in each case in the ordinary course of business;
(5) transactions permitted under "Certain covenants--Merger and
Consolidation";
(6) an issuance of Capital Stock by a Restricted Subsidiary of Avis Rent A
Car to Avis Rent A Car or to a Wholly-Owned Subsidiary (other than a
Securitization Entity) or in the case of a Securitization Entity to any
Person;
(7) for purposes of "Certain covenants--Limitation on Sales of Assets and
Subsidiary Stock" only, the making of a Permitted Investment or a
disposition subject to "Certain covenants--Limitation on Restricted
Payments";
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(8) sales of Permitted Vehicle Collateral or an interest therein of the type
specified in the definition of "Qualified Securitization Transaction" to
a Securitization Entity;
(9) dispositions of assets with an aggregate fair market value in any fiscal
year of less than $2.5 million; and
(10) dispositions in connection with Permitted Liens.
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the notes, compounded semi-annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (2) the sum of all such payments.
"Bank Indebtedness" means any and all amounts, whether outstanding on the
Issue Date or thereafter Incurred, payable by Avis Rent A Car under or in
respect of the Senior Credit Agreement and any related notes, collateral
documents, letters of credit and guarantees and any Interest Rate Agreement
entered into in connection with the Senior Credit Agreement, including
principal, premium, if any, interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to Avis
Rent A Car at the rate specified therein whether or not a claim for post filing
interest is allowed in such proceedings), fees, charges, expenses, reimbursement
obligations, guarantees and all other amounts payable thereunder or in respect
thereof.
"Board of Directors" means, as to any Person, the board of directors of such
Person or any duly authorized committee thereof.
"Call Transfer Agreement" means the Call Transfer Agreement made and entered
into March 4, 1997 between Avis Rent A Car System, Inc. and HFS Incorporated.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participation or other equivalents of or interests
in (however designated) equity of such Person, including any Preferred Stock,
but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation will be the capitalized amount of such obligation at the time
any determination thereof is to be made as determined in accordance with GAAP,
and the Stated Maturity thereof will be the date of the last payment of rent or
any other amount due under such lease prior to the first date such lease may be
terminated without penalty.
"Cash Equivalents" means:
(1) securities issued or directly and fully guaranteed or insured by the
United States or the United Kingdom Government or any agency or
instrumentality thereof, having maturities of not more than one year from
the date of acquisition;
(2) marketable general obligations issued by the United Kingdom or any state
of the United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within one year from
the date of acquisition thereof and, at
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the time of acquisition thereof, having a credit rating of "A" or better
from either Standard & Poor's Ratings Services or Moody's Investors
Service, Inc.;
(3) certificates of deposit, time deposits, eurodollar time deposits,
overnight bank deposits or bankers' acceptances having maturities of not
more than one year from the date of acquisition thereof issued by any
commercial bank the long-term debt of which is rated at the time of
acquisition thereof at least "A" or the equivalent thereof by Standard &
Poor's Ratings Services, or "A" or the equivalent thereof by Moody's
Investors Service, Inc., and having combined capital and surplus in
excess of $500 million;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (1), (2) and (3)
entered into with any bank meeting the qualifications specified in clause
(3) above;
(5) commercial paper rated at the time of acquisition thereof at least "A-2"
or the equivalent thereof by Standard & Poor's Ratings Services or "P-2"
or the equivalent thereof by Moody's Investors Service, Inc., or carrying
an equivalent rating by a nationally recognized rating agency, if both of
the two named rating agencies cease publishing ratings of investments,
and in either case maturing within one year after the date of acquisition
thereof; and
(6) interests in any investment company or money market fund which invests
solely in instruments of the type specified in clauses (1) through (5)
above.
"Change of Control" means:
(1) any "person" or "group" of related persons (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that such person or group shall be deemed to have "beneficial
ownership" of all shares that any such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of Avis Rent A Car (or its successor by
merger, consolidation or purchase of all or substantially all of its
assets) (for the purposes of this clause, such person or group shall be
deemed to beneficially own any Voting Stock of Avis Rent A Car held by an
entity, if such person or group "beneficially owns" (as defined above),
directly or indirectly, more than 35% of the voting power of the Voting
Stock of such entity); or
(2) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Avis Rent
A Car, together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of Avis
Rent A Car, as the case may be, was approved by a vote of at least a
majority of the directors of Avis Rent A Car then still in office who
were either directors at the beginning of such period or whose election
or nomination for election was previously so approved cease for any
reason to constitute a majority of the Board of Directors of Avis Rent A
Car then in office;
(3) the sale, lease, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of Avis Rent A
Car and its Restricted Subsidiaries taken as a whole to any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act);
(4) the adoption by the stockholders of Avis Rent A Car of a plan or
proposal for the liquidation or dissolution of Avis Rent A Car; or
(5) a Change of Control Event as defined under the Master License Agreement.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Computer Services Agreement" means the Computer Service Agreement,
effective as of July 30, 1997 between Avis Rent A Car System, Inc. and WizCom
International, Ltd.
"Consolidated Coverage Ratio" means as of any date of determination, with
respect to any Person, the ratio of (x) the aggregate amount of Consolidated
EBITDA of such Person for the period of the most recent four consecutive fiscal
quarters ending prior to the date of such determination for which financial
statements are in existence to (y) Consolidated Interest Expense for such four
fiscal quarters, PROVIDED, HOWEVER, that:
(1) if Avis Rent A Car or any Restricted Subsidiary:
(a) has Incurred any Indebtedness since the beginning of such period that
remains outstanding on such date of determination or if the
transaction giving rise to the need to calculate the Consolidated
Coverage Ratio is an Incurrence of Indebtedness, Consolidated EBITDA
and Consolidated Interest Expense for such period will be calculated
after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been Incurred on the first day of such period
(except that in making such computation, the amount of Indebtedness
under any revolving credit facility outstanding on the date of such
calculation will be computed based on (i) the average daily balance
of such Indebtedness during such four fiscal quarters or such shorter
period for which such facility was outstanding or (ii) if such
facility was created after the end of such four fiscal quarters, the
average daily balance of such Indebtedness during the period from the
date of creation of such facility to the date of such calculation)
and the discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first day of
such period; or
(b) has repaid, repurchased, defeased or otherwise discharged any
Indebtedness since the beginning of the period that is no longer
outstanding on such date of determination or if the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio
involves a discharge of Indebtedness (in each case other than
Indebtedness incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and the related commitment
terminated), Consolidated EBITDA and Consolidated Interest Expense
for such period will be calculated after giving effect on a pro forma
basis to such discharge of such Indebtedness, including with the
proceeds of such new Indebtedness, as if such discharge had occurred
on the first day of such period;
(2) if since the beginning of such period Avis Rent A Car or any Restricted
Subsidiary will have made any Asset Disposition or if the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio is
an Asset Disposition:
(a) the Consolidated EBITDA for such period will be reduced by an amount
equal to the Consolidated EBITDA (if positive) directly attributable
to the assets which are the subject of such Asset Disposition for
such period or increased by an amount equal to the Consolidated
EBITDA (if negative) directly attributable thereto for such period;
and
(b) Consolidated Interest Expense for such period will be reduced by an
amount equal to the Consolidated Interest Expense directly
attributable to any Indebtedness of Avis Rent A Car or any Restricted
Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to Avis Rent A Car and its continuing Restricted Subsidiaries
in connection with such Asset Disposition for such period (or, if the
Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period
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directly attributable to the Indebtedness of such Restricted
Subsidiary to the extent Avis Rent A Car and its continuing
Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale);
(3) if since the beginning of such period Avis Rent A Car or any Restricted
Subsidiary (by merger or otherwise) will have made an Investment in any
Restricted Subsidiary (or any Person which becomes a Restricted
Subsidiary or is merged with or into Avis Rent A Car) or an acquisition
of assets, including any acquisition of assets occurring in connection
with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of an operating unit, division or
line of business, Consolidated EBITDA and Consolidated Interest Expense
for such period will be calculated after giving pro forma effect thereto
(including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period; and
(4) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into Avis Rent A Car
or any Restricted Subsidiary since the beginning of such period) will
have made any Asset Disposition or any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (2) or
(3) above if made by Avis Rent A Car or a Restricted Subsidiary during
such period, Consolidated EBITDA and Consolidated Interest Expense for
such period will be calculated after giving pro forma effect thereto as
if such Asset Disposition or Investment or acquisition of assets occurred
on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given under
any calculation under this definition, the pro forma calculations will be
determined in good faith by a responsible financial or accounting officer of
Avis Rent A Car (including pro forma expense and cost reductions calculated on a
basis consistent with Regulation S-X under the Securities Act). If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness will be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months).
"Consolidated EBITDA" for any period means, without duplication, the
Consolidated Net Income for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income:
(1) Consolidated Interest Expense;
(2) Consolidated Income Taxes;
(3) consolidated non-vehicle related depreciation expense;
(4) consolidated non-vehicle related amortization of intangibles; and
(5) other non-vehicle related non-cash charges reducing Consolidated Net
Income (excluding any such non-cash charge to the extent it represents an
accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior period
not included in the calculation).
Notwithstanding the preceding sentence, clauses (2) through (5) relating to
amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net
Income to compute Consolidated EBITDA of such Person only to the extent (and in
the same proportion) that the net income (loss) of such Restricted Subsidiary
was included in calculating the Consolidated Net Income of such Person and, to
the extent the amounts set forth in clauses (2) through (5) are in excess of
those necessary to offset a net loss of such Restricted Subsidiary or if such
Restricted Subsidiary has net income for such period included in Consolidated
Net Income, only if a corresponding amount would be
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permitted at the date of determination to be dividended to Avis Rent A Car by
such Restricted Subsidiary without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.
"Consolidated Income Taxes" means, with respect to any Person for any
period, taxes imposed upon such Person or other payments required to be made by
such Person by any governmental authority which taxes or other payments are
calculated by reference to the income or profits of such Person or such Person
and its Restricted Subsidiaries (to the extent such income or profits were
included in computing Consolidated Net Income for such period), regardless of
whether such taxes or payments are required to be remitted to any governmental
authority.
"Consolidated Interest Expense" means, for any period, the total interest
expense of Avis Rent A Car and its consolidated Restricted Subsidiaries, whether
paid or accrued, excluding interest on Permitted Vehicle Indebtedness, plus, to
the extent not included in such interest expense:
(1) interest expense attributable to Capitalized Lease Obligations and the
interest portion of rent expense associated with Attributable
Indebtedness in respect of the relevant lease giving rise thereto,
determined as if such lease were a capitalized lease in accordance with
GAAP and the interest component of any deferred payment obligations;
(2) amortization of debt discount and debt issuance cost;
(3) non-cash interest expense (except with respect to Permitted Vehicle
Indebtedness);
(4) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing;
(5) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries, to the extent such Guarantee or Lien is called upon;
(6) net costs (if positive) associated with Hedging Obligations (including
amortization of fees);
(7) the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period (except with respect
to Permitted Vehicle Indebtedness);
(8) the product of (a) all dividends paid or payable in cash, Cash
Equivalents or Indebtedness or accrued during such period on any series
of Disqualified Stock of such Person or on Preferred Stock of its
Restricted Subsidiaries payable to a party other than Avis Rent A Car or
a Wholly-Owned Subsidiary, times (b) a fraction, the numerator of which
is one and the denominator of which is one minus the then current
effective combined federal, state, provincial and local statutory tax
rate of such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP; and
(9) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to
pay interest or fees to any Person (other than Avis Rent A Car) in
connection with Indebtedness Incurred by such plan or trust; PROVIDED,
HOWEVER, that there will be excluded therefrom any such interest expense
of any Unrestricted Subsidiary to the extent the related Indebtedness is
not Guaranteed or paid by Avis Rent A Car or any Restricted Subsidiary.
For purposes of the foregoing, total interest expense will be determined after
giving effect to any net payments made or received by Avis Rent A Car and its
Subsidiaries with respect to Interest Rate Agreements.
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"Consolidated Net Income" means, for any period, the net income (loss) of
Avis Rent A Car and its consolidated Restricted Subsidiaries determined in
accordance with GAAP; PROVIDED, HOWEVER, that there will not be included in such
Consolidated Net Income:
(1) any net income (loss) of any Person if such Person is not a Restricted
Subsidiary, except that:
(a) subject to the limitations contained in clauses (4), (5) and (6) below,
Avis Rent A Car's equity in the net income of any such Person for such
period will be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Person during such
period to Avis Rent A Car or a Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations contained in
clause (3) below); and
(b) Avis Rent A Car's equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period will be included in determining
such Consolidated Net Income to the extent such loss has been funded with
cash from Avis Rent A Car or a Restricted Subsidiary;
(2) any net income (loss) of any Person acquired by Avis Rent A Car or a
Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;
(3) any net income (but not loss) of any Restricted Subsidiary if such
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to Avis Rent A Car, except that:
(a) subject to the limitations contained in clauses (4), (5) and (6) below,
Avis Rent A Car's equity in the net income of any such Restricted
Subsidiary for such period will be included in such Consolidated Net
Income up to the aggregate amount of cash that could have been
distributed by either such Restricted Subsidiary or the entity to which
the receivables or cash generated by such Consolidated Net Income has
been transferred for purposes of a Qualified Securitization Transaction
during such period to Avis Rent A Car or another Restricted Subsidiary as
a dividend (subject, in the case of a dividend to another Restricted
Subsidiary, to the limitation contained in this clause); and
(b) Avis Rent A Car's equity in a net loss of any such Restricted Subsidiary
for such period will be included in determining such Consolidated Net
Income;
(4) any gain (loss) realized upon the sale or other disposition of any
property, plant or equipment of Avis Rent A Car or its consolidated
Restricted Subsidiaries (including pursuant to any Sale/Leaseback
Transaction) which is not sold or otherwise disposed of in the ordinary
course of business and any gain (loss) realized upon the sale or other
disposition of any Capital Stock of any Person;
(5) any extraordinary gain or loss; and
(6) the cumulative effect of a change in accounting principles.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Customer Lease Financing Loans" has the meaning set forth in the definition
of Specified Financing Subsidiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
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"Designated Senior Indebtedness" means (1) the Bank Indebtedness (to the
extent such Bank Indebtedness constitutes Senior Indebtedness) and (2) any other
Senior Indebtedness which, at the date of determination, has an aggregate
principal amount outstanding of, or under which, at the date of determination,
the holders thereof are committed to lend up to, at least $50 million and is
specifically designated in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of the Indenture.
"Determination Date" means the last calendar day of each month.
"Disqualified Stock" means, with respect to any Person, any Capital Stock of
such Person which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event:
(1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
(2) is convertible or exchangeable for Indebtedness or Disqualified Stock
(excluding Capital Stock which is convertible or exchangeable solely at
the option of Avis Rent A Car or a Restricted Subsidiary); or
(3) is redeemable at the option of the holder thereof, in whole or in part,
in each case on or prior to the date that is 91 days after the date (a)
on which the notes mature or (b) on which there are no notes outstanding,
PROVIDED that only the portion of Capital Stock which so matures or is
mandatorily redeemable, is so convertible or exchangeable or is so
redeemable at the option of the holder thereof prior to such date will be
deemed to be Disqualified Stock; PROVIDED, FURTHER that any Capital Stock
that would constitute Disqualified Stock solely because the holders
thereof have the right to require Avis Rent A Car to repurchase such
Capital Stock upon the occurrence of a change of control or asset sale
(each defined in a substantially identical manner to the corresponding
definitions in the Indenture) shall not constitute Disqualified Stock if
the terms of such Capital Stock (and all such securities into which it is
convertible or for which it is ratable or exchangeable) provide that Avis
Rent A Car may not repurchase or redeem any such Capital Stock (and all
such securities into which it is convertible or for which it is ratable
or exchangeable) pursuant to such provision prior to compliance by Avis
Rent A Car with the provisions of the Indenture described under the
captions "Change of Control" and "Limitation on Sales of Assets and
Subsidiary Stock" and such repurchase or redemption complies with
"Certain covenants--Limitation on Restricted Payments".
"Domestic Subsidiary" means any Restricted Subsidiary that is organized
under the laws of the United States of America or any state thereof or the
District of Columbia.
"Eligible Leases" means open-end and closed-end automobile fleet leases
originated by or on behalf of Avis Rent A Car and its Restricted Subsidiaries
which are of a type customarily eligible for inclusion in a Qualified
Securitization Transaction.
"Eligible Vehicles" shall mean the motor vehicle inventory of Avis Rent A
Car and its Restricted Subsidiaries, in each case, whether held for sale, lease
or rental purposes which are of a type customarily eligible for inclusion in a
Qualified Securitization Transaction.
"Excluded Subsidiary" is a reference to a Foreign Subsidiary, Securitization
Entity, Specified Financing Subsidiary or any regulated bank subsidiary or
insurance subsidiary that has not issued a Guarantee of any Senior Indebtedness.
"Fleet Receivables" means all receivables generated by Avis Rent A Car and
its Restricted Subsidiaries from obligors under fleet maintenance contracts,
fleet management contracts and fuel card contracts and any other service
contracts billed together with Eligible Leases, which are of a type customarily
eligible for inclusion in a Qualified Securitization Transaction.
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"Foreign Subsidiary" means any Restricted Subsidiary that is not organized
under the laws of the United States of America or any state thereof or the
District of Columbia.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the date of the Indenture, including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the Indenture will be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by
virtue of partnership arrangements, or by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise); or
(2) entered into for purposes of assuring in any other manner the obligee of
such Indebtedness of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part); PROVIDED, HOWEVER,
that the term "Guarantee" will not include endorsements for collection or
deposit in the ordinary course of business. The term "Guarantee" used as
a verb has a corresponding meaning.
"Guarantor Senior Indebtedness" means, with respect to a Subsidiary
Guarantor, the following obligations, whether outstanding on the date of the
Indenture or thereafter issued, without duplication:
(1) any Guarantee of the Bank Indebtedness by such Subsidiary Guarantor and
all other Guarantees by such Subsidiary Guarantor of Senior Indebtedness
of Avis Rent A Car or Guarantor Senior Indebtedness of any other
Subsidiary Guarantor; and
(2) all obligations consisting of principal of and premium, if any, accrued
and unpaid interest on, and fees and other amounts relating to, all other
Indebtedness of the Subsidiary Guarantor. Guarantor Senior Indebtedness
includes interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Subsidiary Guarantor
regardless of whether postfiling interest is allowed in such proceeding.
Notwithstanding anything to the contrary in the preceding paragraph,
Guarantor Senior Indebtedness will not include:
(1) any Indebtedness which, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that
the obligations in respect of such Indebtedness are not superior in right
of, or are subordinate to, payment of the notes and the Subsidiary
Guarantee;
(2) any obligations of such Subsidiary Guarantor to another Subsidiary or
Avis Rent A Car;
(3) any liability for Federal, state, local, foreign or other taxes owed or
owing by such Subsidiary Guarantor;
(4) any accounts payable or other liability to trade creditors arising in
the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities);
(5) any Indebtedness, Guarantee or obligation of such Subsidiary Guarantor
that is expressly subordinate or junior in right of payment to any other
Indebtedness, Guarantee or
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obligation of such Subsidiary Guarantor, including, without limitation,
any Guarantor Senior Subordinated Indebtedness and Guarantor Subordinated
Obligations of such Guarantor; or
(6) any Capital Stock.
"Guarantor Senior Subordinated Indebtedness" means, with respect to a
Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee and any other Indebtedness of such Subsidiary Guarantor
(whether outstanding on the Issue Date or thereafter Incurred) that specifically
provides that such Indebtedness is to rank equally in right of payment with the
obligations of such Subsidiary Guarantor under the Subsidiary Guarantee and is
not expressly subordinated by its terms in right of payment to any Indebtedness
of such Subsidiary Guarantor which is not Guarantor Senior Indebtedness of such
Subsidiary Guarantor.
"Guarantor Subordinated Obligation" means, with respect to a Subsidiary
Guarantor, any Indebtedness of such Subsidiary Guarantor (whether outstanding on
the Issue Date or thereafter Incurred) which is expressly subordinate in right
of payment to the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee pursuant to a written agreement.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Incur" means issue, create, assume, Guarantee, incur or otherwise become
liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a
Person existing at the time such person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) will be deemed to be
incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary; and the terms "Incurred" and "Incurrence" have meanings correlative
to the foregoing.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal of and premium (if any) in respect of indebtedness of such
Person for borrowed money (including in respect of Qualified
Securitization Transactions);
(2) the principal of and premium (if any) in respect of obligations of such
Person evidenced by bonds, debentures, notes or other similar
instruments;
(3) the principal component of all obligations of such Person in respect of
letters of credit, bankers' acceptances or other similar instruments
(including reimbursement obligations with respect thereto except to the
extent such reimbursement obligation relates to a trade payable and such
obligation is satisfied within 30 days of Incurrence);
(4) the principal component of all obligations of such Person to pay the
deferred and unpaid purchase price of property (except trade payables),
which purchase price is due more than six months after the date of
placing such property in service or taking delivery and title thereto;
(5) Capitalized Lease Obligations and all Attributable Indebtedness of such
Person;
(6) the principal component of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified
Stock or, with respect to any Subsidiary, any Preferred Stock;
(7) the principal component of all Indebtedness of other Persons secured by
a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; PROVIDED, HOWEVER, that the amount of such
Indebtedness will be the lesser of (a) the fair market value of such
asset at such date of determination and (b) the amount of such
Indebtedness of such other Persons;
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(8) the principal component of Indebtedness of other Persons to the extent
Guaranteed by such Person; and
(9) to the extent not otherwise included in this definition, net obligations
of such Person under Currency Agreements and Interest Rate Agreements
(the amount of any such obligations to be equal at any time to the
termination value of such agreement or arrangement giving rise to such
obligation that would be payable by such Person at such time).
The amount of Indebtedness of any Person at any date will be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
In addition, "Indebtedness" of any Person shall include Indebtedness
described in the preceding paragraph that would not appear as a liability on the
balance sheet of such Person if:
(1) such Indebtedness is the obligation of a partnership or joint venture
that is not a Restricted Subsidiary (a "Joint Venture");
(2) such Person or a Restricted Subsidiary of such Person is a general
partner of the Joint Venture (a "General Partner"); and
(3) there is recourse, by contract or operation of law, with respect to the
payment of such Indebtedness to property or assets of such Person or a
Restricted Subsidiary of such Person; and then such Indebtedness shall be
included in an amount not to exceed:
(a) the lesser of (i) the net assets of the General Partner and (ii) the
amount of such obligations to the extent that there is recourse, by
contract or operation of law, to the property or assets of such Person or
a Restricted Subsidiary of such Person; or
(b) if less than the amount determined pursuant to clause (a) immediately
above, the actual amount of such Indebtedness that is recourse to such
Person or a Restricted Subsidiary of such Person, if the Indebtedness is
evidenced by a writing and is for a determinable amount and the related
interest expense shall be included in Consolidated Interest Expense to
the extent actually paid by Avis Rent A Car or its Restricted
Subsidiaries.
"Interest Rate Agreement" means with respect to any Person any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of any direct or
indirect advance, loan (other than advances to customers in the ordinary course
of business) or other extension of credit (including by way of Guarantee or
similar arrangement, but excluding any debt or extension of credit represented
by a bank deposit other than a time deposit) or capital contribution to (by
means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, Indebtedness or other similar instruments issued
by, such Person and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; PROVIDED that:
(1) Hedging Obligations entered into in the ordinary course of business and
in compliance with the Indenture;
(2) endorsements of negotiable instruments and documents in the ordinary
course of business; and
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(3) an acquisition of assets, Capital Stock or other securities by Avis Rent
A Car or a Restricted Subsidiary for consideration consisting exclusively
of common equity securities of Avis Rent A Car, shall in each case not be
deemed to be an Investment.
For purposes of "--Certain covenants--Limitation on Restricted Payments",
(1) "Investment" will include the portion (proportionate to Avis Rent A
Car's equity interest in a Restricted Subsidiary to be designated as an
Unrestricted Subsidiary) of the fair market value of the net assets of
such Restricted Subsidiary of Avis Rent A Car at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary; PROVIDED,
HOWEVER, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, Avis Rent A Car will be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary in an amount (if
positive) equal to (a) Avis Rent A Car's "Investment" in such Subsidiary
at the time of such redesignation less (b) the portion (proportionate to
Avis Rent A Car's equity interest in such Subsidiary) of the fair market
value of the net assets (as conclusively determined by the Board of
Directors of Avis Rent A Car in good faith) of such Subsidiary at the
time that such Subsidiary is so re-designated a Restricted Subsidiary;
and
(2) any property transferred to or from an Unrestricted Subsidiary will be
valued at its fair market value at the time of such transfer, in each
case as determined in good faith by the Board of Directors of Avis Rent A
Car. If Avis Rent A Car or any Restricted Subsidiary of Avis Rent A Car
sells or otherwise disposes of any Voting Stock of any Restricted
Subsidiary of Avis Rent A Car such that, after giving effect to any such
sale or disposition, such entity is no longer a Subsidiary of Avis Rent A
Car, Avis Rent A Car shall be deemed to have made an Investment on the
date of any such sale or disposition equal to the fair market value (as
conclusively determined by the Board of Directors of Avis Rent A Car in
good faith) of the Capital Stock of such Subsidiary not sold or disposed
of.
"Issue Date" means the date on which the notes are originally issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Master License Agreement" means the Master License Agreement, dated July
30, 1997, among HFS Car Rental, Inc., Avis Rent A Car System, Inc. and Wizard
Co., Inc.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other nonfat form) therefrom, in each case net of:
(1) all legal, accounting, investment banking, title and recording tax
expenses, commissions and other fees and expenses incurred, and all
Federal, state, provincial, foreign and local taxes required to be paid
or accrued as a liability under GAAP (after taking into account any
available tax credits or deductions and any tax sharing agreements), as a
consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any
Lien upon such assets, or which must by its terms, or in order to obtain
a necessary consent to such Asset Disposition, or by applicable law be
repaid out of the proceeds from such Asset Disposition;
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(3) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such
Asset Disposition; and
(4) the deduction of appropriate amounts to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with
the assets disposed of in such Asset Disposition and retained by Avis
Rent A Car or any Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, listing fees,
discounts or commissions and brokerage, consultant and other fees and charges
actually incurred in connection with such issuance or sale and net of taxes paid
or payable as a result of such issuance or sale (after taking into account any
available tax credit or deductions and any tax sharing arrangements).
"Non-Recourse Indebtedness" means Indebtedness:
(1) as to which neither Avis Rent A Car nor any Restricted Subsidiary (a)
provides any Guarantee or credit support of any kind (including any
undertaking, guarantee, indemnity, agreement or instrument that would
constitute Indebtedness) or (b) is directly or indirectly liable (as a
guarantor or otherwise);
(2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder
of any other Indebtedness of Avis Rent A Car or any Restricted Subsidiary
to declare a default under such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity; and
(3) the explicit terms of which provide there is no recourse against any of
the assets of Avis Rent A Car or its Restricted Subsidiaries.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of Avis Rent A Car.
"Officers' Certificate" means a certificate signed by two Officers or by an
Officer and either an Assistant Treasurer or an Assistant Secretary of Avis Rent
A Car.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to Avis
Rent A Car or the Trustee.
"Permitted Investment" means an Investment by Avis Rent A Car or any
Restricted Subsidiary in:
(1) a Restricted Subsidiary (other than a Securitization Entity) or a Person
which will, upon the making of such Investment, become a Restricted
Subsidiary (other than a Securitization Entity); PROVIDED, HOWEVER, that
the primary business of such Restricted Subsidiary is a Related Business;
(2) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, Avis Rent A Car or a Restricted
Subsidiary (other than a Securitization Entity); PROVIDED, HOWEVER, that
such Person's primary business is a Related Business;
(3) cash and Cash Equivalents;
(4) receivables owing to Avis Rent A Car or any Restricted Subsidiary
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; PROVIDED,
HOWEVER, that such trade terms may include such
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concessionary trade terms as Avis Rent A Car or any such Restricted
Subsidiary deems reasonable under the circumstances;
(5) payroll, travel and similar advances to cover matters that are expected
at the time of such advances ultimately to be treated as expenses for
accounting purposes and that are made in the ordinary course of business;
(6) loans or advances to employees made in the ordinary course of business
consistent with past practices of Avis Rent A Car or such Restricted
Subsidiary;
(7) stock, obligations or securities received in settlement of debts created
in the ordinary course of business and owing to Avis Rent A Car or any
Restricted Subsidiary or in satisfaction of judgments or pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of a debtor;
(8) Investments made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with
"--Certain covenants--Limitation on Sales of Assets and Subsidiary
Stock";
(9) Investments in existence on the Issue Date;
(10) Currency Agreements, Interest Rate Agreements and related Hedging
Obligations, which transactions or obligations are Incurred in compliance
with "Certain covenants--Limitation on Indebtedness";
(11) Investments by Avis Rent A Car or any of its Restricted Subsidiaries,
together with all other Investments pursuant to this clause (11), in an
aggregate amount at the time of such Investment not to exceed $40.0
million outstanding at any one time;
(12) Guarantees issued in accordance with "--Certain covenants--Limitations
on Indebtedness"; and
(13) Investments by Avis Rent A Car or a Restricted Subsidiary in a
Securitization Entity or any Investment by a Securitization Entity in any
other Person, in each case, in connection with a Qualified Securitization
Transaction, PROVIDED, HOWEVER, that any Investment in any such Person is
in the form of a Purchase Money Note, or any equity interest or interests
in Permitted Vehicle Collateral generated by Avis Rent A Car or a
Restricted Subsidiary and transferred to any Person in connection with a
Qualified Securitization Transaction.
"Permitted Liens" means, with respect to any Person:
(1) Liens securing Indebtedness and other obligations under the Senior
Credit Facilities and related Interest Rate Agreements and other Senior
Indebtedness and liens on assets of Restricted Subsidiaries securing
Guarantees of Indebtedness and other obligations under a Senior Credit
Facilities and other Guarantor Senior Indebtedness permitted to be
incurred under the Indenture;
(2) pledges or deposits by such Person under workmen's compensation laws,
unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Person is a party, or
deposits to secure public or statutory obligations of such Person or
deposits or cash or United States government bonds to secure surety or
appeal bonds to which such Person is a party, or deposits as security for
contested taxes or import or customs duties or for the payment of rent,
in each case Incurred in the ordinary course of business;
(3) Liens imposed by law, including carriers', warehousemen's and mechanics'
Liens, in each case for sums not yet due or being contested in good faith
by appropriate proceedings if a
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reserve or other appropriate provisions, if any, as shall be required by
GAAP shall have been made in respect thereof;
(4) Liens for taxes, assessments or other governmental charges not yet
subject to penalties for non-payment or which are being contested in good
faith by appropriate proceedings provided appropriate reserves required
pursuant to GAAP have been made in respect thereof;
(5) Liens in favor of issuers of surety or performance bonds or letters of
credit or bankers' acceptances issued pursuant to the request of and for
the account of such Person in the ordinary course of its business;
PROVIDED, HOWEVER, that such letters of credit do not constitute
Indebtedness;
(6) Liens on any airport concession agreements or permits to secure loans
extended to finance tenant improvements used in connection with the
concession agreement or permit subject to such Lien;
(7) encumbrances, easements or reservations of, or rights of others for,
licenses, rights of way, sewers, electric lines, telegraph and telephone
lines and other similar purposes, or zoning or other restrictions as to
the use of real properties or liens incidental to the conduct of the
business of such Person or to the ownership of its properties which do
not in the aggregate materially adversely affect the value of said
properties or materially impair their use in the operation of the
business of such Person;
(8) Liens securing Hedging Obligations so long as the related Indebtedness
is, and is permitted to be under the Indenture, secured by a Lien on the
same property securing such Hedging Obligation;
(9) leases and subleases of real property which do not materially interfere
with the ordinary conduct of the business of Avis Rent A Car or any of
its Restricted Subsidiaries;
(10) judgment Liens not giving rise to an Event of Default so long as such
Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of such judgment have not been
finally terminated or the period within which such proceedings may be
initiated has not expired;
(11) Liens for the purpose of securing the payment of all or a part of the
purchase price of, or Capitalized Lease Obligations with respect to,
assets or property acquired or constructed in the ordinary course of
business; PROVIDED that:
(a) the aggregate principal amount of Indebtedness secured by such Liens is
otherwise permitted to be Incurred under the Indenture and does not
exceed the cost of the assets or property so acquired or constructed; and
(b) such Liens are created within 180 days of construction or acquisition of
such assets or property and do not encumber any other assets or property
of Avis Rent A Car or any Restricted Subsidiary other than such assets or
property and assets affixed or appurtenant thereto;
(12) Liens arising solely by virtue of any statutory or common law
provisions relating to banker's Liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with
a depositary institution; PROVIDED that:
(a) such deposit account is not a dedicated cash collateral account and is
not subject to restrictions against access by Avis Rent A Car in excess
of those set forth by regulations promulgated by the Federal Reserve
Board; and
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(b) such deposit account is not intended by Avis Rent A Car or any
Restricted Subsidiary to provide collateral to the depository
institution;
(13) Liens arising from Uniform Commercial Code financing statement filings
regarding operating leases entered into by Avis Rent A Car and its
Restricted Subsidiaries in the ordinary course of business;
(14) Liens existing on the Issue Date;
(15) Liens on property or shares of stock of a Person at the time such
Person becomes a Restricted Subsidiary; PROVIDED, HOWEVER, that such
Liens are not created, incurred or assumed in connection with, or in
contemplation of, such other Person becoming a Restricted Subsidiary;
PROVIDED FURTHER, HOWEVER, that any such Lien may not extend to any other
property owned by Avis Rent A Car or any Restricted Subsidiary;
(16) Liens on property at the time Avis Rent A Car or a Restricted
Subsidiary acquired the property, including any acquisition by means of a
merger or consolidation with or into Avis Rent A Car or any Restricted
Subsidiary; PROVIDED, HOWEVER, that such Liens are not created, incurred
or assumed in connection with, or in contemplation of, such acquisition;
PROVIDED FURTHER, HOWEVER, that such Liens may not extend to any other
property owned by Avis Rent A Car or any Restricted Subsidiary;
(17) Liens securing Indebtedness or other obligations of a Restricted
Subsidiary owing to Avis Rent A Car or a Wholly Owned Subsidiary (other
than a Securitization Entity);
(18) Liens securing the notes and Subsidiary Guarantees;
(19) Liens securing Refinancing Indebtedness incurred to refinance
Indebtedness that was previously so secured, PROVIDED that any such Lien
is limited to all or part of the same property or assets (plus
improvements, accessions, proceeds or dividends or distributions in
respect thereof) that secured (or, under the written arrangements under
which the original Lien arose, could secure) the Indebtedness being
refinanced or is in respect of property that is the security for a
Permitted Lien hereunder;
(20) Liens on assets transferred to a Securitization Entity or on assets of
a Securitization Entity, in either case incurred in connection with a
Qualified Securitization Transaction; and
(21) Liens securing Customer Lease Financing Loans incurred without
violation of the Indenture.
"Permitted Vehicle Collateral" means, as of any Determination Date:
(1) the collateral securing Permitted Vehicle Indebtedness and consisting of
Eligible Vehicles and receivables, or a beneficial interest therein,
arising from the disposition of Eligible Vehicles and the proceeds
thereof;
(2) Eligible Leases and Fleet Receivables, or a beneficial interest therein,
transferred to a Securitization Entity in connection with a Qualified
Securitization Transaction and the proceeds thereof;
(3) any related assets which are customarily transferred, or in respect of
which security interests are customarily granted, in connection with
asset securitizations involving Eligible Vehicles or Eligible Leases; and
(4) any proceeds of any of the foregoing.
"Permitted Vehicle Indebtedness" means (1) Indebtedness Incurred to finance
or refinance Eligible Vehicles (but only to the extent actually used to finance
or refinance Eligible Vehicles) and (2) Indebtedness secured by Permitted
Vehicle Collateral; provided, however, that any Indebtedness
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redesignated pursuant to paragraph (2)(C) of the covenant described under
"--Certain covenants-- Limitation on Permitted Vehicle Indebtedness" shall not
constitute Permitted Vehicle Indebtedness; and provided, further, that the notes
shall be deemed not to constitute Permitted Vehicle Indebtedness when issued.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company, government or any agency or political subdivision hereof or
any other entity.
"PHH Sub Preferred Stock" is a collective reference to the Series A
Cumulative Participating Redeemable Convertible Preferred Stock, Series B
Cumulative PIK Preferred Stock and Series C Cumulative Redeemable Preferred
Stock of Avis Fleet and the related Certificates of Designations in effect on
the Issue Date, as each of the same may be amended, supplemented or otherwise
modified from time to time; PROVIDED that any such amendment, supplement or
modification is not disadvantageous to the Holders in any material respect.
"Preferred Stock", as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
"Public Equity Offering" means an offering for cash by Avis Rent A Car of
its common stock, or options, warrants or rights with respect to its common
stock.
A "Public Market" exists at any time with respect to the common stock of
Avis Rent A Car, if:
(1) the common stock of Avis Rent A Car is then registered with the
Securities Exchange Commission pursuant to Section 12(b) or 12(g) of the
Exchange Act and traded either on a national securities exchange or in
the National Association of Securities Dealers Automated Quotation
System; and
(2) at least 15% of the total issued and outstanding common stock of Avis
Rent A Car has been and remains distributed prior to such time by means
of an effective registration statement under the Securities Act of 1933,
as amended.
"Purchase Money Note" means a promissory note of a Securitization Entity
evidencing a line of credit, which may be irrevocable, from Avis Rent A Car or
any Restricted Subsidiary of Avis Rent A Car to a Securitization Entity or
representing the deferred purchase price for the purchase of assets by such
Securitization Entity from Avis Rent A Car or a Restricted Subsidiary, in each
case in connection with a Qualified Securitization Transaction, to a
Securitization Entity, which note is repayable from cash available to the
Securitization Entity, other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest,
principal and other amounts owing to such investors and amounts paid in
connection with the purchase of Eligible Vehicles, Eligible Leases, Fleet
Receivables or a beneficial interest therein.
"Purchasing Services Agreement" means the purchasing services agreement
dated as of August 1, 1997, between ARACS and Cendant Corporation.
"Qualified Securitization Transaction" means any transaction or series of
transactions that may be entered into by Avis Rent A Car or any of its
Restricted Subsidiaries pursuant to which Avis Rent A Car or any of its
Restricted Subsidiaries may sell, convey or otherwise transfer to (1) a
Securitization Entity (in the case of a transfer by Avis Rent A Car or any of
its Restricted Subsidiaries) and (2) any other Person (in the case of a transfer
by a Securitization Entity), or may grant a security interest in, any Permitted
Vehicle Collateral (whether now existing or arising in the future) of Avis Rent
A Car or any of its Restricted Subsidiaries, and any assets related thereto
including, without limitation, the proceeds of such Permitted Vehicle
Collateral.
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"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) (collectively, "refinance", "refinances," and
"refinanced" shall have a correlative meaning) any Indebtedness existing on the
date of the Indenture or Incurred in compliance with the Indenture (including
Indebtedness of Avis Rent A Car that refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness, PROVIDED, HOWEVER, that:
(1) (a) if the Stated Maturity of the Indebtedness being refinanced is
earlier than the Stated Maturity of the notes, the Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of
the Indebtedness being refinanced or (b) if the Stated Maturity of the
Indebtedness being refinanced is later than the Stated Maturity of the
notes, the Refinancing Indebtedness has a Stated Maturity at least 91
days later than the Stated Maturity of the notes;
(2) the Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater than the
Average Life of the Indebtedness being refinanced;
(3) such Refinancing Indebtedness is Incurred in an aggregate principal
amount (or if issued with original issue discount, an aggregate issue
price) that is equal to or less than the sum of the aggregate principal
amount (or if issued with original issue discount, the aggregate accreted
value) then outstanding (plus, without duplication, accrued interest,
fees and expenses, including any premium and defeasance costs) of the
Indebtedness being refinanced; and
(4) if the Indebtedness being refinanced is subordinated in right of payment
to the notes or the Subsidiary Guarantee, such Refinancing Indebtedness
is subordinated in right of payment to the notes or the Subsidiary
Guarantee on terms at least as favorable to the Holders as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Registration Rights Agreement" means the registration rights agreement
between Avis Rent A Car and the Franchisor entered into in connection with the
IPO.
"Related Business" means any business which is the same as or related,
ancillary or complementary to any of the businesses of Avis Rent A Car and its
Restricted Subsidiaries on the date of the Indenture after giving effect to the
acquisition of VMS on such date (including WEX Financial).
"Related Business Assets" means assets used or useful in a Related Business.
"Representative" means any trustee, agent or representative (if any) of an
issue of Senior Indebtedness.
"Reservation Services Agreement" means the reservation service agreement
between Cendant Corporation and ARACS entered into in connection with the IPO.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Subsidiary" means (i) any Subsidiary of Avis Rent A Car other
than an Unrestricted Subsidiary and (ii) any Securitization Entity.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby Avis Rent A Car or a Restricted Subsidiary
transfers such property to a Person and Avis Rent A Car or a Restricted
Subsidiary leases it from such Person.
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"Securitization Entity" means a Restricted Subsidiary of Avis Rent A Car (or
another Person in which Avis Rent A Car or any Restricted Subsidiary of Avis
Rent A Car makes an Investment and to which Avis Rent A Car or any Restricted
Subsidiary of Avis Rent A Car transfers Permitted Vehicle Collateral or an
interest in Permitted Vehicle Collateral) which engages in no activities other
than in connection with the ownership, leasing, operation and financing of
Eligible Vehicles and other Permitted Vehicle Collateral and which is designated
by the Board of Directors of Avis Rent A Car (as provided below) as a
Securitization Entity and as to which:
(1) no portion of the Indebtedness or any other obligations (contingent or
otherwise) of which:
(a) is guaranteed by Avis Rent A Car or any Restricted Subsidiary of Avis
Rent A Car (excluding guarantees of Obligations (other than the
principal of, and interest on, Indebtedness) pursuant to Standard
Securitization Undertakings);
(b) is recourse to or obligates Avis Rent A Car or any Restricted
Subsidiary of Avis Rent A Car in any way other than pursuant to
Standard Securitization Undertakings; or
(c) subjects any property or asset of Avis Rent A Car or any Restricted
Subsidiary of Avis Rent A Car, directly or indirectly, contingently
or otherwise, to the satisfaction thereof, other than pursuant to
Standard Securitization Undertakings;
(2) neither Avis Rent A Car nor any Restricted Subsidiary of Avis Rent A Car
has any material contract, agreement, arrangement or understanding
(except in connection with a Purchase Money Note or Qualified
Securitization Transaction) other than on terms no less favorable to Avis
Rent A Car or such Restricted Subsidiary than those that might be
obtained at the time from Persons that are not Affiliates of Avis Rent A
Car, other than fees payable in the ordinary course of business in
connection with servicing Permitted Vehicle Collateral; and
(3) neither Avis Rent A Car nor any Restricted Subsidiary of Avis Rent A Car
has any obligation to maintain or preserve such entity's financial
condition or cause such entity to achieve certain levels of operating
results.
Any such designation by the Board of Directors of Avis Rent A Car shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
resolution of the Board of Directors of Avis Rent A Car giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.
"Senior Credit Agreement" means the Credit Agreement, dated as of the Issue
Date among Avis Rent A Car, Inc., the several banks and other financial
institutions and entities from time to time parties thereto, The Chase Manhattan
Bank, as administrative agent for the lenders and Lehman Commercial Paper Inc.,
as syndication agent, including any amendments, supplements, modifications,
extensions, renewals, restatements or refundings thereof and any credit
facilities or agreements that replace, refund or refinance any part of the loans
with other Senior Indebtedness of Avis Rent A Car, Inc.
"Senior Credit Facilities" means, with respect to Avis Rent A Car, one or
more debt facilities (including, with limitation, the Revolving Credit Facility
and the Term Loan Facilities to be entered into among Avis Rent A Car, The Chase
Manhattan Bank, as Administrative Agent, and the lenders parties thereto from
time to time) or commercial paper facilities with banks or other institutional
lenders providing for revolving credit loans, term loans or letters of credit,
in each case, as amended, restated, modified, renewed, refunded, replaced or
refinanced in whole or in part from time to time (and whether or not with the
original administrative agent and lenders or another administrative agent or
agents or other lenders and whether provided under the original Revolving Credit
Facility and the Term Loan Facilities or any other credit or other agreement or
indenture).
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"Senior Indebtedness" means, whether outstanding on the Issue Date or
thereafter issued, created, Incurred or assumed, the Bank Indebtedness and all
other Indebtedness of Avis Rent A Car, including accrued and unpaid interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to Avis Rent A Car at the rate
specified in the documentation with respect thereto whether or not a claim for
post filing interest is allowed in such proceeding) and fees relating thereto;
PROVIDED, HOWEVER, that Senior Indebtedness will not include:
(1) any Indebtedness which, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that
the obligations in respect of such Indebtedness are not superior in right
of, or are subordinate to, payment of the notes and the Subsidiary
Guarantees;
(2) any obligation of Avis Rent A Car to any Subsidiary;
(3) any liability for Federal, state, foreign, local or other taxes owed or
owing by Avis Rent A Car;
(4) any accounts payable or other liability to trade creditors arising in
the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities);
(5) any Indebtedness, Guarantee or obligation of Avis Rent A Car that is
expressly subordinate or junior in right of payment to any other
Indebtedness, Guarantee or obligation of Avis Rent A Car, including,
without limitation, any Senior Subordinated Indebtedness and any
Subordinated Obligations; or
(6) any Capital Stock.
"Senior Subordinated Indebtedness" means the notes and any other
Indebtedness of Avis Rent A Car that specifically provides that such
Indebtedness is to rank equally with the notes in right of payment and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of Avis Rent A Car which is not Senior Indebtedness.
"Separation Agreement" means the Separation Agreement dated as of June 30,
1997 between HFS Car Rental, Inc. and Avis Rent A Car, Inc.
"Series C Preferred Stock" means the Series C Cumulative Redeemable
Preferred Stock of Avis Fleet and the related Certificate of Designation in
effect on the Issue Date.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of Avis Rent A Car within the meaning of Rule 1-02
under Regulation S-X promulgated by the Commission.
"Specified Financing Subsidiary" means a direct wholly-owned subsidiary of
Avis Fleet (into which Avis Fleet has contributed only nominal equity) that is
solely engaged in the business of acquiring vehicles for and then leasing such
vehicles to, a specified customer (the "Customer"); provided that (i) such
vehicles are purchased solely with the proceeds of loans made by the Customer to
such Specified Financing Subsidiary (the "Customer Lease Financing Loans"), (ii)
neither Avis Rent A Car nor any Restricted Subsidiary provides the Specified
Financing Subsidiary any guarantee or credit support of any kind (including any
undertaking, guarantee, indemnity, agreement or instrument that would constitute
Indebtedness) or is directly or indirectly liable (as a guarantor or otherwise)
for such Customer Lease Financing Loans and (iii) the explicit terms of such
Customer Lease Financing Loans provide that there shall be no recourse against
any of the assets of Avis Rent A Car or its Restricted Subsidiaries.
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by Avis Rent A Car or any Restricted
Subsidiary of Avis Rent A Car which are reasonably customary in securitizations
of vehicles and vehicle leases.
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"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision, but shall not include any contingent obligations to repay, redeem or
repurchase any such principal prior to the date originally scheduled for the
payment thereof.
"Subordinated Obligation" means any Indebtedness of Avis Rent A Car (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the notes pursuant to a written agreement.
"Subsidiary" of any Person means any corporation, trust, association,
partnership, joint venture, limited liability company or other business entity
of which more than 50% of the total voting power of shares of Capital Stock or
other interests (including partnership and joint venture interests) entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by (1) such Person, (2) such Person and one or more
Subsidiaries of such Person or (3) one or more Subsidiaries of such Person.
Unless otherwise specified herein, each reference to a Subsidiary will refer to
a Subsidiary of Avis Rent A Car.
"Subsidiary Guarantee" means, individually, any Guarantee of payment of the
notes by a Subsidiary Guarantor pursuant to the terms of the Indenture and any
supplemental indenture thereto, and, collectively, all such Guarantees. Each
such Subsidiary Guarantee will be in the form prescribed by the Indenture.
"Subsidiary Guarantor" means each Restricted Subsidiary of Avis Rent A Car
in existence on the Issue Date and any Restricted Subsidiary created or acquired
by Avis Rent A Car after the Issue Date other than in each case an Excluded
Subsidiary.
"Tax Disaffiliation Agreement" means the Tax Disaffiliation Agreement by and
among Cendant Corporation and Avis Rent A Car entered into in connection with
the IPO.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of Avis Rent A Car that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of Directors
of Avis Rent A Car in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of Avis Rent A Car may designate any Subsidiary of
Avis Rent A Car (including any newly acquired or newly formed Subsidiary or a
Person becoming a Subsidiary through merger or consolidation or Investment
therein) to be an Unrestricted Subsidiary only if:
(1) such Subsidiary or any of its Subsidiaries does not own any Capital
Stock or Indebtedness of or have any Investment in, or own or hold any
Lien on any property of, any other Subsidiary of Avis Rent A Car which is
not a Subsidiary of the Subsidiary to be so designated or otherwise an
Unrestricted Subsidiary;
(2) all the Indebtedness of such Subsidiary and its Subsidiaries shall, at
the date of designation, and will at all times thereafter, consist of
Non-Recourse Indebtedness;
(3) such designation and the Investment of Avis Rent A Car in such
Subsidiary complies with "Certain covenants--Limitation on Restricted
Payments";
(4) such Subsidiary, either alone or in the aggregate with all other
Unrestricted Subsidiaries, does not operate, directly or indirectly, all
or substantially all of the business of Avis Rent A Car and its
Subsidiaries;
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(5) such Subsidiary is a Person with respect to which neither Avis Rent A
Car nor any of its Restricted Subsidiaries has any direct or indirect
obligation:
(a) to subscribe for additional Capital Stock of such Person; or
(b) to maintain or preserve such Person's financial condition or to cause
such Person to achieve any specified levels of operating results; and
(6) on the date such Subsidiary is designated an Unrestricted Subsidiary,
such Subsidiary is not a party to any agreement, contract, arrangement or
understanding with Avis Rent A Car or any Restricted Subsidiary with
terms substantially less favorable to Avis Rent A Car than those that
might have been obtained from Persons who are not Affiliates of Avis Rent
A Car.
Any such designation by the Board of Directors of Avis Rent A Car shall be
evidenced to the Trustee by filing with the Trustee a resolution of the Board of
Directors of Avis Rent A Car giving effect to such designation and an Officers'
Certificate certifying that such designation complies with the foregoing
conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of the Indenture and any
Indebtedness of such Subsidiary shall be deemed to be Incurred as of such date.
The Board of Directors of Avis Rent A Car may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; PROVIDED that immediately after giving
effect to such designation, no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof and Avis Rent A Car
could incur at least $1.00 of additional Indebtedness under the first paragraph
of the "Limitation on Indebtedness" covenant on a pro forma basis taking into
account such designation.
"VMS Agreements" means the IT Agreement and any transition service agreement
entered into by Cendant or its affiliates in connection with the VMS
Acquisition.
"Voting Stock" of a Person means all classes of Capital Stock of such Person
then outstanding and normally entitled to vote in the election of directors or
Persons discharging comparable functions.
"WEX Financial" means Wright Express Financial Services Corporation, a
licensed industrial loan corporation and any successor thereto.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of Avis Rent A Car,
all of the Capital Stock of which (other than directors' qualifying shares and
PHH Sub Preferred Stock) is owned by Avis Rent A Car or another Wholly-Owned
Subsidiary.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a description of the principal U.S. federal income tax
consequences of the exchange offer. This description is based on (1) the
Internal Revenue Code of 1986, as amended (the "Code"), (2) income tax
regulations (proposed and final) issued under the Code, and (3) administrative
and judicial interpretations of the Code and regulations, each as in effect and
available as of the date of this offering memorandum. These income tax laws,
regulations, and interpretations, however, may change at any time, and any
change could be retroactive to the issuance date of the old notes.
Except where we state otherwise, this summary deals only with old notes held
as capital assets (as defined in the Code) by an initial purchaser who purchased
the old notes at their original offering price.
We do not address all of the tax consequences that may be relevant to a
holder. We also do not address, except as stated below, any of the tax
consequences to (1) holders that may be subject to special tax treatment, such
as financial institutions, real estate investment trusts, tax-exempt
organizations, regulated investment companies, insurance companies and brokers
and dealers or traders in securities or currencies, (2) persons whose functional
currency is not the United States dollar, and (3) persons that will hold notes
as part of a position in a straddle or as part of a "hedging," "conversion" or
other integrated investment transaction. Further, we do not address any state,
local or foreign tax consequences of the exchange offer.
The exchange of old notes for new notes pursuant to the exchange offer will
not constitute a material modification of the terms of the old notes and,
therefore, such exchange will not constitute an exchange for U.S. federal income
tax purposes. Accordingly, you will have no U.S. federal income tax consequences
from such exchange and, further, you will be required to continue to include
interest on the new notes in gross income in the same manner and to the same
extent, if any, as such interest was included in gross income under the old
notes. Your holding period with respect to the new notes will include the
holding period of the old notes and your tax basis in the new notes will be the
same as your tax basis in the old notes immediately before the exchange.
THE ABOVE DESCRIPTION IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF
ALL TAX CONSEQUENCES RELATING TO THE EXCHANGE OFFER. ACCORDINGLY, INVESTORS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE U.S. FEDERAL, STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES RELATING TO THE EXCHANGE OFFER IN LIGHT OF
THEIR PARTICULAR SITUATIONS.
BOOK-ENTRY; DELIVERY AND FORM
Except as described below, the new notes will initially be issued in the
form of one or more registered new notes in global form without coupons. Each
global note will be deposited with, or on behalf of, The Depository Trust
Company and registered in the name of Cede & Co., as nominee of The Depository
Trust Company, or will remain in the custody of the Trustee pursuant to the FAST
Balance Certificate Agreement between The Depository Trust Company and the
trustee.
The Depository Trust Company has advised New Avis that it is (1) a limited
purpose trust company organized under the laws of the State of New York, (2) a
member of the Federal Reserve System, (3) a "clearing corporation" within the
meaning of the Uniform Commercial Code, as amended, and (4) a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. The Depository Trust
Company was created to hold securities for its participating organizations
(collectively, the "DTC Participants") and facilitates the clearance and
settlement of securities transactions between DTC Participants through
electronic book-entry changes to the accounts of the DTC Participants, thereby
eliminating the need for physical transfer and delivery of certificates. DTC
Participants include securities brokers and dealers, including the placement
agents from the
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original offering of the old notes, banks and trust companies, clearing
corporations and other organizations. Access to The Depository Trust Company's
system is also available to other entities such as banks, brokers, dealers and
trust companies (collectively, the "Indirect DTC Participants") that clear
through or maintain a custodial relationship with a DTC Participant, either
directly or indirectly. Holders who are not DTC Participants may beneficially
own securities held by or on behalf of The Depository Trust Company only through
DTC Participants or Indirect DTC Participants.
The Depository Trust Company management is aware that some computer
applications, systems, and the like for processing data ("Systems") that are
dependent upon calendar dates, including dates before, on, and after January 1,
2000, may encounter "Year 2000 problems." The Depository Trust Company has
informed its Participants and other members of the financial community (the
"Industry") that it has developed and is implementing a program so that its
Systems, as the same relate to the timely payment of distributions (including
principal and interest payments) to securityholders, book-entry deliveries, and
settlement of trades within The Depository Trust Company, continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, The Depository Trust Company's
plan includes a testing phase, which is expected to be completed within
appropriate time frames.
However, The Depository Trust Company's ability to perform properly its
services is also dependent upon other parties, including but not limited to
issuers and their agents, as well as third party vendors from whom The
Depository Trust Company licenses software and hardware, and third party vendors
on whom The Depository Trust Company relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. The Depository Trust Company has informed the Industry that it is
contacting (and will continue to contact) third party vendors from whom The
Depository Trust Company acquires services to: (i) impress upon them the
importance of such services being Year 2000 compliant; and (ii) determine the
extent of their efforts for Year 2000 remediation (and, as appropriate, testing)
of their services. In addition, The Depository Trust Company is in the process
of developing such contingency plans as it deems appropriate.
New Avis expects, as provided in the procedures established by The
Depository Trust Company, that (1) upon deposit of the global notes, The
Depository Trust Company will credit the accounts of DTC Participants with an
interest in the global notes and (2) ownership of the new notes will be shown
on, and the transfer of ownership of the new notes will be effected only
through, records maintained by The Depository Trust Company with respect to the
interest of DTC Participants, the DTC Participants and the Indirect DTC
Participants. The laws of some states require that certain persons take physical
delivery in definitive form of securities that they own and that a security
interest in negotiable instruments can only be perfected by delivery of
certificates representing the instruments. Consequently, the ability to transfer
the new notes or to pledge the new notes as collateral will be limited to this
extent.
So long as The Depository Trust Company or its nominee is the registered
owner of a global note, The Depository Trust Company or the nominee, as the case
may be, will be considered the sole owner or holder of the new notes represented
by the global note for all purposes under the indenture. Except as provided
below, owners of beneficial interests in a global note will not be entitled to
have the new notes represented by the global note registered in their names,
will not receive or be entitled to receive physical delivery of certificated
securities, and will not be considered the owners or holders of the new notes
under the indenture for any purpose, including with respect to the giving of any
directions, instruction or approval to the trustee under the indenture. As a
result, the ability of a person having a beneficial interest in new notes
represented by a global note to pledge or transfer that interest to persons or
entities that do not participate in The Depository Trust Company's system or to
otherwise take action with respect to that interest, may be affected by the lack
of a physical certificate evidencing the interest.
188
<PAGE>
Accordingly, each holder owning a beneficial interest in a global note must
rely on the procedures of The Depository Trust Company and, if the holder is not
a DTC Participant or an Indirect DTC Participant, on the procedures of the DTC
Participant through which the holder owns its interest, to exercise any rights
of a holder of new notes under the indenture or the global note. New Avis
understands that under existing industry practice, in the event New Avis
requests any action of holders of new notes or a holder that is an owner of a
beneficial interest in a global note desires to take any action that The
Depository Trust Company, as the holder of the global note, is entitled to take,
The Depository Trust Company would authorize the DTC Participants to take the
action and the DTC Participants would authorize holders owning through the DTC
Participants to take the action or would otherwise act upon the instruction of
such holders. Neither New Avis nor the trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of the new notes by The Depository Trust Company, or for maintaining,
supervising or reviewing any records of The Depository Trust Company relating to
the new notes.
Payments with respect to the principal of, premium on, if any, and interest
on, any new notes represented by a global note registered in the name of The
Depository Trust Company or its nominee on the applicable record date will be
payable by the trustee to or at the direction of The Depository Trust Company or
its nominee in its capacity as the registered holder of the global note
representing the new notes under the indenture. Under the terms of the
indenture, New Avis and the trustee may treat the persons in whose names the new
notes, including the global notes, are registered as the owners for the purpose
of receiving payment and for any and all other purposes whatsoever. As a result,
neither New Avis nor the trustee has or will have any responsibility or
liability for the payment of amounts due to beneficial owners of interest in the
global note, including principal, premium, if any, and interest, or to
immediately credit the accounts of the relevant DTC Participants with such
payment, in amounts proportionate to their respective holdings in principal
amount of beneficial interests in the global note as shown on the records of The
Depository Trust Company. Payments by the DTC Participants and the Indirect DTC
Participants to the beneficial owners of interests in the global note will be
governed by standing instructions and customary practice and will be the
responsibility of the DTC Participants or the Indirect DTC Participants and The
Depository Trust Company.
CERTIFICATED SECURITIES
If (1) The Depository Trust Company notifies New Avis in writing that it is
no longer willing or able to act as a depository or The Depository Trust Company
ceases to be registered as a clearing agency under the Exchange Act and New Avis
is unable to locate a qualified successor within 90 days, (2) New Avis, at its
option, notifies the trustee in writing that it elects to cause the issuance of
new notes in definitive form under the indenture or (3) upon the occurrence of
other specified events, then, upon surrender by The Depository Trust Company of
its global notes, certificated securities will be issued to each person that The
Depository Trust Company identifies as the beneficial owner of the new notes
represented by the global notes. Upon any such issuance, the trustee is required
to register the certificated securities in the name of the persons identified as
beneficial owners--or the nominee of any thereof--and cause the same to be
delivered to these persons.
NO LIABILITY FOR DELAY IN IDENTIFYING BENEFICIAL OWNERS.
Neither New Avis nor the trustee will be liable for any delay by The
Depository Trust Company or any DTC Participant or Indirect DTC Participant in
identifying the beneficial owners of the related new notes and each beneficial
owner may conclusively rely on, and will be protected in relying on,
instructions from The Depository Trust Company for all purposes, including with
respect to the registration and delivery, and the respective principal amounts,
of the new notes to be issued.
189
<PAGE>
REGISTRATION RIGHTS
Holders of the new notes are not entitled to any registration rights with
respect to the new notes. On June 30, 1999, Avis Rent A Car, the subsidiary
guarantors, Chase Securities Inc. and Lehman Brothers Inc. entered into a
Registration Rights Agreement. The Registration Rights Agreement requires Avis
Rent A Car and the subsidiary guarantors to use their reasonable best efforts to
cause a registration statement relating to the exchange of old notes for
registered new notes to be declared effective under the Securities Act by
November 29, 1999. We have also agreed to bear the cost of preparing, filing and
having the registration statement declared effective. The registration statement
of which this prospectus forms a part is the registration statement required by
the Registration Rights Agreement. Upon the registration statement being
declared effective, Avis Rent A Car and the subsidiary guarantors will offer to
all holders of the old notes an opportunity to exchange their securities for a
like principal amount of the new notes and the related guarantees. Avis Rent A
Car and the subsidiary guarantors will keep the exchange offer open for
acceptance for not less than 20 business days--or longer if required by
applicable law--after the date notice of the exchange offer is mailed to the
holders of the old notes, subject to certain customary exceptions. For each old
note accepted for exchange in the exchange offer, the holder of the old note
will receive a new note having a principal amount at maturity equal to that of
the surrendered old note. Interest on the new note will accrue (1) from the
later of (a) the last date to which interest was paid on the old note
surrendered in exchange for the new note or (b) if the old note is surrendered
for exchange on a date in a period which includes the record date for an
interest payment date to occur on or after the date of such exchange and as to
which interest will be paid, the date to which interest will be paid on such
interest payment or (2) if no interest has been paid on such old note, from June
30, 1999.
Based on interpretations by the staff of the Commission, as set forth in
no-action letters issued to third parties, we believe that the new notes and the
related guarantees you receive in the exchange offer may be offered for resale,
resold or otherwise transferred without compliance with the registration and
prospectus delivery provisions of the Securities Act. By tendering your old
notes, you represent to us:
- that any new notes you receive in the exchange offer are being acquired by
you in the ordinary course of your business;
- that at the time of the commencement of the exchange offer, you do not
have any arrangement or understanding with any person to participate in
the distribution of the new notes in violation of the Securities Act, as
defined in the Securities Act;
- that you are not an "affiliate" of New Avis, as defined in Rule 405 under
the Securities Act;
- if you are not a broker-dealer, that you are not engaged in, and do not
intend to engage in, the distribution of the new notes; and
- if you are a participating broker-dealer, that you will receive the new
notes for your own account in exchange for old notes that were acquired by
you as a result of your market-making or other trading activities and that
you will deliver a prospectus in connection with any resale of the new
notes you receive.
The Commission has taken the position that participating broker-dealers may
fulfill their prospectus delivery requirements with respect to resales of the
new notes--other than a resale of an unsold allotment from the original sale of
the old notes--by delivering this prospectus to prospective purchasers. Avis
Rent A Car and the subsidiary guarantors have agreed that for a period of not
more than 180 days after the consummation of the exchange offer, they will make
this prospectus, as amended or supplemented, available to any participating
broker-dealer for use in connection with any resale of the new notes. For
further information regarding the obligations of
190
<PAGE>
participating broker-dealers, including the prospectus delivery requirement, see
"Plan of Distribution."
Under some circumstances, we may be required to file a shelf registration
statement covering resales of the old notes. This requirement will be triggered
if:
- because of any change in law or interpretations thereof by the staff of
the Commission, we are not permitted to effect the exchange offer;
- any old notes validly tendered pursuant to the exchange offer are not
exchanged for new notes by December 27, 1999;
- either Chase Securities Inc. or Lehman Brothers Inc. so requests with
respect to old notes that are not eligible to be exchanged in the exchange
offer;
- any applicable law or interpretations do not permit any holder of old
notes to participate in the exchange offer; or
- any holder of old notes that participates in the exchange offer does not
receive freely transferable new notes in exchange for its old notes.
We must file the shelf registration statement within 90 days of receiving
written notice that one of the foregoing has occurred. If we are required to
file the shelf registration statement, then we will:
- at our expense, file the shelf registration statement with the Commission;
- use our reasonable best efforts to cause the shelf registration statement
to be declared effective under the Securities Act; and
- subject to certain customary exceptions, use our reasonable best efforts
to keep the shelf registration statement effective until the earlier of:
- such time as all of the old notes have been exchanged for new notes
that are not subject to transfer restrictions;
- the date on which, in the written opinion of our counsel, all
outstanding old notes held by persons that are not affiliates of New
Avis may be resold without registration under the Securities Act
pursuant to Rule 144(k) under the Securities Act or any successor
provision; and
- such time as all of the old notes have been sold under the shelf
registration statement.
In the event that a shelf registration statement is filed, we will:
- provide a copy of the prospectus that forms a part of the shelf
registration statement to each holder of old notes;
- notify each holder of old notes when the shelf registration statement has
been declared effective; and
- and take other actions as are required to permit unrestricted resales of
the old notes.
If you sell old notes under the shelf registration statement:
- you must be named as a selling security holder in the prospectus that
forms a part of the shelf registration statement;
- you must deliver a prospectus to any purchasers of your old notes;
191
<PAGE>
- you will be subject to the civil liability provisions of the Securities
Act in connection with such sales; and
- you will be bound by the provisions of the Registration Rights Agreement
that are applicable to holders who sell their old notes under the shelf
registration statement, including certain indemnification rights and
obligations.
If by December 27, 1999, the exchange offer has not been completed and a
shelf registration statement has not been declared effective, we will be
obligated to pay liquidated damages on all outstanding old notes that are
subject to transfer restrictions at a rate of $0.192 per week per $1,000
principal amount until the earlier of (1) the completion of the exchange offer
and (2) the effective date of the shelf registration statement.
This summary of the Registration Rights Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the full text of the Registration Rights Agreement, a copy of which is filed as
an exhibit to the registration statement of which this prospectus forms a part
and is incorporated by reference in this prospectus.
192
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of the new notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of new notes received in exchange for old notes where the old notes
were acquired as a result of market-making activities or other trading
activities. New Avis has agreed that for a period of not more than 180 days
after the effectiveness of the registration statement of which this prospectus
forms a part, it will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with resales of the new
notes.
New Avis will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by broker-dealers for their own account in
the exchange offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing of
options on the new notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any resale of the new notes may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such new notes. Any broker-dealer
that resells new notes that were received by it for its own account in the
exchange offer and any broker or dealer that participates in a distribution of
the new notes may be deemed to be an "underwriter" within the meaning of the
Securities Act. Any profit on any resale of new notes and any commissions or
concessions received by any persons deemed to be underwriters may be deemed to
be underwriting compensation under the Securities Act. The enclosed letter of
transmittal states that by acknowledging that it will deliver and be delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of not more than 180 days after the effectiveness of the
registration statement of which this prospectus forms a part, New Avis will
promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests these documents
from the Exchange Agent. New Avis has agreed to pay all expenses incident to the
exchange offer--other than commissions or concessions of any brokers or
dealers-- and will indemnify the holders of the new notes, including any
broker-dealers, against certain liabilities, including liabilities under the
Securities Act.
Following completion of the exchange offer, New Avis may, in its sole
discretion, commence one or more additional exchange offers to holders of old
notes who did not exchange their old notes for new notes in the exchange offer
on terms which may differ from those contained in the prospectus and the
enclosed letter of transmittal, as provided in the Registration Rights
Agreement. This prospectus, as it may be amended or supplemented from time to
time, may be used by New Avis in connection with any additional exchange offers.
These additional exchange offers may take place from time to time until all
outstanding old notes have been exchanged for new notes, subject to the terms
and conditions contained in the prospectus and letter of transmittal distributed
by New Avis in connection with these additional exchange offers.
LEGAL MATTERS
Certain matters with respect to the notes will be passed upon for Avis Rent
A Car by White & Case LLP, New York, New York.
EXPERTS
The consolidated financial statements of Avis Rent A Car, Inc. and its
subsidiaries as of December 31, 1998 and 1997 and for the years ended December
31, 1998 and 1997 and the
193
<PAGE>
period October 17, 1996 (Date of Acquisition) to December 31, 1996 and as to the
Predecessor Companies for the period January 1, 1996 to October 16, 1996
included in this Prospectus, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing herein and elsewhere
in the Registration Statement, and are included in reliance upon the reports of
such firm given their authority as experts in accounting and auditing.
The combined financial statements of PHH Vehicle Management Services as of
December 31, 1998 and 1997 and for each of the three years in the period ended
December 31, 1998 included in this prospectus have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report appearing herein and
elsewhere in the Registration Statement and are included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
AVAILABLE INFORMATION
Avis Rent A Car and the subsidiary guarantors have filed with the Commission
a registration statement on Form S-4, of which this prospectus forms a part,
under the Securities Act, in connection with our offering of the new notes. As
permitted by the rules and regulations of the Commission, this prospectus does
not contain all of the information in the registration statement. You will find
additional information about Avis Rent A Car, the subsidiary guarantors and the
new notes in the registration statement. Any statements made in this prospectus
concerning the provisions of legal documents are not necessarily complete and
you should read the documents that are filed as exhibits to the registration
statement.
As a result of the exchange offer, Avis Rent A Car will become subject to
the informational requirements of the Exchange Act and will file periodic
reports, statements and other information with the Commission. We do not expect
that the subsidiary guarantors will be individually subject to the information
reporting requirements of the Exchange Act. Financial information with respect
to the subsidiary guarantors and non-guarantor subsidiaries will be included in
the footnotes to Avis Rent A Car's quarterly and annual financial statements.
You may inspect and copy the registration statement, including exhibits, and,
when filed, our periodic reports, statements and other information filed with
the Commission at the public reference facilities maintained by the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Commission's regional offices located at 7 World Trade Center, New
York, New York 10048 and at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Commission also maintains a Web site at http://www.sec.gov
which will contain, when filed, our reports, statements and other information
filed with the Commission.
If we are not required to be subject to the reporting requirements of the
Exchange Act in the future, we will be required under the indenture for the new
notes and the old notes to continue to file with the Commission and to furnish
to holders of the new notes and the old notes the reports, statements and other
information specified in Sections 13 and 15(d) of the Exchange Act, including
annual reports containing audited consolidated financial statements of New Avis
and quarterly reports containing unaudited condensed consolidated financial data
for the first three quarters of each fiscal year.
194
<PAGE>
INDEX TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE #
-----------
<S> <C>
AVIS RENT A CAR, INC.
Audited Consolidated Financial Statements:
Independent Auditors' Report........................................................................... F-2
Consolidated Statements of Operations for the years ended December 31, 1998 and 1997 and the period
October 17, 1996 (Date of Acquisition) to December 31, 1996 and as to the Predecessor Companies for
the period January 1, 1996 to October 16, 1996....................................................... F-3
Consolidated Statements of Financial Position at December 31, 1998 and 1997............................ F-4
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1998 and 1997 and the
period October 17, 1996 (Date of Acquisition) to December 31, 1996 and as to the Predecessor
Companies for the period January 1, 1996 to October 16, 1996......................................... F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1998 and 1997 and the period
October 17, 1996 (Date of Acquisition) to December 31, 1996 and as to the Predecessor Companies for
the period January 1, 1996 to October 16, 1996....................................................... F-6
Notes to the Consolidated Financial Statements......................................................... F-7
Unaudited Condensed Consolidated Financial Statements:
Condensed Consolidated Statements of Operations for the six months ended June 30, 1999 and 1998........ F-42
Condensed Consolidated Statement of Financial Position as of June 30, 1999............................. F-43
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 1999 and 1998........ F-44
Notes to the Condensed Consolidated Financial Statements............................................... F-45
PHH VEHICLE MANAGEMENT SERVICES
Audited Combined Financial Statements:
Independent Auditors' Report........................................................................... F-61
Combined Balance Sheets at December 31, 1998 and 1997.................................................. F-62
Combined Statements of Income for the years ended December 31, 1998, 1997 and 1996..................... F-63
Combined Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996................. F-64
Combined Statements of Shareholders' Equity for the years ended December 31, 1998, 1997, and 1996...... F-65
Notes to the Combined Financial Statements............................................................. F-66
Unaudited Condensed Combined Financial Statements:
Condensed Combined Balance Sheet at March 31, 1999..................................................... F-94
Condensed Combined Statements of Income for the three months ended March 31, 1999 and 1998............. F-95
Condensed Combined Statements of Cash Flows for the three months ended March 31, 1999 and 1998......... F-96
Notes to the Condensed Combined Financial Statements................................................... F-97
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders of
Avis Rent A Car, Inc.
Garden City, New York
We have audited the accompanying consolidated statements of financial
position of Avis Rent A Car, Inc. and subsidiaries (successor to Rental Car
System Holdings, Inc. and subsidiaries, Avis International, Ltd. and
subsidiaries, Avis Enterprises, Inc. and subsidiaries, Pathfinder Insurance
Company and Global Excess & Reinsurance, Ltd., all previously wholly-owned by
Avis, Inc., collectively the "Predecessor Companies") (collectively referred to
as "Avis Rent A Car, Inc." or the "Company") as of December 31, 1998 and 1997,
and the related consolidated statements of operations, stockholders' equity and
cash flows for the years ended December 31, 1998 and 1997 and for the period
October 17, 1996 (Date of Acquisition) to December 31, 1996 and as to the
Predecessor Companies the related consolidated statements of operations,
stockholders' equity and cash flows for the period January 1, 1996 to October
16, 1996. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of the Company as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years ended December 31, 1998 and 1997 and for the period October 17,
1996 to December 31, 1996 (period after the change in control referred to in
Note 1 to the consolidated financial statements), and with respect to the
Predecessor Companies for the period January 1, 1996 to October 16, 1996 (period
up to the change in control referred to in Note 1 to the consolidated financial
statements) in conformity with generally accepted accounting principles.
As more fully discussed in Note 1 to the consolidated financial statements,
the Predecessor Companies were acquired in a business combination accounted for
as a purchase. As a result of the acquisition, the consolidated financial
statements for the period subsequent to the acquisition are presented on a
different basis of accounting than those for the periods prior to the
acquisition and, therefore, are not directly comparable.
[LOGO]
New York, New York
January 25, 1999
(March 19, 1999 as to Note 21 and August 23, 1999 as to Note 22)
F-2
<PAGE>
AVIS RENT A CAR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PREDECESSOR OCTOBER 17, 1996
COMPANIES (DATE OF
------------------- ACQUISITION) YEARS ENDED DECEMBER
JANUARY 1, 1996 TO 31,
TO DECEMBER 31, ----------------------
OCTOBER 16, 1996 1996 1997 1998
------------------- ---------------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue.................... $ 1,504,673 $ 362,844 $2,046,154 $2,297,582
------------------- ---------------- ---------- ----------
Costs and expenses:
Direct operating, net.... 650,750 167,682 863,839 939,986
Vehicle depreciation and
lease charges, net..... 358,937 85,455 525,143 593,064
Selling, general and
administrative......... 283,180 68,215 415,728 438,724
Interest, net............ 138,225 38,205 184,261 201,726
Amortization of cost in
excess of net assets
acquired............... 3,782 1,026 6,860 11,854
------------------- ---------------- ---------- ----------
1,434,874 360,583 1,995,831 2,185,354
------------------- ---------------- ---------- ----------
Income before provision for
income taxes............. 69,799 2,261 50,323 112,228
Provision for income
taxes.................... 31,198 1,040 22,850 48,707
------------------- ---------------- ---------- ----------
Net income................. $ 38,601 $ 1,221 $ 27,473 $ 63,521
------------------- ---------------- ---------- ----------
------------------- ---------------- ---------- ----------
Earnings per share:
Basic...................... $ 1.25 $ .04 $ .89 $ 1.86
------------------- ---------------- ---------- ----------
Diluted.................... $ 1.25 $ .04 $ .88 $ 1.82
------------------- ---------------- ---------- ----------
------------------- ---------------- ---------- ----------
</TABLE>
See accompanying notes to the consolidated financial statements.
F-3
<PAGE>
AVIS RENT A CAR, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1998
-------------- --------------
<S> <C> <C>
ASSETS
Cash and cash equivalents......................................................... $ 44,899 $ 29,751
Restricted cash................................................................... 106,984 133,284
Accounts receivable, net.......................................................... 359,463 360,574
Prepaid expenses.................................................................. 47,360 42,083
Vehicles, net..................................................................... 3,018,856 3,164,816
Property and equipment, net....................................................... 122,860 145,045
Other assets...................................................................... 40,469 40,590
Deferred income tax assets........................................................ 145,726 120,779
Cost in excess of net assets acquired, net........................................ 396,040 468,140
-------------- --------------
Total assets...................................................................... $ 4,282,657 $ 4,505,062
-------------- --------------
-------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable.................................................................. $ 329,706 $ 198,481
Accrued liabilities............................................................... 315,287 326,204
Due to affiliates, net............................................................ 44,512 22,293
Current income tax liabilities.................................................... 22,873 23,045
Deferred income tax liabilities................................................... 34,106 28,504
Public liability, property damage and other insurance liabilities, net............ 256,029 269,209
Debt.............................................................................. 2,826,422 3,014,712
-------------- --------------
Total liabilities............................................................. 3,828,935 3,882,448
-------------- --------------
Commitments and contingencies
Stockholders' equity:
Preferred stock ($.01 par value 20,000,000 shares authorized; none issued)........
Class A Common stock ($.01 par value, 100,000,000 shares authorized; 35,925,000
issued at December 31, 1998; 30,925,000 shares issued and outstanding at
December 31, 1997).............................................................. 309 359
Additional paid-in capital........................................................ 430,507 591,651
Retained earnings................................................................. 28,694 92,215
Accumulated other comprehensive loss.............................................. (5,788) (10,651)
Treasury stock 2,672,700 shares, at cost.......................................... (50,960)
-------------- --------------
Total stockholders' equity.................................................... 453,722 622,614
-------------- --------------
Total liabilities and stockholders' equity........................................ $ 4,282,657 $ 4,505,062
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to the consolidated financial statements.
F-4
<PAGE>
AVIS RENT A CAR, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
COMPREHENSIVE COMMON PAID-IN RETAINED COMPREHENSIVE TREASURY
INCOME STOCK CAPITAL EARNINGS INCOME/(LOSS) STOCK TOTAL
--------------- ----------- ----------- ----------- --------------- ----------- ---------
Balance, January 1, 1996..... $ 2,977 $ 344,531 $ 340,596 $ 156 $ 688,260
<S> <C> <C> <C> <C> <C> <C> <C>
Net income................... $ 38,601 38,601 38,601
Tax benefit of ESOP income
tax deduction.............. 12,939 12,939
Foreign currency translation
adjustment................. 1,711 1,711 1,711
Cash dividends............... (1,398) (1,398)
--------------- ----------- ----------- ----------- --------------- ---------
Comprehensive income......... $ 40,312
---------------
---------------
Balance, October 16, 1996.... $ 2,977 $ 357,470 $ 377,799 $ 1,867 $ 740,113
----------- ----------- ----------- --------------- ---------
----------- ----------- ----------- --------------- ---------
Avis Rent A Car, Inc. ($.01
par value 100,000,000
shares of Class A Common
Stock authorized; 8,500,000
shares of Common Stock
outstanding at October 17,
1996 (Date of Acquisition)
after restatement for a
85,000 to 1 stock split on
September 24,1997.......... $ 85 $ 74,915 $ 75,000
Net income................... $ 1,221 $ 1,221 1,221
Foreign currency translation
adjustment................. 217 $ 217 217
Additional minimum pension
charge..................... (23) (23) (23)
--------------- ----------- ----------- ----------- --------------- ---------
Comprehensive income......... $ 1,415
---------------
---------------
Balance, December 31, 1996... 85 74,915 1,221 194 76,415
Net income................... $ 27,473 27,473 27,473
Sale of Class A Common Stock
($.01 par value) through an
initial public offering of
22,425,000 shares of Common
Stock on September 24,
1997....................... 224 355,592 355,816
Foreign currency translation
adjustment................. (5,761) (5,761) (5,761)
Additional minimum pension
charge..................... (221) (221) (221)
--------------- ----------- ----------- ----------- --------------- ---------
Comprehensive income......... $ 21,491
---------------
---------------
Balance, December 31, 1997... 309 430,507 28,694 (5,788) 453,722
Net income................... $ 63,521 63,521 63,521
Sale of Class A Common Stock
($.01 par value) through a
public offering of
5,000,000 shares of Common
Stock on March 23, 1998.... 50 161,144 161,194
Purchases of Treasury stock,
2,672,700 shares, at
cost....................... $ (50,960) (50,960)
Foreign currency translation
adjustment................. (3,374) (3,374) (3,374)
Additional minimum pension
charge..................... (1,489) (1,489) (1,489)
--------------- ----------- ----------- ----------- --------------- ----------- ---------
Comprehensive income......... $ 58,658
---------------
---------------
Balance, December 31, 1998... $ 359 $ 591,651 $ 92,215 $ (10,651) $ (50,960) $ 622,614
----------- ----------- ----------- --------------- ----------- ---------
----------- ----------- ----------- --------------- ----------- ---------
</TABLE>
See accompanying notes to the consolidated financial statements.
F-5
<PAGE>
AVIS RENT A CAR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR COMPANIES
--------------------------- OCTOBER 17, 1996 YEARS ENDED
JANUARY 1, 1996 (DATE OF ACQUISITION) DECEMBER 31,
TO TO ------------
OCTOBER 16, 1996 DECEMBER 31, 1996 1997
--------------------------- ----------------------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................... $ 38,601 $ 1,221 $ 27,473
Adjustments to reconcile net income to net cash
provided by operating activities:
Vehicle depreciation............................. 306,159 71,343 466,799
Depreciation and amortization of property and
equipment........................................ 12,333 2,212 11,791
Amortization of other non-revenue producing
assets........................................... 6,205 1,026 11,231
Deferred income tax provision.................... 22,342 33 9,161
Undistributed (earnings) losses of associated
companies........................................ (232) 146
Provision for doubtful accounts receivable....... 1,238 227 3,208
Provision for public liability, property damage
and other insurance liabilities, net............. 17,745 1,340 25,574
Changes in operating assets and liabilities:
Restricted cash.................................. (535) 724 (76,596)
Accounts receivable.............................. (204,137) 10,327 (15,201)
Prepaid expenses................................. (2,125) (2,664) 3,914
Other assets..................................... 2,391 (2,754) (8,915)
Accounts payable................................. 82,354 (18,712) 152,777
Accrued liabilities.............................. 101,069 (24,718) (84,150)
Due to (from) affiliates......................... (137,196) (3,796) 53,761
------------- ----------- ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES........ 246,212 35,809 580,973
------------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for vehicle additions................... (2,325,460) (561,117) (4,406,183)
Vehicle deletions................................ 1,795,562 565,896 3,382,177
Payments for additions to property and
equipment........................................ (25,953) (3,484) (24,733)
Retirements of property and equipment............ 1,849 361 3,971
Payments for purchase of licensees............... (3,134) (199,381)
------------- ----------- ------------
NET CASH (USED IN) PROVIDED BY INVESTING
ACTIVITIES....................................... (557,136) 1,656 (1,244,149)
------------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from public offerings, net................ 359,316
Purchases of treasury stock........................
Changes in debt:
Proceeds......................................... 519,167 63,903 3,381,173
Repayments....................................... (267,317) (133,457) (3,031,885)
------------- ----------- ------------
Net increase (decrease) in debt.................. 251,850 (69,554) 349,288
Intercompany debt.................................. 109,500 (2,865)
Payments for debt issuance costs................... (2,604) (29,302)
Cash dividends..................................... (1,398)
------------- ----------- ------------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES....................................... 357,348 (72,419) 679,302
------------- ----------- ------------
Effect of exchange rate changes on cash............ 260 94 (945)
------------- ----------- ------------
Net increase (decrease) in cash and cash
equivalents...................................... 46,684 (34,860) 15,181
Cash and cash equivalents at beginning of period... 17,894 64,578 29,718
------------- ----------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD......... $ 64,578 $ 29,718 $ 44,899
------------- ----------- ------------
------------- ----------- ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest......................................... $ 135,733 $ 28,170 $ 189,086
------------- ----------- ------------
------------- ----------- ------------
Income taxes..................................... $ 6,220 $ 827 $ 8,899
------------- ----------- ------------
------------- ----------- ------------
<CAPTION>
1998
------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................... $ 63,521
Adjustments to reconcile net income to net cash
provided by operating activities:
Vehicle depreciation............................. 581,022
Depreciation and amortization of property and
equipment........................................ 13,191
Amortization of other non-revenue producing
assets........................................... 23,559
Deferred income tax provision.................... 38,457
Undistributed (earnings) losses of associated
companies........................................
Provision for doubtful accounts receivable....... 2,961
Provision for public liability, property damage
and other insurance liabilities, net............. 13,687
Changes in operating assets and liabilities:
Restricted cash.................................. (26,300)
Accounts receivable.............................. (14,045)
Prepaid expenses................................. 6,848
Other assets..................................... (6,069)
Accounts payable................................. (23,148)
Accrued liabilities.............................. (2,475)
Due to (from) affiliates......................... (18,320)
------------
NET CASH PROVIDED BY OPERATING ACTIVITIES........ 652,889
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for vehicle additions................... (4,303,048)
Vehicle deletions................................ 3,610,721
Payments for additions to property and
equipment........................................ (42,933)
Retirements of property and equipment............ 5,302
Payments for purchase of licensees............... (237,182)
------------
NET CASH (USED IN) PROVIDED BY INVESTING
ACTIVITIES....................................... (967,140)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from public offerings, net................ 161,194
Purchases of treasury stock........................ (50,960)
Changes in debt:
Proceeds......................................... 1,217,289
Repayments....................................... (1,023,432)
------------
Net increase (decrease) in debt.................. 193,857
Intercompany debt..................................
Payments for debt issuance costs................... (4,654)
Cash dividends.....................................
------------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES....................................... 299,437
------------
Effect of exchange rate changes on cash............ (334)
------------
Net increase (decrease) in cash and cash
equivalents...................................... (15,148)
Cash and cash equivalents at beginning of period... 44,899
------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD......... $ 29,751
------------
------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest......................................... $ 209,977
------------
------------
Income taxes..................................... $ 13,338
------------
------------
</TABLE>
See accompanying notes to the consolidated financial statements.
F-6
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include Avis Rent A Car,
Inc. (name changed from and formerly known as Rental Car System Holdings, Inc.
which was incorporated on October 17, 1996) and subsidiaries (including the
carved out corporate operations of HFS Car Rental, Inc. (name changed from and
formerly known as, and hereinafter referred to as, Avis, Inc.), which is the
holding company of Rental Car System Holdings, Inc., and Prime Vehicles Trust
(the "Vehicle Trust")), Avis International, Ltd. and subsidiaries, Avis
Enterprises, Inc. and subsidiaries, Pathfinder Insurance Company and Global
Excess & Reinsurance, Ltd. (collectively referred to as "Avis Rent A Car,
Inc."). All of the foregoing companies were ultimately wholly-owned subsidiaries
of Avis, Inc., which was acquired by Cendant Corporation (formerly HFS
Incorporated ("Cendant")) on October 17, 1996 (the "Date of Acquisition") for
approximately $806.5 million (the "Acquisition"). The purchase price was
comprised of approximately $367.2 million in cash, $100.9 million of
indebtedness and $338.4 million of common stock. Prior to October 17, 1996, the
above-named entities were wholly-owned by Avis, Inc. and are referred to
collectively as the "Predecessor Companies". Avis Rent A Car, Inc. and the
Predecessor Companies are referred to throughout the notes to the consolidated
financial statements as the "Company". Prior to the Acquisition, the major
shareholder of Avis, Inc. was an Employee Stock Ownership Plan ("ESOP") and the
minority shareholder was General Motors Corporation ("General Motors"). The
Company purchases a significant portion of its vehicles, and receives certain
financial incentives and allowances from General Motors (see Notes 4, 6, and
19). As a result of the Acquisition, the consolidated financial statements for
the period subsequent to the Acquisition are presented on a different basis of
accounting than those for the periods prior to the Acquisition and, therefore,
are not directly comparable. On January 1, 1997, Avis, Inc. contributed the net
assets of its corporate operations and all of its common stock ownership in Avis
International, Ltd. and subsidiaries, Avis Enterprises, Inc. and subsidiaries,
Pathfinder Insurance Company and Global Excess & Reinsurance, Ltd. to the
Company. After the transfer, the remaining operations of Avis, Inc. consist of
an investment in a wholly-owned subsidiary which owns the Avis trade names and
trademarks. Pursuant to a plan developed by Cendant prior to the Date of
Acquisition, Cendant caused the Company to undertake an initial public offering
("IPO"). On September 24, 1997, the Company issued and sold 22,425,000 shares of
its common stock through such IPO and received net proceeds of $359.3 million.
On March 23, 1998, the Company sold 5,000,000 shares of its common stock through
a public offering (the "Offering") and received net proceeds of approximately
$161 million. In addition, in the Offering on March 23, 1998, Cendant reduced
its ownership of the Company by selling 1,000,000 shares of the Company's common
stock and retained the net proceeds. As a result of the IPO, the Offering on
March 23, 1998 and the repurchase of 2,672,700 shares of treasury stock by the
Company during 1998, Cendant's equity interest in the Company at January 23,
1999 is approximately 20% (see Notes 12 and 21). The Company has used the net
proceeds from these offerings to (i) acquire certain Avis System franchises (see
Note 2) and (ii) for working capital and general corporate purposes, including
the repayment of certain indebtedness. A Cendant subsidiary owns and operates
the reservation system as well as the telecommunications and computer processing
systems which service the rental car operations for reservations, rental
agreement processing, accounting and vehicle control. Cendant is reimbursed for
such services at cost (see Note 5). In addition, a Cendant subsidiary charges
the Company a royalty fee for the use of the Avis trade name (see Note 5).
F-7
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The acquisition of the Company by Cendant was accounted for under the
purchase method and includes the operations of the Company subsequent to the
Date of Acquisition. A portion of the purchase price has been allocated to the
fair value of the Company. This fair value was calculated on the basis that the
Company is an independent franchisee of Avis, Inc. and is required to pay
certain fees for use of the Avis trade name, reservation services and other
franchise related services. The fair value of the Company has been allocated to
individual assets and liabilities based on their fair value at the Date of
Acquisition.
The purchase cost allocation at the Date of Acquisition has been allocated
to the Company as follows (in thousands):
<TABLE>
<S> <C>
Allocated purchase cost........................................ $ 75,000
----------
Fair value of:
Liabilities assumed.......................................... 3,215,677
Assets acquired.............................................. 3,059,186
----------
Net liabilities................................................ 156,491
----------
Cost in excess of net assets acquired.......................... $ 231,491
----------
----------
</TABLE>
Certain prior year amounts have been reclassified so that the consolidated
financial statements are comparable with the current year.
PRINCIPLES OF CONSOLIDATION
All material intercompany accounts and transactions have been eliminated.
ACCOUNTING ESTIMATES
Generally accepted accounting principles require the use of estimates, which
are subject to change, in the preparation of financial statements. Significant
accounting estimates used include estimates for determining public liability,
property damage and other insurance liabilities, and the realization of deferred
income tax assets. However, actual results may differ.
REVENUE RECOGNITION
Revenue is recognized over the period the vehicle is rented.
CASH AND CASH EQUIVALENTS
The Company considers unrestricted deposits and short-term investments with
an original maturity date of three months or less to be cash equivalents.
RESTRICTED CASH
Restricted cash includes cash and short-term investments that are not
readily available for normal company disbursements. Certain amounts have been
set aside as required under the Company's debt covenants and to satisfy
insurance related and other commitments of the Company.
F-8
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
VEHICLES, NET
Vehicles are stated at cost, net of accumulated depreciation, incentives and
allowances. In accordance with industry practice, when vehicles are sold, gains
or losses are reflected as an adjustment to depreciation. Vehicles are generally
depreciated at rates ranging from 10% to 25% per annum. Manufacturers provide
the Company with incentives and allowances (such as rebates and volume
discounts) which are amortized to income over the holding periods of the
vehicles.
PROPERTY AND EQUIPMENT, NET
Property and equipment is stated at cost, net of accumulated depreciation
and amortization. Depreciation is calculated using the straight-line method over
the estimated useful life of the assets. Estimated useful lives range from five
to ten years for furniture, fixtures and equipment, to thirty years for
buildings. Leasehold improvements are amortized over the shorter of twenty years
or the remaining life of the lease. Maintenance and repairs are expensed;
renewals and improvements are capitalized. When depreciable assets are retired
or sold, the cost and related accumulated depreciation are removed from the
accounts with any resulting gain or loss reflected in the consolidated statement
of operations.
COST IN EXCESS OF NET ASSETS ACQUIRED, NET
Cost in excess of net assets acquired is amortized over a 40 year period and
is shown net of accumulated amortization of $7.9 million and $19.7 million at
December 31, 1997 and 1998, respectively.
IMPAIRMENT ACCOUNTING
The Company reviews the recoverability of its long-lived assets, including
cost in excess of net assets acquired, when events or changes in circumstances
occur that indicate that the carrying value of the assets may not be
recoverable. The measurement of possible impairment is based on the Company's
ability to recover the carrying value of the asset from the expected future
pre-tax undiscounted cash flows generated. The measurement of impairment
requires management to use estimates of expected future cash flows. If an
impairment loss existed, the amount of the loss would be recorded under the
caption costs and expenses in the consolidated statements of operations. It is
at least reasonably possible that future events or circumstances could cause
these estimates to change.
PUBLIC LIABILITY, PROPERTY DAMAGE AND OTHER INSURANCE LIABILITIES, NET
Insurance liabilities on the accompanying consolidated statements of
financial position include additional liability insurance, personal effects
protection insurance, public liability and property damage ("PLPD") and personal
accident insurance claims for which the Company is self-insured. The Company is
self-insured up to $1 million per claim under its automobile liability insurance
program for PLPD and additional liability insurance. Costs in excess of $1
million per claim are insured under various contracts with commercial insurance
carriers. The liability for claims up to $1 million is estimated based on the
Company's historical loss and loss adjustment expense experience, which is
adjusted for current trends.
F-9
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The insurance liabilities include a provision for both claims reported to
the Company as well as claims incurred but not yet reported to the Company. This
method is an actuarially accepted loss reserve method. Adjustments to this
estimate and differences between estimates and the amounts subsequently paid are
reflected in the Consolidated Statements of Operations as they occur.
FOREIGN CURRENCY TRANSLATION
The assets and liabilities of foreign companies are translated at year-end
exchange rates. Results of operations are translated at the average rates of
exchange in effect during the year. The resultant translation adjustment is
included as a component of comprehensive income within consolidated
stockholders' equity.
INCOME TAXES
Effective September 30, 1997, the Company files a U.S. consolidated federal
income tax return. The Company has adopted the calendar year as its fiscal year.
The Company files separate income tax returns in states where a consolidated
return is not permitted. The Company was included in the consolidated federal
income tax return of Cendant through September 29, 1997. Pursuant to the
regulations under the Internal Revenue Code, the Company's pro rata share of the
consolidated federal income tax liability of Cendant was allocated to the
Company on a separate return basis. The Predecessor Companies were included in
the consolidated federal income tax return of Avis, Inc. In accordance with
Statement of Financial Accounting Standards No. 109, "ACCOUNTING FOR INCOME
TAXES" ("SFAS 109"), deferred income tax assets and liabilities are measured
based upon the difference between the financial accounting and tax basis of
assets and liabilities.
PENSIONS
Costs of the defined benefit plans are actuarially determined under the
projected unit credit cost method and include amounts for current service and
interest on projected benefit obligations and plan assets. The Company's policy
is to fund at least the minimum contribution amount required by the Employee
Retirement Income Security Act of 1974.
ADVERTISING
Advertising costs are expensed as incurred. Advertising costs were $66.1
million, $10.3 million, $65.6 million and $77.7 million for the periods ended
October 16, 1996, December 31, 1996, 1997, and 1998, respectively.
ENVIRONMENTAL COSTS
The Company's operations include the storage and dispensing of gasoline. The
Company accrues losses associated with the remediation of accidental fuel
discharges when such losses are probable and reasonably estimable. Accruals for
estimated losses from environmental remediation obligations generally are
recognized no later than completion of the remedial feasibility study. Such
accruals are adjusted as further information develops or circumstances change.
Costs of future expenditures for environmental remediation obligations are not
discounted to their present value. Recoveries from insurance companies and other
reimbursements are generally not significant.
F-10
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECENT ACCOUNTING PRONOUNCEMENTS
Recent pronouncements of the Financial Accounting Standards Board, which
were adopted for the year ended December 31, 1998 are Financial Accounting
Standards No. 130, "REPORTING COMPREHENSIVE INCOME" (see Note 11), and No. 132
"EMPLOYERS' DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS" (see
Note 13). The adoption of these accounting standards has not had a material
effect on the results of operations or the financial position of the Company.
A recent pronouncement of the Financial Accounting Standards Board which is
not required to be adopted at this date, is Statement of Financial Accounting
Standards No. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES" ("SFAS 133"), which is effective for the Company's consolidated
financial statements for the year ending December 31, 2000. SFAS 133 establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
It requires that any entity recognize all derivatives as either assets or
liabilities in the statement of financial position at fair value.
The Accounting Standards Executive Committee of the American Institute of
Certified Public Accountants issued Statement of Position No. 98-5, "ACCOUNTING
FOR START-UP COSTS" ("SOP 98-5"). SOP 98-5 requires that all start-up costs
should be expensed as incurred, unless the costs incurred were to acquire or
develop tangible assets or to acquire intangible assets from a third party. The
SOP is effective for fiscal years beginning after December 15, 1998.
The adoption of SFAS 133 and SOP 98-5 is not expected to have a material
effect on the results of the Company's consolidated financial statements.
NOTE 2--ACQUISITIONS
On May 1, 1998, the Company acquired the assets of the car rental business
of Hayes Leasing Company, Inc., including the Avis System franchises for the
cities of Austin, Fort Worth and San Antonio, and the counties of Dallas and
Tarrant, Texas for approximately $86 million in cash plus the refinancing of
fleet-related indebtedness, which totaled approximately $136 million for a total
purchase price of approximately $222 million. In addition, during the year ended
December 31, 1998, the Company purchased the assets of several other Avis System
franchises for approximately $15 million in cash. If these Acquisitions had
occurred on January 1, 1998 or 1997, they would not have had a material impact
on the Company's results of operations. The excess purchase price over the net
assets acquired for these acquisitions was approximately $90 million.
F-11
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--ACQUISITIONS (CONTINUED)
The following is the preliminary purchase cost allocation for the
acquisition of the assets of Hayes Leasing Company, Inc. and other Avis System
franchises during the year ended December 31, 1998 mentioned above (in
thousands):
<TABLE>
<S> <C>
Purchase cost.................................................... $ 237,182
---------
Fair value of:
Assets acquired................................................ 153,828
Liabilities assumed............................................ (6,967)
---------
Net assets....................................................... 146,861
---------
Cost in excess of net assets acquired............................ $ 90,321
---------
---------
</TABLE>
On August 20, 1997, the Company purchased The First Gray Line Corporation.
On September 18, 1997, the Company purchased certain assets and repurchased the
franchise rights of another Avis System franchisee. These acquisitions had an
aggregate purchase cost of approximately $199 million. The excess purchase cost
over net assets acquired was approximately $173 million.
The following is the purchase cost allocation for these 1997 acquisitions
mentioned above (in thousands):
<TABLE>
<S> <C>
Purchase cost.................................................... $ 199,381
---------
Fair value of:
Assets acquired................................................ 354,637
Liabilities assumed............................................ 328,269
---------
Net assets....................................................... 26,368
---------
Cost in excess of net assets acquired............................ $ 173,013
---------
---------
</TABLE>
The preliminary purchase cost allocations for certain acquisitions are
subject to adjustment when additional information concerning asset and liability
valuations are obtained. The final asset and liability fair values may differ
from those set forth in the accompanying statement of financial position at
December 31, 1998. However, the changes are not expected to have a material
effect on the financial position of the Company. These acquisitions have been
accounted for by the purchase method. The financial statements include the
operating results of these acquisitions subsequent to their respective dates of
acquisition.
The acquisition of the franchise rights of the additional Avis System
franchisee, if it had occurred on January 1, 1997, would not have had a material
impact on the results of operations of the Company.
The following unaudited pro forma information presents the results of
operations of the Company, which assumes that the following transactions had
occurred on January 1 of each period presented: (i) the acquisition of the
Company by Cendant and the establishment of a franchisor/ franchisee
relationship, (ii) the acquisition of First Gray Line and (iii) the repayment of
debt with the
F-12
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--ACQUISITIONS (CONTINUED)
net proceeds (after the purchase of First Gray Line) from the IPO (in thousands,
except earnings per share amounts):
<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Revenue......................................................... $ 2,055,519 $ 2,175,897
------------- -------------
------------- -------------
Net income...................................................... $ 8,567 $ 39,432
------------- -------------
------------- -------------
Basic earnings per share........................................ $ .28 $ 1.28
------------- -------------
------------- -------------
Diluted earnings per share...................................... $ .28 $ 1.26
------------- -------------
------------- -------------
</TABLE>
NOTE 3--RESTRICTED CASH
At December 31, 1997 and 1998, restricted cash includes an escrow amount of
$66,000,000 and $90,000,000, respectively, as required under the Company's debt
agreements, to provide additional credit enhancement on the Company's Medium
Term Notes (the "Medium Term Notes") (see Note 9). In addition, restricted cash
includes amounts relating to lease obligations of the Company's Canadian vehicle
financing arrangements, amounts set aside to satisfy certain claims under the
Company's self-insurance programs and other obligations of the Company.
NOTE 4--ACCOUNTS RECEIVABLE, NET
Accounts receivable, net at December 31, 1997 and 1998 consist of the
following (in thousands):
<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Vehicle rentals..................................................... $ 102,697 $ 104,032
Due from General Motors............................................. 166,941 161,377
Vehicle related..................................................... 52,450 65,586
Damage claims....................................................... 11,938 14,710
Due from licensees.................................................. 4,361 1,571
Other............................................................... 23,362 16,648
----------- -----------
361,749 363,924
Less allowance for doubtful accounts................................ (2,286) (3,350)
----------- -----------
$ 359,463 $ 360,574
----------- -----------
----------- -----------
</TABLE>
Vehicle related amounts include receivables for vehicles sold under
guaranteed repurchase contracts ("Repurchase Programs") and amounts due for
incentives and allowances. Incentives and allowances are based on all of the
following: the volume of vehicles to be purchased for a model year, the
manufacturers' willingness to encourage the Company to retain vehicles rather
than return the vehicles back to the manufacturer and the purchase of particular
models not subject to repurchase under "buyback" arrangements. Incentives and
allowances are amortized to income over the average holding period of the
vehicles (see Notes 6 and 19).
F-13
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5--DUE TO AFFILIATES, NET
Due to affiliates, net at December 31, 1997 and 1998 consist of non-interest
bearing advances due Cendant or its consolidated subsidiaries of $44.5 million
and $22.3 million, respectively. Non-interest bearing advances represents
intercompany transactions relating primarily to royalty fees, reservation
processing, data processing and management, service and administrative fees.
Expense and (income) items of the Company include the following charges from
(to) Avis, Inc. and subsidiaries prior to the Date of Acquisition for the period
ended October 16, 1996 (in thousands):
<TABLE>
<CAPTION>
JANUARY 1, 1996
TO
OCTOBER 16, 1996
-----------------
<S> <C>
Vehicle related costs.......................................................................... $ (25,134)
Data processing................................................................................ 30,209
Employee benefits allocation................................................................... (2,776)
Rent........................................................................................... (2,459)
--------
$ (160)
--------
--------
</TABLE>
Expense items of the Company include the following charges from Cendant and
affiliates of Cendant for the period October 17, 1996 (Date of Acquisition) to
December 31, 1996 and for the years ended December 31, 1997 and 1998 (in
thousands):
<TABLE>
<CAPTION>
OCTOBER 17, 1996
TO YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1997 1998
----------------- -------------- --------------
<S> <C> <C> <C>
Royalty fee................................ $ -- $ 81,846 $ 91,904
Reservations............................... 10,900 43,240 49,872
Data processing............................ 8,772 41,896 35,844
Management, service and administrative fees
and other................................ 12,079 4,927 4,648
-------- -------------- --------------
$ 31,751 $ 171,909 $ 182,268
-------- -------------- --------------
-------- -------------- --------------
</TABLE>
These charges seek to reimburse the affiliated company for the actual costs
incurred. They are determined in accordance with various intercompany agreements
and include certain allocations which are based upon such factors as square
footage, employee salaries, computer usage time, etc. Effective January 1, 1997,
Cendant charged the Company a royalty fee of 4.0% of revenue for the use of the
Avis trade name. The royalty fee of 4.0% consists of a base royalty of 3.0% of
the Company's gross revenue and a supplemental royalty of 1.0% of gross revenue
payable quarterly in arrears (which will increase 0.1% per year commencing July
30, 1999 and each of the following four years thereafter to a maximum of 1.5%
until July 30, 2003). The supplemental royalty or a portion thereof may be
deferred if the Company does not meet certain financial targets.
In addition, for the year ended December 31, 1998, the Company was charged
by Cendant approximately $3.8 million for certain software developed for
internal use, which have been capitalized on the accompanying Consolidated
Statements of Financial Position. Under the
F-14
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5--DUE TO AFFILIATES, NET (CONTINUED)
Computer Services Agreement with Cendant dated July 30, 1997, software developed
for the Company's internal use is charged to the Company at Cendant's cost.
NOTE 6--VEHICLES, NET
Vehicles at December 31, 1997 and 1998 consist of the following (in
thousands):
<TABLE>
<CAPTION>
1997 1998
------------- -------------
<S> <C> <C>
Rental vehicles..................................................................... $ 3,173,526 $ 3,443,385
Buses and support vehicles.......................................................... 55,761 67,786
Vehicles held for sale.............................................................. 51,645 21,871
------------- -------------
3,280,932 3,533,042
Less accumulated depreciation....................................................... (262,076) (368,226)
------------- -------------
$ 3,018,856 $ 3,164,816
------------- -------------
------------- -------------
</TABLE>
Depreciation expense recorded for vehicles was $275.9 million, $66.8
million, $460.6 million and $576.2 million for the periods ended October 16,
1996, December 31, 1996, 1997, and 1998, respectively. Depreciation expense is
stated net of amortization of certain incentives and allowances from various
vehicle manufacturers of approximately $67.6 million, $15.6 million, $121
million and $119 million for the periods ended October 16, 1996, December 31,
1996, 1997 and 1998, respectively. Depreciation expense also reflects a net gain
(loss) on the disposal of vehicles of $23.7 million, $2.9 million, $7.0 million
and $(6.8) million for the periods ended October 16, 1996, December 31, 1996,
1997, and 1998, respectively.
In April 1990 and December 1994, the Company entered into seven year
operating leases. Rental expense for those vehicles under the Company's
operating lease agreements was $93.0 million, $16.1 million, and $58.4 million
for the periods ended October 16, 1996, December 31, 1996 and 1997,
respectively. These leases were terminated on July 31, 1997 and refinanced under
a domestic integrated fleet financing program (see Note 9).
NOTE 7--PROPERTY AND EQUIPMENT, NET
Property and equipment at December 31, 1997 and 1998 consist of the
following (in thousands):
<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Land................................................................ $ 25,269 $ 23,726
Buildings........................................................... 12,775 8,655
Leasehold improvements.............................................. 64,779 87,830
Furniture, fixtures and equipment................................... 13,456 16,869
Construction-in-progress............................................ 18,714 32,236
----------- -----------
134,993 169,316
Less accumulated depreciation and amortization...................... (12,133) (24,271)
----------- -----------
$ 122,860 $ 145,045
----------- -----------
----------- -----------
</TABLE>
F-15
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8--ACCRUED LIABILITIES
Accrued liabilities at December 31, 1997 and 1998 consist of the following
(in thousands):
<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Payroll and related costs........................................... $ 101,962 $ 103,043
Taxes, other than income taxes...................................... 9,229 9,349
Rents and property related.......................................... 35,644 22,241
Interest............................................................ 7,294 6,140
Sales and marketing................................................. 24,672 43,704
Vehicle related..................................................... 25,475 27,102
Other............................................................... 111,011 114,625
----------- -----------
$ 315,287 $ 326,204
----------- -----------
----------- -----------
</TABLE>
NOTE 9--FINANCING AND DEBT
Debt outstanding at December 31, 1997 and 1998 consist of the following (in
thousands):
<TABLE>
<CAPTION>
1997 1998
------------- -------------
<S> <C> <C>
Commercial Paper Notes (at an average rate of 5.9% in 1997 and
5.6% in 1998)................................................. $ 1,091,800 $ 678,377
Short-term notes-foreign at 5.77% to 13.5% in 1997 and 5.0% to
12.0% in 1998................................................. 17,996 17,904
Floating rate notes at rates from 5.42% to 5.63%................ 56,977
Current portion of long-term debt............................... 49,644 1,085
------------- -------------
Total current debt............................................ 1,159,440 754,343
Medium Term Notes due July 2000 at 6.22%........................ 800,000 800,000
Medium Term Notes due July 2002 at 6.40%........................ 850,000 850,000
Medium Term Notes due February 2005 at 6.14%.................... 600,000
Foreign floating rate notes due July 2000 at rates from 5.81% to
7.02% in 1997 and 5.69% to 6.21% in 1998...................... 15,205 9,677
Other debt...................................................... 1,777 692
------------- -------------
$ 2,826,422 $ 3,014,712
------------- -------------
------------- -------------
</TABLE>
On July 31, 1997, the Company through Avis Rent A Car System, Inc. ("ARACS")
entered into a domestic integrated fleet financing program that provided for up
to $3.65 billion in financing for vehicles covered by Repurchase Programs, with
up to 25% of the facility available for vehicles not covered by Repurchase
Programs. As of December 31, 1998, the availability of the domestic integrated
fleet financing program is $3.75 billion. The domestic integrated fleet
financing program provides for the issuance of up to $1.5 billion of
asset-backed variable funding notes (the "Commercial Paper Notes") and $2.25
billion of asset backed medium term notes (The "Medium Term Notes"). The
Commercial Paper Notes and the Medium Term Notes are backed by a first priority
security interest in the Company's fleet. Additional credit enhancement was
provided for the Medium Term Notes by establishing an escrow account in the
amounts of $66 million and $90 million, which is included in "Restricted Cash"
(see Note 3) on the accompanying Consolidated
F-16
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9--FINANCING AND DEBT (CONTINUED)
Statements of Financial Position at December 31, 1997 and 1998, respectively.
The weighted average interest rate on commercial paper was 5.5% for the year
ended December 31, 1998. Average commercial paper borrowings during 1998
amounted to $809.7 million.
As part of the acquisition of The First Gray Line Corporation (see Notes 1
and 2), the Company assumed a $200 million vehicle financing facility between
Grand Rent A Car, Inc. (a subsidiary of The First Gray Line Corporation) and
Atlantic Asset Securitization Corporation, under a credit agreement originally
dated as of September 15, 1995. This agreement provided for the financing of
vehicles used in The First Gray Line Corporation's rental business, and expired
on August 15, 1998. At December 31, 1997 under this credit agreement, there was
$115 million outstanding and included in Commercial Paper Notes. The weighted
average interest rate and average borrowing under this credit agreement was 5.7%
and $171.1 million respectively for the period August 20, 1997 to December 31,
1997. The credit facility was maintained until July 31, 1998, when it was
terminated. For the period January 1, 1998, to July 31, 1998, the weighted
average interest rate and average borrowing under this credit facility was 5.6%
and $58.1 million, respectively.
On July 31, 1997, ARACS entered into a $470 million secured credit facility
(the "Credit Facility") which is guaranteed by the Company and certain of ARACS'
subsidiaries. The Credit Facility was reduced to $350 million with the repayment
of a $120 million term loan on December 1, 1997. The following is a summary of
the material terms and conditions of the Credit Facility:
The Credit Facility consists of (i) a revolving credit facility in the
amount of up to $125 million and is available on a revolving basis until
December 31, 2001 in order to finance the working capital needs of ARACS in
the ordinary course of business (with up to $75 million of such amount
available for the issuance of standby letters of credit to support worker's
compensation and other insurance and bonding requirements of ARACS, the
Company and its subsidiaries in the ordinary course of business), (ii) a 364
day standby letter of credit facility of $225 million available on a
revolving basis until April 29, 1999 to fund (a) any shortfall in certain
payments owing to AESOP Leasing, a subsidiary of ARACS pursuant to fleet
agreements and (b) maturing Commercial Paper Notes if such Commercial Paper
Notes cannot be repaid through the issuance of additional Commercial Paper
Notes or draws under the liquidity facility supporting the Commercial Paper
Notes. In addition, up to $75 million of the $225 million is available on a
revolving basis to finance the working capital needs of ARACS in the
ordinary course of business. For the period July 31, 1997 through December
1, 1997, the average outstanding borrowings on this facility were $74.6
million with a weighted average interest rate of 8%. At December 31, 1998,
the Company had issued letters of credit of $31.9 million under the $125
million revolving credit facility and $150 million under the $225 million
standby letter of credit facility. At December 31, 1998 there were no loans
outstanding under either facility.
Interest accrues on borrowings outstanding under the Credit Facility at a
rate equal to at the option of ARACS, (A) the sum of (i) the highest of (a)
the rate of interest publicly announced by Chase Securities Inc. as its
prime rate in effect at its principal office in New York City, or (b) the
secondary market rate for three-month certificates of deposit (adjusted for
statutory reserve requirements) plus 1% or (c) the federal funds effective
rate from time to time plus 0.5% and (ii) an applicable margin; or (B) the
sum of (i) the rate (adjusted for statutory reserve requirements) at which
eurodollar deposits for one, two, three or six months (as selected by ARACS)
are offered in the interbank eurodollar market and (ii) an applicable
margin.
F-17
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9--FINANCING AND DEBT (CONTINUED)
The Credit Facility is secured by the tangible and intangible assets of
ARACS and the Company (including, without limitation, its intellectual
property, its rights under the Master License Agreement and related
agreements, real property and all of the capital stock or equivalent equity
ownership interests of ARACS and each of its direct and indirect domestic
subsidiaries and 65% of ARACS first-tier foreign subsidiaries), except for
those assets which are subject to a negative pledge or as to which the
agents for the Credit Facility shall determine in their sole discretion that
the costs of obtaining such a security interest are excessive in relation to
the value of the security to be afforded thereby.
The weighted-average interest rates of the short-term notes-foreign as of
December 31, 1997 and 1998 were 8.7% and 6.0%, respectively.
Prior to July 31, 1997, the primary source of funding the Company's domestic
vehicles was provided by a Vehicle Trust. The annualized weighted average
interest rates for Vehicle Trust financing for the periods ended October 16,
1996, December 31, 1996 and 1997 were 6.6%, 6.5% and 6.6%, respectively.
The agreements with the Company's lenders include a number of significant
covenants that, among other things, restrict its ability to dispose of non-fleet
assets, incur additional indebtedness, create liens, prohibit the payment of
dividends, enter into certain investments or acquisitions, repurchase or redeem
capital stock, engage in mergers or consolidations or engage in certain
transactions with affiliates and otherwise restrict corporate activities.
Certain of these agreements also require the Company to maintain specified
financial ratios. As of December 31, 1998, the Company was in compliance with
all such covenants related to these agreements.
Mandatory maturities of long-term obligations, including current maturities,
for each of the next five years ending December 31, and thereafter, are as
follows (in thousands):
<TABLE>
<S> <C>
1999............................................. $ 1,085
2000............................................. 809,886
2001............................................. 227
2002............................................. 850,220
2003............................................. 36
Thereafter....................................... 600,000
</TABLE>
OTHER CREDIT FACILITIES
At December 31, 1998, in addition to the Credit Facility previously
described, the Company has available letters of credit/overdraft agreements for
its international operations totaling $29.8 million, which may be renewed
annually at the Company's option and the banks' discretion. The collateral for
certain of these agreements consists of a pledge of certain cash balances in the
amount of $25 million, which are included in "Restricted Cash" on the
accompanying Consolidated Statements of Financial Position at December 31, 1998.
At December 31, 1998, the Company has outstanding letters of credit under these
facilities totaling $26.7 million.
In addition, for certain of its international operations, the Company has
available unused lines of credit totaling $227.1 million. At December 31, 1998,
the unused lines of credit agreements require an annual fee of 0.2% to 0.5% of
the unused line.
F-18
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9--FINANCING AND DEBT (CONTINUED)
INTEREST RATE SWAP AGREEMENTS
The Company has entered into four interest rate swap agreements to reduce
the impact of changes in interest rates on certain outstanding current debt
obligations. These agreements effectively change the Company's interest rate
exposure on $24.6 million and $288.6 million of its outstanding debt from a
weighted average variable interest rate to a fixed rate of 6.3% and 4.8% at
December 31, 1997 and 1998, respectively. The variable interest rates for
certain of these interest rate swap agreements are either reset quarterly or
daily based upon the average 30-day commercial paper rate for the quarter.
Interest is cash settled on a net basis for each agreement quarterly. The
interest rate swap agreements will terminate in October 2001 and August 2003.
Under certain of the swap agreements terminating in August 2003, the
counter-party has the right to terminate one of the agreements in August 2000
and one agreement in August 2001. The differential to be paid or received is
recognized ratably as interest rates change over the life of the agreements as
an adjustment to interest expense.
The net interest differential charged to interest expense for the periods
ended October 16, 1996, December 31, 1996, 1997 and 1998 was $582,000, $285,000,
$909,000 and $53,000, respectively. The Company is exposed to credit risk in the
event of nonperformance by counterparties to its interest rate swap agreements.
Credit risk is limited by entering into such agreements with primary dealers
only. Therefore, the Company does not anticipate that non-performance by
counterparties will occur. Notwithstanding this, the Company monitors
counterparty credit ratings at least quarterly through reviewing independent
credit agency reports.
Both current and potential exposure are evaluated, as necessary, by
obtaining replacement cost information from alternative dealers. Potential loss
to the Company from credit risk on these agreements is limited to amounts
receivable, if any.
NOTE 10--FAIR VALUE OF FINANCIAL INSTRUMENTS
The net interest payable and the estimated fair value of the Company's
interest rate swap agreements represent liabilities of approximately $193,000
and $366,000, respectively, at December 1997. At December 31, 1998, the net
interest receivable and estimated fair value of the Company's interest rate swap
agreements represent assets of approximately $268,000 and $885,000,
respectively.
For instruments including cash and cash equivalents, restricted cash,
accounts receivable, and accounts payable, the carrying amount approximates fair
value because of the short maturity of these instruments. The fair value of
floating-rate debt approximates carrying value because these instruments
re-price frequently at current market prices. At December 31, 1998, the fair
value of the Medium Term Notes exceeds the carrying value by approximately $44.5
million.
The Company believes that it is not practicable to estimate the current fair
value of the amounts due from (to) affiliates because of the related party
nature of the instruments.
F-19
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11--INCOME TAXES
The provision for income taxes consists of the following (in thousands):
<TABLE>
<CAPTION>
OCTOBER 17, 1996
JANUARY 1, 1996 (DATE OF ACQUISITION)
TO TO YEAR ENDED YEAR ENDED
OCTOBER 16, 1996 DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- --------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Current:
Federal.................... $ 800
State...................... $ 2,176 $ 719 $ 1,013 980
Foreign.................... 6,680 288 12,676 8,470
-------- ------- -------- --------
8,856 1,007 13,689 10,250
-------- ------- -------- --------
Deferred:
Federal.................... 19,614 (85) 12,463 33,200
State...................... 410 3,520
Foreign.................... 2,728 118 (3,712) 1,737
-------- ------- -------- --------
22,342 33 9,161 38,457
-------- ------- -------- --------
Provision for income taxes... $ 31,198 $ 1,040 $ 22,850 $ 48,707
-------- ------- -------- --------
-------- ------- -------- --------
</TABLE>
F-20
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11--INCOME TAXES (CONTINUED)
The effective income tax rates for the periods ended October 16, 1996,
December 31, 1996, 1997 and 1998 vary from the statutory U.S. federal income tax
rate due to the following (dollar amounts in thousands):
<TABLE>
<CAPTION>
OCTOBER 17, 1996
(DATE OF
JANUARY 1, 1996 ACQUISITION)
TO TO
OCTOBER 16, 1996 DECEMBER 31, 1996
-------------------- --------------------
<S> <C> <C> <C> <C>
Statutory U.S. federal income tax provision/tax rate................ $ 24,429 35.0% $ 791 35.0%
Tax effect of foreign operations and dividends...................... 5,134 7.4 (1,073) (47.5)
Amortization of cost in excess of net assets acquired and other
intangibles....................................................... 1,045 1.5 359 15.9
State income taxes, net of federal tax benefit...................... 1,413 2.0 469 20.8
Other non-deductible business expenses.............................. 462 .6 494 21.8
Other............................................................... (1,285) (1.8)
--------- --- --------- ---------
Effective income tax provision/tax rate............................. $ 31,198 44.7% $ 1,040 46.0%
--------- --- --------- ---------
--------- --- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998
-------------------- --------------------
<S> <C> <C> <C> <C>
Statutory U.S. federal income tax provision/tax rate................ $ 17,613 35.0% $ 39,280 35.0%
Tax effect of foreign operations and dividends...................... 1,436 2.9 2,677 2.4
Amortization of cost in excess of net assets acquired and other
intangibles....................................................... 2,369 4.7 3,351 3.0
State income taxes, net of federal tax benefit...................... 924 1.8 2,925 2.6
Other non-deductible business expenses.............................. 508 1.0 474 0.4
--------- --- --------- ---
Effective income tax provision/tax rate............................. $ 22,850 45.4% $ 48,707 43.4%
--------- --- --------- ---
--------- --- --------- ---
</TABLE>
In accordance with SFAS 109, the net deferred income tax assets at December
31, 1997 and 1998, include the following (in thousands):
<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
GROSS DEFERRED INCOME TAX ASSETS:
Accrued liabilities..................................................................... $ 223,881 $ 233,695
Net operating loss carryforwards........................................................ 96,253 118,437
Alternative minimum income tax credit carryforwards..................................... 3,025 3,825
----------- -----------
323,159 355,957
----------- -----------
GROSS DEFERRED INCOME TAX LIABILITIES:
Tax depreciation in excess of book depreciation......................................... (197,082) (247,090)
Prepaids and other...................................................................... (14,457) (16,592)
----------- -----------
(211,539) (263,682)
----------- -----------
Net deferred income tax assets.......................................................... $ 111,620 $ 92,275
----------- -----------
----------- -----------
</TABLE>
In connection with the adoption of Statement of Financial Accounting
Standards No. 130, "REPORTING COMPREHENSIVE INCOME" ("SFAS 130"), the Company
has included in net deferred
F-21
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11--INCOME TAXES (CONTINUED)
income tax assets and Stockholders' Equity, a decrease of $1.2 million, a
decrease of $0.1 million, an increase of $3.8 million, and an increase of $3.1
million related to the income tax effects of the Foreign Currency Translation
Adjustment and Minimum Pension Liability for the periods ended October 16, 1996,
December 31, 1996, 1997, and 1998, respectively.
The Company has alternative minimum tax net operating loss carryforwards of
$191.4 million. The federal net operating loss carryforward is $318.5 million;
the net operating loss carryforward expires as follows: 2000, $7.5 million;
2001, $7.1 million; 2004, $93.1 million; 2007, $67.7 million; 2008, $41.1
million; 2009, $18.3 million; and 2012, $83.7 million.
NOTE 12--TREASURY STOCK
On September 1, 1998, the Board of Directors authorized the Company to
repurchase up to 1,500,000 shares of the outstanding common stock at market
prices. On September 23, 1998, the Board of Directors authorized the Company to
purchase up to 3,500,000 additional shares of outstanding common stock. For the
year ended December 31, 1998, the Company repurchased 2,672,700 shares of common
stock at an aggregate cost of $50,960,000. On January 23, 1999, the Company
repurchased an additional 1,300,000 common shares from Cendant at a cost of
$31,500,000, which reduced Cendant's ownership in the Company's common stock to
approximately 20% (see Note 21).
NOTE 13--RETIREMENT BENEFITS
The Company, through its subsidiary ARACS, sponsors non-contributory defined
benefit plans covering employees who are members of certain collective
bargaining units and non-union full-time employees hired prior to December 31,
1983 who were age 25 or above on January 1, 1985. ARACS also contributes to
union sponsored pension plans.
Effective January 1, 1999 the Company curtailed its defined benefit plans to
its eligible salaried and hourly employees as of June 30, 1985. The Company will
recognize a gain as a result of the curtailment during the first quarter of
fiscal year ending December 31, 1999.
Through ARACS, the Company sponsors two Voluntary Investment Savings Plans
under a "qualified cash or deferred arrangement" under Section 401(k) of the
Internal Revenue Code covering its union and non-union employees. For the
periods ended October 16, 1996, December 31, 1996, 1997 and 1998, the Company's
cost of these plans was $1.4 million, $0.4 million, $1.8 million and $1.6
million, respectively.
Included in the non-union Investment Savings Plan, ARACS makes a defined
contribution for full-time employees. The contributions are determined at 2% of
each covered employee's compensation. Employer contributions for the periods
ended October 16, 1996, December 31, 1996, 1997 and 1998 amounted to $1.5
million, $0.4 million, $2.1 million and $2.3 million, respectively.
The defined benefit plans provide benefits based upon years of credited
service, highest average compensation and social security benefits. Annual
retirement benefits, at age 65, are equal to 1 1/2% of the participating
employee's final average compensation (average compensation during the highest
five consecutive years of employment in the ten years prior to retirement) less
1 3/7% of
F-22
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13--RETIREMENT BENEFITS (CONTINUED)
the Social Security benefits for each year of service up to a maximum of 35
years. In addition, the plan provides for reduced benefits before age 65 and for
a joint and survivor annuity option.
The Company also sponsors several foreign pension plans. The most
significant of these is the Canadian pension plan.
The status of the Company's defined benefit plans at December 31, 1997 and
1998, including the plans to its Salaried and Hourly Employees as of June 1985,
the Bargaining Plan, the Non Qualified Defined Benefit Plan and the Canadian
Plan is as follows (in thousands):
<TABLE>
<CAPTION>
1997 1998
---------- -----------
<S> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year............................. $ 89,325 $ 106,887
Service cost...................................................... 3,446 2,809
Interest cost..................................................... 6,956 6,922
Plan participants' contributions.................................. 193 182
Amendments........................................................ 631 635
Actuarial gain.................................................... 9,266 11,014
Benefits paid..................................................... (2,752) (2,798)
Foreign currency translation loss................................. (178) (400)
---------- -----------
Benefit obligation at end of year................................... 106,887 125,251
---------- -----------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year...................... 77,747 89,816
Actual return on plan assets...................................... 9,707 8,969
Plan participants' contributions.................................. 192 182
Employer contributions............................................ 5,160 5,908
Benefits paid..................................................... (2,628) (2,798)
Foreign currency translation loss................................. (362) (715)
---------- -----------
Fair value of plan assets at end of year............................ 89,816 101,362
---------- -----------
Funded status....................................................... (17,071) (23,889)
Unrecognized net accrual gain....................................... 7,629 16,394
Unrecognized prior service cost..................................... 1,228 1,703
Unrecognized transition asset....................................... (2,587) (2,251)
---------- -----------
Accrued benefit cost................................................ $ (10,801) $ (8,043)
---------- -----------
---------- -----------
AMOUNTS RECOGNIZED IN THE STATEMENT OF FINANCIAL POSITION:
Prepaid benefit cost................................................ $ 1,704 $ 1,752
Accrued benefit liability........................................... (4,351) (14,340)
Intangible asset.................................................... (8,554) 1,704
Accumulated other comprehensive income.............................. 400 2,841
---------- -----------
Net amount recognized............................................... $ (10,801) $ (8,043)
---------- -----------
---------- -----------
</TABLE>
F-23
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13--RETIREMENT BENEFITS (CONTINUED)
Net pension costs of the non-qualified defined benefit plan for the periods
ended October 16, 1996, December 31, 1996, 1997 and 1998, include the following
components (in thousands):
<TABLE>
<CAPTION>
JANUARY 1, 1996 OCTOBER 17, 1996 JANUARY 1, 1997 JANUARY 1, 1998
TO TO TO TO
OCTOBER 16, 1996 DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1998
------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Service cost-benefits earned during the
period................................ $ 2,558 $ 359 $ 3,446 $ 2,809
Interest cost on projected benefit
obligation............................ 4,224 517 6,956 6,922
Return on assets-expected gain on plan
assets................................ (5,380) (1,558) (6,804) (7,786)
Net amortization of prior service cost.. 765 1,257 35 70
Contributions to union plans and
other................................. 2,029 733 3,021 3,894
Amortization of unrecognized net assets
at transition......................... (106) (28) (132) (123)
------- ------- ------- -------
Net pension cost........................ $ 4,090 $ 1,280 $ 6,522 $ 5,786
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
At December 31, 1997 and 1998, the measurement of the projected benefit
obligation was based upon the following assumptions weighted average interest
rates:
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Discount rate................................................................ 7.24% 6.00%
Compensation increase........................................................ 4.72% 4.72%
Long-term return on plan assets.............................................. 8.81% 8.77%
</TABLE>
The U.S. plans' assets are invested in corporate bonds, U.S. government
securities and common stock mutual funds. The Canadian plan's assets are
invested in Canadian stocks, bonds, mutual funds, real estate and money market
funds.
NOTE 14--EARNINGS PER SHARE ("EPS")
In calculating basic earnings per share, the shares issued in the initial
public offering of 22,425,000 shares together with 8,500,000 shares owned by
Cendant, resulting from the 85,000 to 1 stock split on September 24, 1997 (Date
of IPO), were used for all periods presented through December 31, 1997. Basic
EPS for 1998 was calculated using 34,172,249 weighted-average shares
F-24
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14--EARNINGS PER SHARE ("EPS") (CONTINUED)
outstanding for the year ended December 31, 1998. Diluted EPS for the year ended
December 31, 1997 and 1998 was calculated as follows (in thousands, except share
amounts):
<TABLE>
<CAPTION>
1997 1998
-------------- --------------
<S> <C> <C>
DILUTED EPS
Income available to common stockholders...................... $ 27,473 $ 63,521
-------------- --------------
-------------- --------------
Weighted average common shares outstanding................... 30,925,000 34,172,249
Plus: Dilutive effect of the assumed exercise of stock
options (i)................................................ 256,134 780,308
-------------- --------------
Adjusted weighted average shares outstanding................. 31,181,134 34,952,557
-------------- --------------
-------------- --------------
Diluted EPS (i).............................................. $ 0.88 $ 1.82
-------------- --------------
-------------- --------------
</TABLE>
- ------------------------
(i) Prior to September 23, 1997, there were no stock options outstanding.
NOTE 15--STOCK OPTION PLAN
On September 23, 1997, the Avis Rent A Car, Inc. 1997 Stock Option Plan (the
"Stock Option Plan") was adopted by the Board of Directors under which 4,620,977
shares of Common Stock were reserved for issuance upon the exercise of options
granted to officers, key employees, independent contractors and non-employee
Directors of the Company and its designated subsidiaries. On September 23, 1997,
3,953,900 options were granted at $17.00 per share, the fair market value of the
Company's common stock on the date of grant. On May 21, 1998, at the Annual
Meeting of Stockholders, the shareholders approved an amendment to the Company's
Stock Option Plan, increasing the maximum number of shares authorized for
issuance under the Stock Option Plan to 6,000,000. At December 31, 1998,
approximately 4,443,100 options are outstanding under the Stock Option Plan. The
primary purpose of the Stock Option Plan is to provide additional incentive to
officers, key employees, independent contractors and non-employee Directors of
the Company and to strengthen their commitment to the Company and its
subsidiaries.
Subsequently elected non-employee Directors will receive a like grant under
the Stock Option Plan upon election or appointment to the Board of Directors.
The exercise price of each option under the Stock Option Plan may not be
less than the fair market value of a share of Common Stock on the date the
option is granted. Options held by an optionee will generally become exercisable
as to 20% of the shares covered by such options on the first anniversary of the
date of grant and with respect to an additional 20% of the shares covered by
such options on each of the four succeeding anniversaries of the date of grant
if the optionee continues to be employed or retained as an independent
contractor by the Company, on each such date. All options held by an optionee
will become fully exercisable (to the extent not already exercisable) if a
"change of control transaction" (as defined in the Stock Option Plan) occurs.
Shares of Common Stock acquired upon the exercise of the options may be subject
to restrictions on transfer which will be set forth in the agreement evidencing
the grant of the option. All options granted under the Stock Option Plan, to the
extent not exercised, expire on the earliest of (i) the tenth anniversary of the
date of grant, (ii) two years following the optionee's termination of employment
on account of death, retirement, disability or (iii) one year following the
termination of optionee's employment for any other reason.
F-25
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15--STOCK OPTION PLAN (CONTINUED)
Generally, the Board of Directors of the Company may amend or terminate the
Stock Option Plan, provided that (i) no such amendment or termination may
adversely affect the rights of any participant without the consent of such
participant and (ii) to the extent required by any law, regulation or stock
exchange rule, no amendment shall be effective without the approval of the
Company's stockholders.
The Company makes no recognition of the options in the financial statements
until they are exercised. The Company applies Accounting Principles Board
Opinion No. 25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES" and related
Interpretations in accounting for its plans and does not recognize compensation
expense for its stock-based compensation plans. The Company has adopted only the
disclosure provisions of Statement of Financial Accounting Standard No. 123,
"ACCOUNTING FOR STOCK-BASED COMPENSATION" ("SFAS 123").
The following is a summary of stock option activity for the period September
23, 1997 through December 31, 1997 and the year ended December 31, 1998:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES EXERCISE PRICE
----------- ---------------
<S> <C> <C>
Granted September 23, 1997 (inception of the stock option
plan)......................................................... 3,953,900 $ 17.00
Forfeited....................................................... (78,200) $ 17.00
----------- -------
Outstanding at December 31, 1997................................ 3,875,700 $ 17.00
Granted......................................................... 1,437,000 $ 23.49
Forfeited....................................................... (869,600) $ 19.32
----------- -------
Outstanding at December 31, 1998................................ 4,443,100 $ 18.65
----------- -------
----------- -------
Exercisable Options
December 31, 1998............................................... 759,140 $ 17.00
----------- -------
----------- -------
</TABLE>
No options were exercisable at December 31, 1997.
Pro forma disclosures are provided for the years ended December 31, 1997 and
1998 as if the Company adopted the cost recognition requirements under SFAS 123.
The weighted average fair value of each option granted is (estimated on the date
of grant using the Black-Scholes option-pricing model) is $9.80 and $11.73 for
1997 and 1998, respectively, using the following assumptions:
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Expected volatility.......................................................... 45.0% 40.0%
Risk-free interest rate...................................................... 5.7 6.0
Expected option life in years................................................ 7.5 6.5
</TABLE>
The weighted-average remaining contractual life of the stock options is 9.6
years and 7.3 years at December 31, 1997 and 1998, respectively. Had
compensation expense been recognized for the years ended December 31, 1997 and
1998, grants for stock-based compensation plans in
F-26
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15--STOCK OPTION PLAN (CONTINUED)
accordance with provisions of SFAS 123, the Company would have recorded net
income and earnings per share as follows (in thousands, except per share data):
<TABLE>
<CAPTION>
1997 1998
------------------------- -------------------------
<S> <C> <C> <C> <C>
AS REPORTED PRO FORMA AS REPORTED PRO FORMA
------------ ----------- ------------ -----------
Net income................................................... $ 27,473 $ 26,436 $ 63,521 $ 58,656
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
Basic earnings per share..................................... $ .89 $ .85 $ 1.86 $ 1.72
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
Diluted earnings per share................................... $ .88 $ .85 $ 1.82 $ 1.68
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
</TABLE>
NOTE 16--LEASES, AIRPORT CONCESSION FEES AND COMMITMENTS
The Company is committed to make rental payments under noncancelable
operating leases relating principally to vehicle rental facilities and
equipment. Under certain leases, the Company is obligated to pay certain
additional costs, such as property taxes, insurance and maintenance. Airport
concession agreements usually require a guaranteed minimum amount plus
contingent fees, which are generally based on a percentage of revenues.
Operating lease payments and net airport concession fees charged to expense
for the periods ended October 16, 1996, December 31, 1996, 1997 and 1998 are as
follows (in thousands):
<TABLE>
<CAPTION>
OCTOBER 17, 1996
(DATE OF
JANUARY 1, 1996 ACQUISITION)
TO TO YEAR ENDED YEAR ENDED
OCTOBER 16, 1996 DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- -------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Minimum fees................. $ 88,787 $ 23,576 $ 122,015 $ 147,034
Contingent fees.............. 61,290 13,220 72,954 34,944
----------------- -------- ---------- ----------
150,077 36,796 194,969 181,978
Less sublease rentals........ (3,843) (1,000) (4,741) (4,701)
----------------- -------- ---------- ----------
$ 146,234 $ 35,796 $ 190,228 $ 177,277
----------------- -------- ---------- ----------
----------------- -------- ---------- ----------
</TABLE>
Future minimum rental commitments under noncancelable operating leases
amounted to approximately $467.8 million at December 31, 1998. The minimum
rental payments due in each of the next five years ending December 31, and
thereafter, are as follows (in thousands):
<TABLE>
<S> <C>
1999.............................................................. $ 89,185
2000.............................................................. 73,512
2001.............................................................. 58,671
2002.............................................................. 43,841
2003.............................................................. 26,195
Thereafter........................................................ 176,430
</TABLE>
At December 31, 1998, future minimum rental commitments include $75.0
million due to a subsidiary of Cendant, related to the Company's corporate
headquarters and Virginia Beach processing facility.
F-27
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16--LEASES, AIRPORT CONCESSION FEES AND COMMITMENTS (CONTINUED)
In addition to the Company's lease commitments, the Company has outstanding
purchase commitments of approximately $2.1 billion at December 31, 1998, which
relate principally to vehicle purchases.
NOTE 17--SEGMENT INFORMATION
The Company operates in one industry segment, the rental car business. The
Company's rental car business rents vehicles to business and leisure travelers,
and is divided into four main geographic areas; the United States, Australia/New
Zealand, Canada, and other Foreign Operations. Revenue generated from the car
rental business is recorded in the country in which the vehicle is rented. The
accounting policies of each geographic area are the same as those described in
the summary of significant accounting policies (see Note 1). The operations
within major geographic areas for the periods ended October 16, 1996, December
31, 1996, 1997 and 1998 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
PERIOD ENDED OCTOBER 16, 1996
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OTHER
UNITED AUSTRALIA/ FOREIGN
STATES NEW ZEALAND CANADA OPERATIONS CONSOLIDATED
------------- ------------- ----------- ----------- -------------
Revenue.................................. $ 1,313,619 $ 105,401 $ 69,814 $ 15,839 $ 1,504,673
------------- ------------- ----------- ----------- -------------
------------- ------------- ----------- ----------- -------------
Total assets............................. $ 2,858,008 $ 115,082 $ 147,617 $ 65,796 $ 3,186,503
------------- ------------- ----------- ----------- -------------
------------- ------------- ----------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31, 1996
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OTHER
UNITED AUSTRALIA/ FOREIGN
STATES NEW ZEALAND CANADA OPERATIONS CONSOLIDATED
------------- ------------- ----------- ----------- -------------
Revenue.................................. $ 312,194 $ 31,107 $ 13,467 $ 6,076 $ 362,844
------------- ------------- ----------- ----------- -------------
------------- ------------- ----------- ----------- -------------
Total assets............................. $ 2,839,188 $ 120,216 $ 122,657 $ 49,171 $ 3,131,232
------------- ------------- ----------- ----------- -------------
------------- ------------- ----------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OTHER
UNITED AUSTRALIA/ FOREIGN
STATES NEW ZEALAND CANADA OPERATIONS CONSOLIDATED
------------- ------------- ----------- ----------- -------------
Revenue.................................. $ 1,804,478 $ 131,228 $ 85,021 $ 25,427 $ 2,046,154
------------- ------------- ----------- ----------- -------------
------------- ------------- ----------- ----------- -------------
Total assets............................. $ 4,001,186 $ 98,145 $ 131,987 $ 51,339 $ 4,282,657
------------- ------------- ----------- ----------- -------------
------------- ------------- ----------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OTHER
UNITED AUSTRALIA/ FOREIGN
STATES NEW ZEALAND CANADA OPERATIONS CONSOLIDATED
------------- ------------- ----------- ----------- -------------
Revenue.................................. $ 2,061,967 $ 115,790 $ 92,402 $ 27,423 $ 2,297,582
------------- ------------- ----------- ----------- -------------
------------- ------------- ----------- ----------- -------------
Total assets............................. $ 4,209,835 $ 98,361 $ 148,230 $ 48,636 $ 4,505,062
------------- ------------- ----------- ----------- -------------
------------- ------------- ----------- ----------- -------------
</TABLE>
F-28
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 18--SELECTED QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
QUARTERS ENDED
------------------------------------------------------------
<S> <C> <C> <C> <C>
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1997 1997 1997 1997
------------- ------------- -------------- --------------
Revenue............................................ $ 456,014 $ 489,633 $ 580,049 $ 520,458
Costs and expenses................................. 449,031 472,256 555,096 519,448
------------- ------------- -------------- --------------
Income before provision for income taxes........... 6,983 17,377 24,953 1,010
Provision for income taxes......................... 2,778 8,476 11,085 511
------------- ------------- -------------- --------------
Net income......................................... $ 4,205 $ 8,901 $ 13,868 $ 499
------------- ------------- -------------- --------------
------------- ------------- -------------- --------------
Earnings per share:
Basic.............................................. $ .14 $ .29 $ .45 $ .02
------------- ------------- -------------- --------------
------------- ------------- -------------- --------------
Diluted............................................ $ .14 $ .29 $ .45 $ .02
------------- ------------- -------------- --------------
------------- ------------- -------------- --------------
Shares of Common Stock outstanding:
Basic.............................................. 30,925,000 30,925,000 30,925,000 30,925,000
------------- ------------- -------------- --------------
------------- ------------- -------------- --------------
Diluted............................................ 30,925,000 30,925,000 30,925,000 31,949,535
------------- ------------- -------------- --------------
------------- ------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
QUARTERS ENDED
------------------------------------------------------------
<S> <C> <C> <C> <C>
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1998 1998 1998 1998
------------- ------------- -------------- --------------
Revenue............................................ $ 511,390 $ 575,280 $ 652,385 $ 558,527
Costs and expenses................................. 498,161 535,370 599,679 552,144
------------- ------------- -------------- --------------
Income before provision for income taxes........... 13,229 39,910 52,706 6,383
Provision for income taxes......................... 5,821 17,560 22,568 2,758
------------- ------------- -------------- --------------
Net income......................................... $ 7,408 $ 22,350 $ 30,138 $ 3,625
------------- ------------- -------------- --------------
------------- ------------- -------------- --------------
Earnings per share:
Basic............................................ $ .24 $ .62 $ .85 $ .11
------------- ------------- -------------- --------------
------------- ------------- -------------- --------------
Diluted.......................................... $ .23 $ .61 $ .83 $ .11
------------- ------------- -------------- --------------
------------- ------------- -------------- --------------
Shares of Common Stock outstanding:
Basic............................................ 31,425,000 35,925,000 35,608,000 33,690,798
------------- ------------- -------------- --------------
------------- ------------- -------------- --------------
Diluted.......................................... 32,561,483 36,730,233 36,180,000 34,068,603
------------- ------------- -------------- --------------
------------- ------------- -------------- --------------
</TABLE>
NOTE 19--RELATED PARTY TRANSACTIONS
The Company and Avis Europe, plc cooperate jointly in marketing and
promotional activities, the exchange of reservations, the honoring of charge
cards and vouchers, and the transfer of the related billings. Two members of the
Company's board of directors are executive officers of Cendant and also serve on
the board of Avis Europe Limited, the parent company of Avis Europe, plc.
During the period ended October 16, 1996, the Company purchased from General
Motors approximately $1.8 billion of vehicles net of incentives and allowances
(see Notes 1 and 4).
F-29
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 19--RELATED PARTY TRANSACTIONS (CONTINUED)
Vehicle manufacturers offer vehicle repurchase programs on an ongoing basis
to assist in the acquisition and disposition of vehicles. These programs
generally allow the Company, at its option, subject to certain provisions, to
sell the vehicles back to the manufacturers at pre-determined prices. Amounts
included under these programs are reflected in "Accounts receivable, net" on the
accompanying consolidated statement of financial position at December 31, 1998
(see Note 4). Under the terms of certain financing agreements with General
Motors, the Company is required to purchase a significant percentage of its
fleet from local dealers of General Motors subject to market conditions. In
addition, the Company participates in an arrangement whereby General Motors
provides payments for purchasing and promoting a specified number and mix of
vehicles (see Note 6).
At December 31, 1998, the Company is affiliated with Cendant, which owns
approximately 20% of the Company as of January 23, 1999. For the years ended
December 31, 1997 and 1998, the Company earned revenues of approximately $2.2
million and $62.1 million, respectively, from Cendant and its subsidiary
companies, of which approximately $76 thousand and $745 thousand was outstanding
and is included in accounts receivable on the accompanying Consolidated
Statements of Financial Position at December 31, 1997 and 1998. The Company
purchased approximately $90.6 million and $91.0 million in 1997 and 1998,
respectively, of goods and services from these affiliated companies.
NOTE 20--LITIGATION
From time to time, the Company is subject to routine litigation incidental
to its business. The Company maintains insurance policies that cover most of the
actions brought against the Company. The Company is not currently involved in
any legal proceeding which it believes would have a material adverse effect upon
its financial condition or results of operations.
NOTE 21--SUBSEQUENT EVENTS
On March 19, 1999, the Company purchased the common stock and franchise
rights of Rent A Car Company, Incorporated, of Richmond, Virginia for $10.2
million. Cost in excess of the fair value of net assets acquired at March 19,
1999, is approximately $7.6 million. The Company financed this transaction
through internally generated funds.
From January 1, 1999 through March 10, 1999, the Company under its Common
Stock Repurchase Program, purchased 2,013,100 shares of common stock at an
aggregate cost of $48.0 million including 1.3 million shares, which were
repurchased from Cendant at a cost of $31.5 million. As of March 10, 1999, under
the Company's Common Stock Repurchase Program, the Company has cumulatively
repurchased 4,685,800 common shares at an average cost of approximately $21 per
share.
NOTE 22--VMS ACQUISITION AND GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL
STATEMENTS
On June 30, 1999, the Company completed the transaction contemplated by the
agreement and plan of merger and reorganization dated as of May 22, 1999 (the
"Merger "), with PHH Corporation, a Maryland corporation and wholly-owned
subsidiary of Cendant, PHH Holdings Corporation ("PHH Holdings"), a Texas
corporation and wholly-owned subsidiary of PHH
F-30
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 22--VMS ACQUISITION AND GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL
STATEMENTS (CONTINUED)
Corporation, and Avis Fleet Leasing and Management Corporation, a Texas
corporation and a wholly-owned subsidiary of the Company (the "Acquisition
Subsidiary").
Pursuant to the merger agreement, the Acquisition Subsidiary and PHH
Holdings merged on June 30, 1999 and the Acquisition Subsidiary acquired VMS for
$1.8 billion and refinanced VMS indebtedness of approximately $3.5 billion (the
"VMS Acquisition"). The acquisition financing included borrowings by the Company
of $1.0 billion of term loans, the issuance by the Company of $500 million of
senior subordinated notes, and the issuance by the acquisition subsidiary of
$362 million of preferred stock.
In connection with the VMS Acquisition and as part of the financing thereof,
Avis Rent A Car. Inc. (the "Parent") issued and sold the senior subordinated
notes. The senior subordinated notes are general unsecured obligations of the
Parent, subordinated in right of payment to all existing and future senior
indebtedness of the Company, and guaranteed by certain of the Parent's domestic
subsidiaries. Accordingly, the following condensed consolidating financial
information presents the condensed consolidating financial statements as of
December 31, 1998 and 1997 and for the years ended December 31, 1998 and 1997
and for the period from October 17, 1996 (Date of Acquisition) to December 31,
1996 and as to the Predecessor Companies for the period from January 1, 1996 to
October 16, 1996, respectively, of: (a) the Parent; (b) the guarantor
subsidiaries; (c) the non-guarantor subsidiaries; (d) elimination entries
necessary to consolidate Parent with guarantor and non-guarantor subsidiaries;
and (e) the Company on a consolidated basis.
Separate financial statements and other disclosures with respect to the
subsidiary guarantors have not been made because management has determined that
such information is not material to holders of the senior subordinated notes.
F-31
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 22--VMS ACQUISITION AND GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL
STATEMENTS (CONTINUED)
Investments in subsidiaries are accounted using the equity method for
purposes of the consolidating presentation. The principle elimination entries
eliminate investments in subsidiaries and intercompany balances and transactions
(in thousands):
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
-------------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
---------- --------------- ------------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Revenue.......................... $ 2,061,967 $ 235,615 $ 2,297,582
--------------- ---------- -------------
Direct operating, net.......... 836,124 103,862 939,986
Vehicle depreciation and lease
charges, net................. 531,828 61,236 593,064
Selling, general and
administrative............... 405,366 33,358 438,724
Interest, net.................. $ 13,836 183,663 4,227 201,726
Amortization of cost in excess
of net assets acquired....... 11,702 152 11,854
---------- --------------- ---------- -------------
13,836 1,968,683 202,835 2,185,354
---------- --------------- ---------- -------------
(13,836) 93,284 32,780 112,228
Equity in net earnings of
subsidiaries................. 72,514 $ (72,514)
---------- --------------- ---------- -------------- -------------
Income before provision for
income taxes................... 58,678 93,284 32,780 (72,514) 112,228
Provision for/(benefit from)
income taxes................... (4,843) 44,470 9,080 48,707
---------- --------------- ---------- -------------- -------------
Net income....................... $ 63,521 $ 48,814 $ 23,700 $ (72,514) $ 63,521
---------- --------------- ---------- -------------- -------------
---------- --------------- ---------- -------------- -------------
</TABLE>
F-32
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 22--GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
--------------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
----------- --------------- ------------------- -------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenue........................ $ 1,804,477 $ 241,677 $ 2,046,154
--------------- ---------- -------------
Direct operating, net........ 752,084 111,755 863,839
Vehicle depreciation and
lease charges, net......... 459,963 65,180 525,143
Selling, general and
administrative............. $ 8,073 373,071 34,584 415,728
Interest, net................ 5,765 173,636 4,860 184,261
Amortization of cost in
excess of net assets
acquired................... 6,728 132 6,860
----------- --------------- ---------- -------------
13,838 1,765,482 216,511 1,995,831
----------- --------------- ---------- -------------
(13,838) 38,995 25,166 50,323
Equity in net earnings of
subsidiaries............... 36,468 $ (36,468)
----------- --------------- ---------- -------------- -------------
Income before provision for
income taxes................. 22,630 38,995 25,166 (36,468) 50,323
Provision for/(benefit from)
income taxes................. (4,843) 18,730 8,963 -- 22,850
----------- --------------- ---------- -------------- -------------
Net Income................... $ 27,473 $ 20,265 $ 16,203 $ (36,468) $ 27,473
----------- --------------- ---------- -------------- -------------
----------- --------------- ---------- -------------- -------------
</TABLE>
F-33
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 22--GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE PERIOD FROM OCTOBER 17, 1996 (DATE OF ACQUISITION)
TO DECEMBER 31, 1996
----------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
--------- --------------- ------------------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenue............................ $ 313,395 $ 49,449 $ 362,844
--------------- -------- -----------
Direct operating, net............ 144,915 22,767 167,682
Vehicle depreciation and lease
charges, net................... 70,324 15,131 85,455
Selling, general and
administrative................. 60,222 7,993 68,215
Interest, net.................... 36,756 1,449 38,205
Amortization of cost in excess of
net assets acquired............ 999 27 1,026
--------------- -------- -----------
313,216 47,367 360,583
--------------- -------- -----------
179 2,082 2,261
Equity in net earnings of
subsidiaries................... $ 1,221 1,977 $ (3,198)
--------- --------------- -------- -------------- -----------
Income before provision for income
taxes............................ 1,221 2,156 2,082 (3,198) 2,261
Provision for income taxes......... 935 105 1,040
--------- --------------- -------- -------------- -----------
Net Income......................... $ 1,221 $ 1,221 $ 1,977 $ (3,198) $ 1,221
--------- --------------- -------- -------------- -----------
--------- --------------- -------- -------------- -----------
</TABLE>
F-34
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 22--GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 1996 TO OCTOBER 16, 1996
-------------------------------------------------------------------
GUARANTOR NON-GUARANTOR
SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
--------------- ------------------- -------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenue...................................... $ 1,310,695 $ 193,978 $ 1,504,673
--------------- ---------- -------------
Direct operating, net...................... 563,292 87,458 650,750
Vehicle depreciation and lease charges,
net...................................... 310,115 48,822 358,937
Selling, general and administrative........ 253,391 29,789 283,180
Interest, net.............................. 130,726 7,499 138,225
Amortization of cost in excess of net
assets acquired.......................... 3,699 83 3,782
--------------- ---------- -------------
1,261,223 173,651 1,434,874
--------------- ---------- -------------
49,472 20,327 69,799
Equity in net earnings of subsidiaries..... 11,991 $ (11,991)
--------------- ---------- -------------- -------------
Income before provision for income taxes..... 61,463 20,327 (11,991) 69,799
Provision for income taxes................... 22,862 8,336 31,198
--------------- ---------- -------------- -------------
Net Income................................... $ 38,601 $ 11,991 $ (11,991) $ 38,601
--------------- ---------- -------------- -------------
--------------- ---------- -------------- -------------
</TABLE>
F-35
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 22--GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1998
----------------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
------------ --------------- ------------------- -------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents.... $ 11 $ 9,776 $ 19,964 $ 29,751
Restricted cash.............. 2,000 131,284 133,284
Accounts receivable, net..... 136,112 224,462 360,574
Prepaid expenses............. 34,666 7,417 42,083
Vehicles, net................ (73,213) 3,238,029 3,164,816
Property and equipment,
net........................ 129,090 15,955 145,045
Investment in subsidiaries... 533,274 422,146 $ (955,420)
Other Assets................. 38,127 2,463 40,590
Deferred Income tax assets... 9,686 111,093 120,779
Cost in excess of net assets
acquired, net.............. 465,321 2,819 468,140
------------ --------------- ------------------- -------------- --------------
Total Assets............. $ 542,971 $ 1,275,118 $ 3,642,393 $ (955,420) $ 4,505,062
------------ --------------- ------------------- -------------- --------------
------------ --------------- ------------------- -------------- --------------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable............. $ 112,220 $ 86,261 $ 198,481
Accrued liabiities........... $ 969 277,018 48,217 326,204
Due to affiliates, net....... (80,612) 112,605 (9,700) 22,293
Current income tax
liabilities................ 19,413 3,632 23,045
Deferred income tax
liabilities................ 28,504 28,504
Public liability, property
damage and other insurance
liabilities, net........... 218,811 50,398 269,209
Debt......................... 1,777 3,012,935 3,014,712
------------ --------------- ------------------- --------------
Total Liabilities........ (79,643) 741,844 3,220,247 3,882,448
Commitments and contingencies
Stockholders' equity......... 622,614 533,274 422,146 $ (955,420) 622,614
------------ --------------- ------------------- -------------- --------------
Total Liabilities and
Stockholders' Equity... $ 542,971 $ 1,275,118 $ 3,642,393 $ (955,420) $ 4,505,062
------------ --------------- ------------------- -------------- --------------
------------ --------------- ------------------- -------------- --------------
</TABLE>
F-36
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 22--GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1997
--------------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
----------- --------------- ------------------- -------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents............. $ 11 $ 27,199 $ 17,689 $ 44,899
Restricted cash....................... 106,984 106,984
Accounts receivable, net.............. 153,268 206,195 359,463
Prepaid expenses...................... 38,492 8,868 47,360
Vehicles, net......................... 115,125 2,903,731 3,018,856
Property and equipment, net........... 106,257 16,603 122,860
Investment in subsidiaries............ 465,631 293,231 $ (758,862)
Other assets.......................... 37,416 3,053 40,469
Deferred income tax assets............ 4,843 140,883 145,726
Cost in excess of net assets acquired,
net................................. 393,981 2,059 396,040
----------- --------------- ------------------- -------------- -------------
Total Assets...................... $ 470,485 $ 1,305,852 $ 3,265,182 $ (758,862) $ 4,282,657
----------- --------------- ------------------- -------------- -------------
----------- --------------- ------------------- -------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable...................... $ 161,045 $ 168,661 $ 329,706
Accrued liabiities.................... $ 1,151 288,768 25,368 315,287
Due to affiliates, net................ 15,612 41,180 (12,280) 44,512
Current income tax liabilities........ 15,938 6,935 22,873
Deferred income tax liabilities....... 5,483 28,623 34,106
Public liabiity, property damage and
other insurance liabilities, net.... 209,893 46,136 256,029
Debt.................................. 117,914 2,708,508 2,826,422
----------- --------------- ------------------- -------------
Total Liabilities................. 16,763 840,221 2,971,951 3,828,935
Commitments and contingencies
Stockholders' equity.................. 453,722 465,631 293,231 $ (758,862) 453,722
----------- --------------- ------------------- -------------- -------------
Total Liabilities and
Stockholders' Equity............ $ 470,485 $ 1,305,852 $ 3,265,182 $ (758,862) $ 4,282,657
----------- --------------- ------------------- -------------- -------------
----------- --------------- ------------------- -------------- -------------
</TABLE>
F-37
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 22--GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
--------------------------------------------------------------------------
PARENT GUARANTOR NON-GUARANTOR ELIMINATION TOTAL
--------- ------------- ------------------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income.......................... $ 63,521 $ 48,814 $ 23,700 $ (72,514) $ 63,521
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:............. (101,241) 593,636 96,973 589,368
--------- ------------- ------------------- -------------- -----------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES.......... (37,720) $ 642,450 120,673 (72,514) 652,889
--------- ------------- ------------------- -------------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Payments for vehicle additions...... 49,363 (4,352,411) (4,303,048)
Vehicle deletions................... (218,228) 3,828,949 3,610,721
Payments for additions to property
and equipment..................... (39,691) (3,242) (42,933)
Retirements of property and
equipment......................... 4,664 638 5,302
Investment in subsidiaries.......... (72,514) (107,977) 180,491
Payment for purchase of licensees... (227,213) (9,969) (237,182)
--------- ------------- ------------------- -------------- -----------
NET CASH USED IN INVESTING
ACTIVITIES.................... (72,514) (539,082) (536,035) 180,491 (967,140)
--------- ------------- ------------------- -------------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from public offerings,
net............................... 161,194 161,194
Purchases of treasury stock......... (50,960) (50,960)
Net (decrease) increase in debt..... (116,137) 309,994 193,857
Payments for debt issuance costs.... (4,654) (4,654)
Capital contribution in Argentina... 1,000 (1,000)
Investment in AESOP Leasing LP...... 110,000 (110,000)
Cash dividends...................... (3,023) 3,023
--------- ------------- ------------------- -------------- -----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES.......... 110,234 (120,791) 417,971 (107,977) 299,437
--------- ------------- ------------------- -------------- -----------
Effect of exchange rate changes on
cash.............................. (334) (334)
--------- ------------- ------------------- -------------- -----------
Net (decrease) increase in cash and
cash equivalents.................. (17,423) 2,275 (15,148)
Cash and cash equivalents at
beginning of the year............. 11 27,199 17,689 44,899
--------- ------------- ------------------- -------------- -----------
CASH AND CASH EQUIVALENTS AT END OF
THE YEAR.......................... $ 11 $ 9,776 $ 19,964 $ $ 29,751
--------- ------------- ------------------- -------------- -----------
--------- ------------- ------------------- -------------- -----------
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest.......................... $ 209,977
-----------
-----------
Income taxes...................... $ 13,338
-----------
-----------
</TABLE>
F-38
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 22--GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
--------------------------------------------------------------------------
PARENT GUARANTOR NON-GUARANTOR ELIMINATION TOTAL
--------- ------------- ------------------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income.......................... $ 27,473 $ 20,265 $ 16,203 $ (36,468) $ 27,473
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:............. (350,310) 909,073 (5,263) 553,500
--------- ------------- ------------------- -------------- -----------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES.......... (322,837) 929,338 10,940 (36,468) 580,973
--------- ------------- ------------------- -------------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Payments for vehicle additions...... (73,731) (4,332,452) (4,406,183)
Vehicle deletions................... (287,267) 3,669,444 3,382,177
Payments for additions to property
and equipment..................... (19,588) (5,145) (24,733)
Retirements of property and
equipment......................... 3,814 157 3,971
Investment in subsidiaries.......... (36,468) (191,400) 227,868
Payment for purchase of licensees... (199,381) (199,381)
--------- ------------- ------------------- -------------- -----------
NET CASH USED IN INVESTING
ACTIVITIES.................... (36,468) (767,553) (667,996) 227,868 (1,244,149)
--------- ------------- ------------------- -------------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from public offerings,
net............................... 359,316 359,316
Net (decrease) increase in debt..... (116,231) 465,519 349,288
Payments for debt issuance costs.... (29,302) (29,302)
Investment in AESOP Leasing LP...... 191,400 (191,400)
--------- ------------- ------------------- -------------- -----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES.......... 359,316 (145,533) 656,919 (191,400) 679,302
--------- ------------- ------------------- -------------- -----------
Effect of exchange rate changes on
cash.............................. (945) (945)
--------- ------------- ------------------- -------------- -----------
Net increase (decrease) in cash and
cash equivalents.................. 11 16,252 (1,082) 15,181
Cash and cash equivalents at
beginning of the year............. 10,947 18,771 29,718
--------- ------------- ------------------- -------------- -----------
CASH AND CASH EQUIVALENTS AT END OF
THE YEAR.......................... $ 11 $ 27,199 $ 17,689 $ $ 44,899
--------- ------------- ------------------- -------------- -----------
--------- ------------- ------------------- -------------- -----------
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest.......................... $ 189,086
-----------
-----------
Income taxes...................... $ 8,899
-----------
-----------
</TABLE>
F-39
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 22--GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE PERIOD OCTOBER 17, 1996 (DATE OF ACQUISITION)
TO DECEMBER 31, 1996
---------------------------------------------------------------------------
PARENT GUARANTOR NON-GUARANTOR ELIMINATION TOTAL
----------- ------------- ------------------- -------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................ $ 1,221 $ 1,221 $ 1,977 $ (3,198) $ 1,221
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:............... 45,190 (10,602) 34,588
----------- ------------- ---------- -------------- ----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES............ 1,221 46,411 (8,625) (3,198) 35,809
----------- ------------- ---------- -------------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for vehicle additions........ 540 (561,657) (561,117)
Vehicle deletions..................... (74,970) 640,866 565,896
Payments for additions to property and
equipment........................... (2,938) (546) (3,484)
Retirements of property and
equipment........................... (383) 744 361
Investment in subsidiaries............ (1,221) (3,892) 5,113
----------- ------------- ---------- -------------- ----------
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES............ (1,221) (81,643) 79,407 5,113 1,656
----------- ------------- ---------- -------------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in debt....... 376 (69,930) (69,554)
Intercompany debt..................... (2,865) (2,865)
Investment in Constellation
Reinsurance Company Ltd............. 1,915 (1,915)
----------- ------------- ---------- -------------- ----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES............ 376 (70,880) (1,915) (72,419)
----------- ------------- ---------- -------------- ----------
Effect of exchange rate changes on
cash................................ 94 94
----------- ------------- ---------- -------------- ----------
Net decrease in cash and cash
equivalents......................... (34,856) (4) (34,860)
Cash and cash equivalents at beginning
of period........................... 45,803 18,775 64,578
----------- ------------- ---------- -------------- ----------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD.............................. $ $ 10,947 $ 18,771 $ $ 29,718
----------- ------------- ---------- -------------- ----------
----------- ------------- ---------- -------------- ----------
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest............................ $ 28,170
----------
----------
Income taxes........................ $ 827
----------
----------
</TABLE>
F-40
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 22--GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE PERIOD JANUARY 1, 1996 TO OCTOBER 16, 1996
-------------------------------------------------------------------
GUARANTOR NON-GUARANTOR ELIMINATION TOTAL
-------------- ------------------- -------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................... $ 38,601 $ 11,991 $ (11,991) $ 38,601
Adjustments to reconcile net income to net
cash provided by operating activities:..... 143,043 64,568 207,611
-------------- ------------------- -------------- --------------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES............................. 181,644 76,559 (11,991) 246,212
-------------- ------------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for vehicle additions............... (122,013) (2,203,447) (2,325,460)
Vehicle deletions............................ 32,708 1,762,854 1,795,562
Payments for additions to property and
equipment.................................. (23,150) (2,803) (25,953)
Retirements of property and equipment........ 3,021 (1,172) 1,849
Investment in subsidiaries................... (11,991) 11,991
Payment for purchase of licensee,
net........................................ (3,134) (3,134)
-------------- ------------------- -------------- --------------
NET CASH USED IN INVESTING ACTIVITIES.... (121,425) (447,702) 11,991 (557,136)
-------------- ------------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in debt.............. (23,474) 275,324 251,850
Intercompany debt............................ 109,500 109,500
Payments for debt issuance costs............. (2,604) (2,604)
Cash dividends............................... (1,398) (1,398)
-------------- ------------------- --------------
NET CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES............................. (26,078) 383,426 357,348
-------------- ------------------- --------------
Effect of exchange rate changes on cash...... 260 260
-------------- ------------------- --------------
Net increase in cash and cash equivalents.... 34,141 12,543 46,684
Cash and cash equivalents at beginning of
period..................................... 11,662 6,232 17,894
-------------- ------------------- -------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD... $ 45,803 $ 18,775 $ $ 64,578
-------------- ------------------- -------------- --------------
-------------- ------------------- -------------- --------------
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest................................... $ 135,733
--------------
--------------
Income taxes............................... $ 6,220
--------------
--------------
</TABLE>
F-41
<PAGE>
AVIS RENT A CAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------------
1998 1999
------------- -------------
<S> <C> <C>
Revenue............................................................................. $ 1,086,670 $ 1,204,374
------------- -------------
Costs and Expenses:
Direct operating, net............................................................... 440,684 476,938
Vehicle depreciation and lease charges, net......................................... 277,394 311,167
Selling, general and administrative................................................. 213,114 231,182
Interest, net....................................................................... 96,818 104,362
Amortization of cost in excess of net assets acquired............................... 5,521 6,351
------------- -------------
1,033,531 1,130,000
------------- -------------
Income before provision for income taxes............................................ 53,139 74,374
Provision for income taxes.......................................................... 23,381 31,906
------------- -------------
Net income.......................................................................... $ 29,758 $ 42,468
------------- -------------
------------- -------------
Earnings per share:
Basic............................................................................... $ 0.88 $ 1.35
------------- -------------
------------- -------------
Diluted............................................................................. $ 0.86 $ 1.31
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
F-42
<PAGE>
AVIS RENT A CAR, INC.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30,
1999
--------------
<S> <C>
ASSETS
Cash and cash equivalents......................................................................... $ 280,370
Restricted cash................................................................................... 189,680
Accounts receivable, net.......................................................................... 910,311
Finance lease receivables......................................................................... 340,868
Prepaid expenses.................................................................................. 62,212
Vehicles, net..................................................................................... 7,663,270
Property and equipment, net....................................................................... 257,114
Cost in excess of net assets acquired, net........................................................ 1,796,203
Other assets...................................................................................... 88,599
--------------
Total assets...................................................................................... $ 11,588,627
--------------
--------------
LIABILITIES, PREFERRED STOCK AND COMMON STOCKHOLDERS' EQUITY
Accounts payable.................................................................................. $ 624,278
Accrued liabilities............................................................................... 352,744
Deferred income................................................................................... 65,375
Due to affiliates, net............................................................................ 79,677
Current income tax liabilities.................................................................... 50,400
Deferred income tax liabilities................................................................... 142,580
Public liability, property damage and other insurance liabilities, net............................ 279,324
Debt.............................................................................................. 9,017,106
--------------
Total liabilities............................................................................. 10,611,484
--------------
Commitments and contingencies
Class A Preferred stock........................................................................... 360,000
Class C Preferred stock........................................................................... 2,000
--------------
Total Preferred stock......................................................................... 362,000
--------------
Common stockholders' equity:
Class A Common stock.............................................................................. 359
Additional paid-in capital........................................................................ 591,959
Retained earnings................................................................................. 134,683
Accumulated other comprehensive loss.............................................................. (7,971)
Treasury stock.................................................................................... (103,887)
--------------
Total common stockholders' equity............................................................. 615,143
--------------
Total liabilities, preferred stock and common stockholders' equity............................ $ 11,588,627
--------------
--------------
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
F-43
<PAGE>
AVIS RENT A CAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
<S> <C> <C>
1998 1999
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................................................... $ 29,758 $ 42,468
Adjustments to reconcile net income to net cash provided by operating activities..... 128,901 256,701
----------- -----------
Net cash provided by operating activities............................................ 158,659 299,169
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for vehicle additions....................................................... (1,919,655) (2,494,247)
Vehicle deletions.................................................................... 1,382,588 1,519,474
Payments for property and equipment.................................................. (21,088) (17,953)
Retirements of property and equipment................................................ 2,554 1,073
Payments for purchase of rental car franchise licensees, net of cash acquired of
$11,065 in 1999.................................................................... (232,475) (42,503)
Payment for purchase of PHH Holdings, net of cash acquired of $170,568............... (1,330,932)
----------- -----------
Net cash used in investing activities................................................ (788,076) (2,365,088)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Changes in debt:
Proceeds........................................................................... 1,233,774 5,882,621
Repayments......................................................................... (777,708) (3,510,624)
----------- -----------
Net increase in debt............................................................... 456,066 2,371,997
Payments for debt issuance costs..................................................... (3,832) (1,635)
Proceeds from public offering........................................................ 161,194
Purchases of treasury stock.......................................................... (57,237)
Other................................................................................ 3,326
----------- -----------
Net cash provided by financing activities............................................ 613,428 2,316,451
----------- -----------
Effect of exchange rate changes on cash................................................ (428) 87
----------- -----------
Net increase (decrease) in cash and cash equivalents................................... (16,417) 250,619
Cash and cash equivalents at beginning of period....................................... 44,899 29,751
----------- -----------
Cash and cash equivalents at end of period............................................. $ 28,482 $ 280,370
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash interest paid..................................................................... $ 98,390 $ 107,466
----------- -----------
----------- -----------
Cash income taxes paid................................................................. $ 7,938 $ 5,329
----------- -----------
----------- -----------
Businesses acquired:
Fair value of assets acquired, net of cash of $181,633............................... $ 232,765 $ 6,218,950
Liabilities assumed.................................................................. 290 4,483,515
----------- -----------
Net assets acquired.................................................................. 232,475 1,735,435
Less issuance of Series A and Series C Preferred Stocks.............................. (362,000)
----------- -----------
Net cash paid for acquisitions....................................................... $ 232,475 $ 1,373,435
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
F-44
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
include Avis Rent A Car, Inc. and its subsidiaries (the "Company" or "Avis Rent
A Car"). These consolidated financial statements reflect, in the opinion of
management, all material adjustments (which include normal recurring adjustments
only) necessary to fairly state the financial position, the results of
operations and cash flows for the periods presented. The condensed consolidated
statement of financial position include all of the assets and liabilities of the
Company including the Company's recently acquired vehicle management business in
the United States and Canada ("PHH North America"), and in Europe ("PHH
Europe"), and of Wright Express LLC (collectively "VMS") and Motorent, Inc.
These condensed consolidated statements of operations do not include the results
of operations of VMS and of Motorent, Inc., which were purchased on June 30,
1999 (see Note 4). Operating results for interim periods are not indicative of
the results that can be expected for a full year. These consolidated financial
statements should be read in conjunction with the Company's audited annual
consolidated financial statements and notes thereto, included in the Company's
annual report on Form 10-K and Forms 8-K filed with the Securities and Exchange
Commission. Certain amounts in the prior period have been reclassified to
conform to current period presentation.
NOTE 2--EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income for the three
month periods ended June 30, 1998 and 1999 by 35,925,000 and 31,188,977 weighted
average shares outstanding, respectively, and for the six months ended June 30,
1998 and 1999 by 33,687,431 and 31,529,114 weighted average shares outstanding,
respectively. Diluted earnings per share is computed by dividing net income for
the three month periods ended June 30, 1998 and 1999 by 36,730,233 and
32,237,810 weighted average shares outstanding, respectively, and for the six
months ended June 30, 1998 and 1999 by 34,680,670 and 32,380,499 weighted
average shares outstanding, respectively. Shares used in calculating diluted
earnings per share include the effects of the assumed exercise of stock options.
NOTE 3--TREASURY STOCK
At June 30, 1999 treasury stock is comprised of the following:
<TABLE>
<CAPTION>
TREASURY
STOCK, NET TREASURY
(IN THOUSANDS) SHARES
-------------- -------------
<S> <C> <C>
Balance, January 1, 1999...................................... $ 50,960 2,672,700
Treasury stock repurchased from January 1, to June 30, 1999... 57,037 2,318,775
Treasury stock issued under the Company's stock option plan... (4,110) (195,627)
-------------- -------------
Balance, June 30, 1999........................................ $ 103,887 4,795,848
-------------- -------------
-------------- -------------
</TABLE>
Included in treasury stock repurchased from January 1, 1999 to June 30, 1999
are 1.6 million shares repurchased from Cendant Corporation ("Cendant") at a
cost of $40.8 million.
F-45
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4--ACQUISITIONS
On March 19, 1999, and June 30, 1999, the Company purchased the common stock
and franchise rights of Rent A Car Company, Incorporated, of Richmond Virginia
("Rent-A-Car, Inc.") and Motorent, Inc. of Nashville Tennessee ("Motorent") for
approximately $10.1 million and $43.7 million, respectively. These acquisitions
were financed through internally generated funds.
On June 30, 1999, the Company completed the transaction contemplated by the
agreement and plan of merger and reorganization dated as of May 22, 1999 (the
"Merger "), with PHH Corporation, a Maryland corporation and wholly-owned
subsidiary of Cendant, PHH Holdings Corporation ("PHH Holdings"), a Texas
corporation and wholly-owned subsidiary of PHH Corporation, and Avis Fleet
Leasing and Management Corporation, a Texas corporation and a wholly-owned
subsidiary of the Company (the "Acquisition Subsidiary").
Pursuant to the merger agreement, the Acquisition Subsidiary and PHH
Holdings merged on June 30, 1999 and the Acquisition Subsidiary acquired VMS for
$1.8 billion and refinanced VMS indebtedness of approximately $3.5 billion (the
"VMS Acquisition"). The acquisition financing included borrowings by the Company
of $1.0 billion of term loans, the issuance by the Company of $500 million of
senior subordinated notes, and the issuance by the acquisition subsidiary of
$362 million of preferred stock (see Note 5).
In connection with the VMS Acquisition, the Company received a perpetual,
royalty-free license to use a number of VMS trademarks, including the "PHH" name
and logo. PHH Corporation and PHH Holdings entered into a 5-year non-compete
agreement with Avis Rent A Car, Inc. and the Acquisition Subsidiary. The
Acquisition Subsidiary also received a limited license to use the Cendant name
in Europe and the United States for a period of up to one year. In addition, the
parties have entered into agreements under which Cendant agreed to provide the
Company with computer services and with transitional services with respect to
various administrative services, including payroll and benefits, which had
previously been provided to VMS by Cendant. In addition, the Acquisition
Subsidiary has entered into an agreement under which it will provide Cendant
with certain transitional administrative services which had previously been
provided by VMS.
The preliminary purchase cost allocation for the Company's acquisitions of
Rent-A-Car Inc., Motorent and VMS, are subject to adjustment, when additional
information concerning asset and liability valuations are obtained. The final
asset and liability fair values will differ from those set forth in the
accompanying statement of financial position at June 30, 1999. However, the
changes are not expected to have a material effect on the financial position of
the Company. The above mentioned acquisitions have been accounted for by the
purchase method. The financial statements include the operating results of
acquisitions subsequent to their dates of acquisition.
F-46
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4--ACQUISITIONS (CONTINUED)
The following is the preliminary purchase cost allocation of the
acquisitions described above (in thousands):
<TABLE>
<S> <C>
Purchase cost.................................................. $1,853,767
----------
Fair value of:
Assets acquired.............................................. 4,986,842
Liabilities assumed.......................................... 4,483,315
----------
Net assets..................................................... 503,527
----------
Cost in excess of net assets acquired.......................... $1,350,240
----------
----------
</TABLE>
The following unaudited pro forma information presents the results of
operations of the Company as if the acquisition of VMS for $1.8 billion
(including the issuance of Series A and Series C Preferred) and the refinancing
of VMS indebtedness and related adjustments had taken place on January 1, 1998
(in thousands, except share data):
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1998 JUNE 30, 1999
-------------- --------------
<S> <C> <C>
Revenue........................................................................... $ 1,880,744 $ 2,012,469
-------------- --------------
-------------- --------------
Income before provision for income taxes.......................................... $ 51,752 $ 53,433
-------------- --------------
-------------- --------------
Net income........................................................................ $ 26,640 $ 25,927
-------------- --------------
-------------- --------------
Earnings applicable to common stockholders........................................ $ 17,530 $ 16,817
-------------- --------------
-------------- --------------
Earnings per share:
Basic............................................................................. $ .52 $ .53
-------------- --------------
-------------- --------------
Diluted........................................................................... $ .51 $ .52
-------------- --------------
-------------- --------------
</TABLE>
If the acquisition of Rent-A-Car, Inc. and Motorent had occurred on January
1, 1998, they would not have had a material impact on the results of operations
for the three and six month periods ended June 30, 1998 and 1999.
NOTE 5--SERIES A, B AND C PREFERRED STOCK
SERIES A PREFERRED STOCK
In connection with the VMS Acquisition, a total of 7,200,000 shares of
Series A Preferred have been issued and were outstanding at June 30, 1999.
Holders of Series A Preferred Stock are not entitled to preemptive rights. The
Series A Preferred Stock has an aggregate liquidation preference of $360 million
or $50 per share (the "Series A Liquidation Preference"). Each share of Series A
Preferred accrues dividends at a rate per annum of 5% of the Series A
Liquidation Preference, payable in cash semi-annually in arrears. Dividends are
payable in shares of Series B Cumulative PIK Preferred Stock (see Series B
Preferred Stock below). In addition, if the Company is unable to obtain the
consent of its Shareholders to amend its charter by June 30, 2000 to Issue Class
B
F-47
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 5--SERIES A, B AND C PREFERRED STOCK (CONTINUED)
Common Stock (see Note 6) and Class A Common Stock issuable in exchange for the
Class B Common Stock, the dividend rate on the Series A Preferred will increase
to 12%, with retroactive effect to the date of issuance. Until the fifth
anniversary of the issuance of the Series A Preferred, these dividends may be
paid in Series B Preferred Stock at the discretion of the Company. The Series A
Preferred is also entitled to special annual dividends at a rate of 2% of the
Series A Liquidation Preference per annum, payable in cash annually on March
15(th), in the event that the Acquisition Subsidiary achieves targeted
consolidated Earnings Before Income Taxes, Depreciation and Amortization
("EBITDA") levels. Upon liquidation, and after payment of all amounts owed to
all classes of capital stock ranked senior to the Series A Preferred, holders of
shares of Series A Preferred will receive the Series A Liquidation Preference of
such shares plus accrued and unpaid dividends. The Series A Preferred may be
redeemed by the Acquisition Subsidiary, in whole or in part, on or after the
fifth anniversary of the date of issuance, and must be redeemed in whole upon
the eleventh anniversary of the date of issuance for an amount per share equal
to the Series A Liquidation Preference plus accrued and unpaid dividends. In
addition, holders of the Series A Preferred may cause the Acquisition Subsidiary
to redeem their shares for cash, upon the bankruptcy or insolvency of the
Company or a change in control with respect to Avis Rent A Car, Inc. or Avis
Rent A Car System, Inc.
The holders of the Series A Preferred may convert shares of Series A
Preferred into shares of Class B Common Stock once specified levels of 12-month
consolidated EBITDA of the Acquisition Subsidiary have been reached and the
average closing price of Class A Common Stock for a specified period shall have
exceeded a performance conversion price. Such conversion shall be at a rate (the
"Performance Conversion Rate") obtained by dividing the per share Series A
Liquidation Preference by $50 (as adjusted for antidilution protection, the
"Performance Conversion Price").
On or after the fifth anniversary of the closing date of the VMS
Acquisition, if the share price of the Class A Common Stock has exceeded an
amount equal to 110% of the Performance Conversion Price for 20 trading days
within a period of 30 consecutive trading days ending within five trading days
of notice of conversion given by the Acquisition Subsidiary, then the Series A
Preferred will be converted into Class B Common Stock at the Performance
Conversion Rate. Upon the bankruptcy or insolvency of the Acquisition Subsidiary
or any of its subsidiaries that constitute a Significant Subsidiary of Avis Rent
A Car, Inc., as defined in Rule 1-02(w) of Regulation S-X (a "Significant
Subsidiary"), the Series A Preferred automatically converts into Class B Common
Stock at a rate equal to the quotient obtained by dividing: (1) the per share
Series A Liquidation Preference by (2) the average trading price per share of
Class A Common Stock for the 30 trading days immediately preceding the date of
the holder's conversion notice or the date on which the bankruptcy case
commences, as applicable (the "Series A Market Conversion Rate"). The Series A
Market Conversion Rate is subject to adjustment for antidilution protection.
Additionally, holders of Series A Preferred may convert their Series A
Preferred into Class B Common Stock at the Series A Market Conversion Rate if
the Acquisition Subsidiary: (1) fails to make a redemption payment on the Series
A Preferred or the Series B Preferred, (2) fails to pay dividends when due on
either the Series A Preferred or the Series B Preferred, (3) takes actions
requiring consents of its holders of the Series A Preferred or the Series B
Preferred without
F-48
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 5--SERIES A, B AND C PREFERRED STOCK (CONTINUED)
obtaining such consents or (4) issues additional shares of the Series A
Preferred or Series B Preferred, or reissues shares of either, in violation of
their terms.
Without the affirmative vote of the holders of a majority of the outstanding
shares of Series A Preferred, the Acquisition Subsidiary shall not (1)
authorize, create or issue any security ranking senior to the Series A Preferred
as to dividends or on liquidation (other than the Series C Preferred); (2) amend
its articles of incorporation or the certificate of designations for the Series
A Preferred in a manner adverse to the holders of the Series A Preferred; (3)
authorize the issuance of additional shares of Series A Preferred; or (4)
reincorporate the Acquisition Subsidiary in a jurisdiction other than Texas
prior to the second anniversary of the date of issuance of the Series A
Preferred. Holders of Series A Preferred are not entitled to voting rights,
except as required by Texas law. In those circumstances where the holders of
Series A Preferred have a right to vote, each holder of a share of Series A
Preferred shall be entitled to one vote per share.
Shares of Series A Preferred are freely transferable. Shares of Series A
Preferred reacquired in any manner will be retired and may not be reissued as
shares of Series A Preferred.
SERIES B PREFERRED STOCK
Series B Cumulative PIK Preferred Stock (the "Series B Preferred") will be
issued as dividends to the Series A Preferred holders by the Acquisition
Subsidiary. No shares of Series B Preferred were outstanding as of June 30,
1999. Holders of the Series B Preferred are not entitled to preemptive rights.
The Series B Preferred has a liquidation preference of $50 per share (the
"Series B Liquidation Preference"). Each share of Series B Preferred accrues
dividends at a rate per annum of 5% of the Series B Liquidation Preference,
payable in cash semi-annually in arrears. In addition, if the Company is unable
to obtain the consent of its shareholders to amend its charter by June 30, 2000
to issue Class B Common Stock and Class A Common Stock issuable in exchange for
the Class B Common Stock, the dividend rate on the Series B Preferred will
increase to 12%, with retroactive effect to the date of issuance. Until the
fifth anniversary of the date of issuance of the Series B Preferred, dividends
may, at the discretion of the Acquisition Subsidiary be paid in kind;
thereafter, dividends must be paid in cash. Upon liquidation, and after payment
of all amounts owed to all classes of capital stock ranked senior to the Series
B Preferred, holders of shares of Series B Preferred will receive the Series B
Liquidation Preference of such shares plus accrued and unpaid dividends.
The Series B Preferred has the same ranking as the Series A Preferred. The
Series B Preferred may be redeemed by the Acquisition Subsidiary, in whole or in
part, on or after the fifth anniversary of the date of issuance, and must be
redeemed in whole upon the eleventh anniversary of the date of issuance for an
amount per share equal to the Series B Liquidation Preference plus accrued and
unpaid dividends.
Additionally, holders of Series B Preferred may convert their Series B
Preferred into Class B Common Stock at the Series B Market Conversion Rate
(defined below) if the Acquisition Subsidiary: (1) fails to make a redemption
payment on the Series A Preferred or the Series B Preferred, (2) fails to pay
dividends when due on either the Series A Preferred or the Series B Preferred,
(3) takes actions requiring the consents of the holders of the Series A
Preferred or the
F-49
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 5--SERIES A, B AND C PREFERRED STOCK (CONTINUED)
Series B Preferred without obtaining such consents or (4) issues additional
shares of the Series A Preferred or Series B Preferred, or reissues shares of
either, in violation of their terms. The Series B Preferred also automatically
converts into Class B Common Stock at the Series B Market Conversion Rate upon
the bankruptcy or insolvency of the Acquisition Subsidiary or any of its
Significant Subsidiaries.
The Series B Market Conversion Rate ("Series B Market Conversion Rate")
equals the quotient obtained by dividing: (1) the per share Series B Liquidation
Preference by (2) the average trading price per share of the Company's Common
Stock for the 30 trading days immediately preceding the date of the holder's
conversion notice or the date on which the bankruptcy case commences, as
applicable. The Market Conversion Rate is subject to customary adjustment under
certain circumstances.
Holders of Series B Preferred will have voting rights analogous to those of
the holders of the Series A Preferred. Shares of Series B Preferred are freely
transferable. Shares of Series B Preferred reacquired in any manner will be
retired and may not be reissued as shares of Series B Preferred.
SERIES C PREFERRED STOCK
A total of 40,000 shares of Series C Preferred were outstanding at June 30,
1999, in connection with the VMS Acquisition. Holders of the Series C Preferred
are not entitled to preemptive rights. The Series C Preferred has an aggregate
liquidation preference of $2,000,000 or $50 per share (the "Series C Liquidation
Preference"). Each share of Series C Preferred accrues dividends at 11% per
annum, payable in cash semi-annually in arrears. An escrow account in the amount
of $1,000,000 has been established to cover future dividend payments. Upon
liquidation, and after payment of amounts, if any, owed to all classes of
capital stock ranked senior to the Series C Preferred, holders of shares of
Series C Preferred will receive the Series C Liquidation Preference of such
shares plus accrued and unpaid dividends. The Series C Preferred ranks senior to
the Series A Preferred, the Series B Preferred and the Class A Common Stock in
right of payment of the dividends. The Series C Preferred may be redeemed by the
Acquisition Subsidiary, in whole or in part, on or after the fifth anniversary
of the date of issuance, and must be redeemed in whole upon the seventh
anniversary of the date of issuance, in each case for an amount per share equal
to the Series C Liquidation Preference plus accrued and unpaid dividends.
Holders of Series C Preferred are not entitled to voting rights, except
under certain circumstances. Without the affirmative vote of the holders of a
majority of the outstanding shares of Series C Preferred, the Acquisition
Subsidiary may not take certain specified actions that would adversely affect
the rights of the holders of the Series C Preferred. Shares of Series C
Preferred reacquired in any manner will be retired and may not be reissued as
shares of Series C Preferred.
NOTE 6--CLASS B COMMON STOCK
In the event that Avis Rent A Car obtains the consent of its shareholders to
amend its charter by June 30, 2000 to issue Class B Common Stock, Avis Rent A
Car will authorize and reserve for issuance shares of Class B Common Stock to be
issued upon the conversion of the Series A Preferred or the Series B Preferred.
F-50
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 6--CLASS B COMMON STOCK (CONTINUED)
The Class B Common Stock will rank (1) junior to any class or series of
preferred stock of the Company and (2) PARI PASSU with the Class A Common Stock
in right of payment of dividends and on liquidation. The Class B Common Stock
will be nonvoting.
At any time that the beneficial ownership by Cendant, together with any
affiliate of Cendant (Cendant and such affiliates, the "Cendant Affiliates"), of
the Class A Common stock is less than 20% of the voting power of the outstanding
shares of Class A Common Stock, the Cendant Affiliates shall have the right to
convert shares of Class B Common Stock into Class A Common Stock on a
share-for-share basis in an amount such that the ownership by the Cendant
Affiliates of the Class A Common Stock does not exceed 20% of the voting power
of the outstanding shares of Class A Common Stock after giving effect to such
conversion.
The Cendant Affiliates shall have the right to convert the Class B Common
Stock into shares of Class A Common Stock on a share-for-share basis upon the
occurrence of (1) a bankruptcy or insolvency of the Company and (2) a Preferred
Stock Change of Control, other than any Preferred Stock Change of Control that
is caused solely by the sale by the Cendant Affiliates of its shares of Class A
Common Stock or Class B Common Stock.
Upon the transfer, sale or disposition for value to any person other than
the Cendant Affiliates, each share of Class B Common Stock shall be
automatically exchanged for the Class A Common Stock on a share-for-share basis.
Other than upon conversion of the Series A Preferred or the Series B
Preferred, no additional shares of Class B Common Stock may be issued. Shares of
Class B Common Stock shall be freely transferable. Shares of Class B Common
Stock reacquired in any manner shall be retired and may not be reissued as
shares of Class B Common Stock.
In connection with the VMS Acquisition, the Company entered into a
registration rights agreement pursuant to which Cendant and certain transferees
of Class B Common Stock and Class A Common Stock converted from the Class B
Common stock held by Cendant (the "Holders") will have the right to require the
Company to register all or part of the Class A Common Stock owned by such
Holders under the Securities Act of 1933 as amended (the "Securities Act") (an
"Acquisition Demand Registration"). However, the Company may postpone giving
effect to an Acquisition Demand Registration for a period of up to 30 days if
the Company believes such registration might have a material adverse effect on
any plan or proposal by the Company with respect to any financing, acquisition,
recapitalizaiton, reorganization or other material transaction or the Company is
in possession of material non-public information that, if publicly disclosed,
could result in a material disruption of a major corporate development or
transaction then pending or in progress or in other material adverse
consequences to the Company. In addition, the Holders have the right to
participate in any registrations by the Company of Class A Common Stock (an
"Acquisition Piggyback Registration"). The Holders will pay all out-of-pocket
expenses incurred in connection with any Acquisition Registration, and the
Company will pay all out-of-pocket expenses incurred in connection with any
Acquisition Demand Piggyback Registration, except for underwriting discounts,
commissions and expenses attributable to the shares of Class A Common Stock sold
by such holders.
F-51
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 7--COMPREHENSIVE INCOME
Comprehensive income is comprised of the following (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
<S> <C> <C>
1998 1999
--------- ---------
Net income............................................................. $ 29,758 $ 42,468
Foreign currency translation adjustment................................ (3,524) 2,680
--------- ---------
Comprehensive income................................................... $ 26,234 $ 45,148
--------- ---------
--------- ---------
</TABLE>
NOTE 8--RETIREMENT BENEFITS
Effective January 1, 1999, the Company curtailed its defined benefit plans
to its eligible salaried and hourly employees as of June 30, 1985. The Company
recognized a non-recurring $7.5 million pre-tax gain as a result of the
curtailment which was recorded in January 1999 and is included in Direct
Operating expense on the accompanying Statement of Operations for the six months
ended June 30, 1999.
F-52
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 9--FINANCING AND DEBT
Debt outstanding at June 30, 1999 consists of the following (in thousands):
<TABLE>
<CAPTION>
JUNE 30,
1999
-------------
<S> <C>
Commercial Paper Notes......................................................... $ 1,463,996
Short-term notes-foreign....................................................... 169,940
Wright Express Federal Funds................................................... 21,957
Wright Express Certificates of Deposit......................................... 49,651
Current portion of long-term debt -other....................................... 512
Current portion of long-term debt--acquisition financing....................... 8,500
-------------
TOTAL CURRENT DEBT........................................................... 1,714,556
-------------
FLEET FINANCING
Interim Domestic Asset Backed Securities -Variable Funding Notes............... 2,735,508
Interim Foreign Asset Backed Securities -UK Advances........................... 720,000
Series 1997-1A asset backed notes due July 2000 at 6.22%....................... 800,000
Series 1997-1B asset backed notes due July 2002 at 6.40%....................... 850,000
Series 1998-1 asset backed notes due February 2005 at 6.14%.................... 600,000
Self funded notes.............................................................. 26,853
Other.......................................................................... 5,689
-------------
TOTAL FLEET DEBT............................................................. 5,738,050
-------------
ACQUISITION FINANCING
Senior Subordinated Notes due May 2009 at 11.00%............................... 500,000
Term A Loan Notes due June 2005................................................ 242,500
Term B Loan Notes due June 2006................................................ 374,500
Term C Loan Notes due June 2007................................................ 374,500
Revolving Credit Facility due June 2005........................................ 73,000
-------------
TOTAL ACQUISITION FINANCING.................................................. 1,564,500
-------------
TOTAL DEBT................................................................... $ 9,017,106
-------------
-------------
</TABLE>
COMMERCIAL PAPER NOTES, SERIES 1997-1A, 1997-1B AND 1998-1 ASSET BACKED NOTES
On July 31, 1997, the Company through Avis Rent A Car System, Inc. ("ARACS")
entered into a domestic integrated fleet financing program (the "Avis ABS
Facility") that provides for up to $3.65 billion in financing for vehicles
covered by Repurchase Programs, with up to 25% of the facility available for
vehicles not covered by Repurchase Programs. As of June 30, 1999, the domestic
integrated fleet financing program is $3.75 billion. The domestic integrated
fleet financing program provides for the issuance of up to $1.5 billion of
asset-backed variable funding notes (the "Commercial Paper Notes") and $2.25
billion of asset-backed medium term notes (The "Medium Term Notes"). The
Commercial Paper Notes and the Medium Term Notes are backed by a first priority
security interest in the Company's fleet. Additional credit enhancement was
provided for the
F-53
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 9--FINANCING AND DEBT (CONTINUED)
Medium Term Notes by establishing an escrow account in the amount of $90
million, which is included in "Restricted Cash".
The weighted average interest rate on commercial paper borrowings was 5.7%
and 5.0% for the six months ended June 30, 1998 and 1999, respectively.
Average commercial paper borrowings was $737 million and $1,001 million for
the six months ended June 30, 1998 and 1999, respectively.
SHORT-TERM NOTES FOREIGN
The weighted average interest rates of the short-term notes-foreign as of
June 30, 1998 and 1999 was 5.5% and 5.2%, respectively.
CERTIFICATES OF DEPOSIT
At June 30, 1999, scheduled maturities of certificates of deposit of $49,651
are all less than one year. The interest rates range from 5.09% to 5.5%.
FEDERAL FUNDS PAYABLE
Federal Funds Payable consists of federal funds purchased and is generally
repaid within one to ten business days from the transaction date. At June 30,
1999, federal funds payable consist of three separate agreements totaling
$21,957, bearing interest at rates of 5.875% and 6.375%.
ASSET BACKED SECURITIES, SENIOR SUBORDINATED NOTES AND TERM NOTES
In connection with the VMS Acquisition (see Note 4), Avis Rent A Car, Inc.:
(A) Refinanced the VMS existing fleet debt with the proceeds of $2,735,507
domestic and $720,000 foreign asset-backed securities issued pursuant to
an offering of asset-backed securities (the "Interim VMS ABS Offering"),
under certain fleet financing facilities and together with the Avis ABS
facilities.
The domestic securities comprising the Interim VMS ABS Offering are
issued by a bankruptcy remote special purpose entity (the "Domestic ABS
Issuer") and placed initially with a single multi-seller commercial paper
conduit, and thereafter may be syndicated to one or more other bank
sponsored conduits (collectively the "CP Conduits").
The CP Conduits will acquire Domestic Variable funding notes ("VFNs"),
Domestic Preferred Membership Interests and U.K. Advances using the
proceeds of commercial paper issuances. In addition, from time to time,
the Domestic ABS Issuer may issue medium-term notes secured by the
Domestic ABS Assets, using the proceeds of any such offerings to reduce
the amount of Domestic VFNs then outstanding.
The interest rate is variable and is based on commercial paper notes plus
a weighted average margin of approximately 45 basis points.
F-54
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 9--FINANCING AND DEBT (CONTINUED)
The rate in effect at June 30, 1999 for the domestic and foreign
asset-backed securities were 5.39% and 5.43%, respectively.
(B) Issued $500,000 of Senior Subordinated Notes due May 1, 2009 with an
interest rate of 11% (the "Senior Subordinated Notes"). The Senior
Subordinated Notes are subordinated in the right of payment to all
existing and future senior indebtedness of the Company and are
unconditionally guaranteed on a senior subordinated basis by ARACS and
other domestic subsidiary of the Company that guarantees the Senior
Credit Facility (as defined). Interest is payable semi-annually
commencing November 1, 1999.
(C) At June 30, 1999, the Company had outstanding the following term loans:
Term Loans A, B, and C bear interest at either Chase Manhattan Bank's
("Chase") alternate base rate or the Eurodollar rate (at the Company's
option) plus the applicable margin. The applicable margin for each type
of loan is as follows:
<TABLE>
<CAPTION>
ABR LOANS EURODOLLAR LOANS
----------- -----------------
<S> <C> <C>
Revolving Loans.............................................. 1.75% 2.75%
Term A Loan.................................................. 1.75% 2.75%
Term B Loan.................................................. 2.25% 3.25%
Term C Loan.................................................. 2.50% 3.50%
</TABLE>
The Term A, B, and C Loans mature on June 30, 2005, 2006 and 2007,
respectively, and require repayments of principal in quarterly
installments.
REVOLVING CREDIT FACILITY
Under the terms of the Revolving Credit Facility, the Company had
outstanding $73,000 as of June 30, 1999 at a variable interest rate with terms
identical to the Term A Loan.
SELF-FUND NOTES
Self-fund notes represent loans made by customers to purchase leased
vehicles. Repayment of these notes is matched to payments on the underlying
lease including the disposal of the vehicles at maturity. Interest can be fixed
or floating, depending on the underlying leases. The average interest rate at
June 30, 1999, was 5.5%.
The agreements with the Company's lenders include a number of significant
covenants that, among other things, restrict its ability to dispose of non-fleet
assets, incur additional indebtedness, create liens, prohibit the payment of
dividends, enter into certain investments or acquisitions, repurchase or redeem
capital stock, engage in mergers or consolidations or engage in certain
transactions with affiliates and otherwise restrict corporate activities.
Certain of these agreements also require the Company to maintain specific
financial ratios. At June 30, 1999, the Company was in compliance with all such
covenants related to these agreements.
F-55
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 10--GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL STATEMENTS
In connection with the VMS Acquisition and as part of the financing thereof,
Avis Rent A Car, Inc. (the "Parent") issued and sold the Senior Subordinated
Notes (see Note 9). The Senior Subordinated Notes are general unsecured
obligations of the Parent, subordinated in right of payment to all existing and
future senior indebtedness of the Company, and guaranteed by certain of the
Parent's domestic subsidiaries. Accordingly, the following condensed
consolidating financial information presents the condensed consolidating
financial statement as of June 30, 1999 and for the six months ended June 30,
1998 and 1999, respectively, of: (a) Parent; (b) the guarantor subsidiaries; (c)
the non-guarantor subsidiaries; (d) elimination entries necessary to consolidate
Parent with guarantor and non-guarantor subsidiaries; and (e) the Company on a
consolidated basis.
Separate financial statements and other disclosures with respect to the
subsidiary guarantors have not been made because management has determined that
such information is not material to holders of the Senior Subordinated Notes.
Investments in subsidiaries are accounted using the equity method for
purposes of the consolidating presentation. The principle elimination entries
eliminate investments in subsidiaries and intercompany balances and transactions
(in thousands):
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
---------------------------------------------------------------------
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
----------- ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Revenue................................. $ 975,294 $ 111,376 $ 1,086,670
------------ ------------ --------------
Direct operating, net................... 389,323 51,361 440,684
Vehicle depreciation and lease charges,
net................................... 248,580 28,814 277,394
Selling, general and administrative..... 196,641 16,473 213,114
Interest, net........................... $ 6,916 88,234 1,668 96,818
Amortization of cost in excess of net
assets acquired....................... 5,449 72 5,521
----------- ------------ ------------ --------------
$ 6,916 928,227 98,388 1,033,531
----------- ------------ ------------ --------------
(6,916) 47,067 12,988 53,139
Equity in earnings of subsidiaries...... 34,253 8,473 $ (42,726)
----------- ------------ ------------ ------------ --------------
Income before provision for income
taxes................................. 27,337 55,540 12,988 (42,726) 53,139
Provision for income taxes.............. (2,421) 21,287 4,515 23,381
----------- ------------ ------------ ------------ --------------
Net income.......................... $ 29,758 $ 34,253 $ 8,473 $ (42,726) $ 29,758
----------- ------------ ------------ ------------ --------------
----------- ------------ ------------ ------------ --------------
</TABLE>
F-56
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 10--GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
---------------------------------------------------------------------
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
----------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Revenue.................................. $ 1,086,437 $ 117,937 $ 1,204,374
------------- ------------ -------------
Direct operating, net.................... 421,062 55,876 476,938
Vehicle depreciation and lease charges,
net.................................... 281,621 29,546 311,167
Selling, general and administrative...... 214,450 16,732 231,182
Interest, net............................ $ 6,918 95,556 1,888 104,362
Amortization of cost in excess of net
assets acquired........................ 6,255 96 6,351
----------- ------------- ------------ -------------
6,918 1,018,944 104,138 1,130,000
----------- ------------- ------------ -------------
(6,918) 67,493 13,799 74,374
Equity in earnings of subsidiaries....... 46,965 9,374 $ (56,339)
----------- ------------- ------------ ------------ -------------
Income before provision for income
taxes.................................. 40,047 76,867 13,799 (56,339) 74,374
Provision for income taxes............... (2,421) 29,902 4,425 31,906
----------- ------------- ------------ ------------ -------------
Net income............................... $ 42,468 $ 46,965 $ 9,374 $ (56,339) $ 42,468
----------- ------------- ------------ ------------ -------------
----------- ------------- ------------ ------------ -------------
</TABLE>
F-57
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 10--GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENT OF FINANCIAL POSITION
JUNE 30, 1999
----------------------------------------------------------------------------
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents.......... $ 15,359 $ 67,177 $ 197,834 $ 280,370
Restricted cash.................... 189,680 189,680
Accounts receivable, net........... 3,952 221,870 684,489 910,311
Finance lease receivables.......... 43,123 297,745 340,868
Due from affiliates, net........... 1,404,419 (1,319,212) (85,207)
Prepaid expenses................... 49,108 13,104 62,212
Vehicles, net...................... (44,079) 7,707,349 7,663,270
Property and equipment, net........ 174,367 82,747 257,114
Investment in subsidiaries......... 982,919 1,460,246 134,020 $ (2,577,185)
Other assets....................... 1,001 82,266 5,332 88,599
Cost in excess of net assets
acquired, net.................... 1,597,484 198,719 1,796,203
------------- ------------- -------------- -------------- --------------
Total assets....................... $ 2,407,650 $ 2,332,350 $ 9,425,812 $ (2,577,185) $ 11,588,627
------------- ------------- -------------- -------------- --------------
------------- ------------- -------------- -------------- --------------
LIABILITIES, PREFERRED STOCK AND
COMMON STOCKHOLDERS' EQUITY
Accounts payable................... $ 233,282 $ 390,996 $ 624,278
Accrued liabilities, net........... $ 1,063 327,806 23,875 352,744
Deferred income.................... 24,445 40,930 65,375
Due to affiliates.................. 231,550 (380,179) 228,306 79,677
Current income tax liabilities..... (9,172) 59,572 50,400
Deferred income tax liabilities.... (13,106) 114,911 40,775 142,580
Public liability, property damage
and other insurance liabilities,
net.............................. 223,674 55,650 279,324
Debt............................... 1,573,000 63,164 7,380,942 9,017,106
------------- ------------- -------------- --------------
Total liabilities.................. 1,792,507 597,931 8,221,046 10,611,484
Commitments and contingencies
Preferred stock.................... 362,000 362,000
Common stockholders' equity........ 615,143 1,372,419 1,204,766 $ (2,577,185) 615,143
------------- ------------- -------------- -------------- --------------
Total liabilities, preferred stock
and common stockholders'
equity........................... $ 2,407,650 $ 2,332,350 $ 9,425,812 $ (2,577,185) $ 11,588,627
------------- ------------- -------------- -------------- --------------
------------- ------------- -------------- -------------- --------------
</TABLE>
F-58
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 10--GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
----------------------------------------------------------------------
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------------ ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................. $ 29,758 $ 34,253 $ 8,473 $ (42,726) $ 29,758
Adjustments to reconcile net income to
net cash provided by operating
activities:........................... (156,701) 276,735 8,867 128,901
------------ ------------- ------------ ------------ -------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES.............. (126,943) 310,988 17,340 (42,726) 158,659
------------ ------------- ------------ ------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for vehicle additions.......... 70,072 (1,989,727) (1,919,655)
Vehicle deletions....................... (84,739) 1,467,327 1,382,588
Payments for additions to property and
equipment............................. (19,874) (1,214) (21,088)
Retirements of property and equipment... 2,365 189 2,554
Investment in subsidiaries.............. (31,126) (8,475) 39,601
Payment for purchase of licensees....... (222,506) (9,969) (232,475)
------------ ------------- ------------ ------------ -------------
NET CASH USED IN INVESTING
ACTIVITIES........................ (31,126) (263,157) (533,394) 39,601 (788,076)
------------ ------------- ------------ ------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayment of) increase in debt..... (54,507) 510,573 456,066
Payments for debt issuance costs........ (3,832) (3,832)
Proceeds from public offering........... 161,194 161,194
------------ ------------- ------------ ------------ -------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES.............. 161,194 (58,339) 510,573 613,428
------------ ------------- ------------ ------------ -------------
Effect of exchange rate changes on
cash.................................. (3,125) (428) 3,125 (428)
------------ ------------- ------------ ------------ -------------
Net decrease in cash and cash
equivalents........................... (10,508) (5,909) (16,417)
Cash and cash equivalents at beginning
of period............................. 11 27,199 17,689 44,899
------------ ------------- ------------ ------------ -------------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD................................ $ 11 $ 16,691 $ 11,780 $ $ 28,482
------------ ------------- ------------ ------------ -------------
------------ ------------- ------------ ------------ -------------
Supplemental disclosure of cash flow
information:
Cash paid during the period for
Interest.............................. $ 98,390
-------------
-------------
Income taxes.......................... $ 7,938
-------------
-------------
Businesses acquired:
Fair value of assets acquired......... $ 232,765
Liabilities assumed................... 290
-------------
Net assets acquired................... 232,475
-------------
Net cash paid for acquisitions........ $ 232,475
-------------
-------------
</TABLE>
F-59
<PAGE>
AVIS RENT A CAR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 10--GUARANTOR AND NON-GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
--------------------------------------------------------------------
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
----------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................... $ 42,468 $ 46,965 $ 9,374 $ (56,339) $ 42,468
Adjustments to reconcile net income to net cash
provided by operating activities:............. (166,712) 311,296 112,117 256,701
----------- ------------ ------------ ------------ -------------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES................................ (124,244) 358,261 121,491 (56,339) 299,169
----------- ------------ ------------ ------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for vehicle additions.................. 89,213 (2,583,460) (2,494,247)
Vehicle deletions............................... (259,369) 1,778,843 1,519,474
Payments for additions to property and
equipment..................................... (16,761) (1,192) (17,953)
Retirements of property and equipment........... 1,056 17 1,073
Investment in subsidiaries...................... (49,645) (9,374) 59,019
Payment for purchase of licensees, net of cash
acquired of $11,065........................... (42,503) (42,503)
Payment for purchase of PHH Holdings, net of
cash acquired of $170,568..................... (1,330,932) (1,330,932)
----------- ------------ ------------ ------------ -------------
NET CASH USED IN INVESTING ACTIVITIES....... (1,380,577) (237,738) (805,792) 59,019 (2,365,088)
----------- ------------ ------------ ------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in (repayment of) debt............. 1,573,000 (67,953) 866,950 2,371,997
Payments for debt issuance costs................ (1,600) (35) (1,635)
Purchase of treasury stock...................... (57,237) (57,237)
Other........................................... 3,326 3,326
Cash dividends.................................. 4,866 (4,866)
----------- ------------ ------------ ------------ -------------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES................................ 1,517,489 (63,122) 862,084 2,316,451
----------- ------------ ------------ ------------ -------------
Effect of exchange rate changes on cash......... 2,680 87 (2,680) 87
----------- ------------ ------------ ------------ -------------
Net increase in cash and cash equivalents....... 15,348 57,401 177,870 250,619
Cash and cash equivalents at beginning of
period........................................ 11 9,776 19,964 29,751
----------- ------------ ------------ ------------ -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD...... $ 15,359 $ 67,177 $ 197,834 $ $ 280,370
----------- ------------ ------------ ------------ -------------
----------- ------------ ------------ ------------ -------------
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest...................................... $ 107,466
-------------
-------------
Income taxes.................................. $ 5,329
-------------
-------------
Business acquired:
Fair value of assets acquired................. 6,218,950
Liabilities................................... 4,483,515
-------------
Net assets acquired........................... 1,735,435
Less issuance of Series A and Series C
preferred stock............................. (362,000)
-------------
Net cash paid for acquisitions................ $ 1,373,435
-------------
-------------
</TABLE>
F-60
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
PHH Corporation
We have audited the accompanying combined balance sheets of PHH Vehicle
Management Services (the "Group") as of December 31, 1998 and 1997, and the
related combined statements of income, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1998. All entities in
the Group are directly or indirectly wholly-owned subsidiaries of Cendant
Corporation. These combined financial statements are the responsibility of the
Group's management. Our responsibility is to express an opinion on these
combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall combined
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such combined financial statements present fairly, in all
material respects, the financial position of PHH Vehicle Management Services as
of December 31, 1998 and 1997, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.
[LOGO]
Parsippany, New Jersey
June 18, 1999, except Note 18,
which is dated June 30, 1999
F-61
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
COMBINED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
<S> <C> <C>
1998 1997
------------- -------------
ASSETS
Cash and cash equivalents......................................................... $ 21,059 $ 11,938
Accounts and loans receivable--net of allowance of $11,272 and $8,702............. 508,901 383,830
Property and equipment--net....................................................... 93,529 39,066
Goodwill--net of accumulated amortization of $22,849 and $17,108.................. 219,192 31,439
Other intangibles--net............................................................ 17,246 1,179
Deferred income taxes............................................................. 39,945 39,696
Other assets...................................................................... 40,099 33,546
------------- -------------
Total assets exclusive of assets under management programs.................... 939,971 540,694
------------- -------------
ASSETS UNDER MANAGEMENT PROGRAMS:
Net investment in leases and leased vehicles
Operating leases................................................................ 2,956,676 3,030,187
Direct financing leases......................................................... 830,753 563,290
Accrued interest................................................................ 899 941
------------- -------------
3,788,328 3,594,418
------------- -------------
TOTAL ASSETS........................................................................ $ 4,728,299 $ 4,135,112
------------- -------------
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable.................................................................. $ 181,718 $ 219,229
Accrued liabilities............................................................... 113,499 56,598
Income taxes payable.............................................................. 108,089 44,828
Deferred revenue.................................................................. 41,146 46,447
Due to affiliates................................................................. 182,061 242,850
Certificate of deposit............................................................ 25,000 --
Borrowed funds.................................................................... 22,207 39,677
------------- -------------
Total liabilities exclusive of liabilities under management programs.......... 673,720 649,629
------------- -------------
LIABILITIES UNDER MANAGEMENT PROGRAMS:
Debt:
Affiliates...................................................................... 1,859,683 2,531,863
Third party..................................................................... 1,250,628 269,213
Deferred income taxes............................................................. 213,444 244,241
------------- -------------
3,323,755 3,045,317
------------- -------------
TOTAL LIABILITIES................................................................... 3,997,475 3,694,946
------------- -------------
COMMITMENTS AND CONTINGENCIES (Note 15).............................................
SHAREHOLDERS' EQUITY................................................................ 730,824 440,166
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.......................................... $ 4,728,299 $ 4,135,112
------------- -------------
------------- -------------
</TABLE>
See notes to combined financial statements.
F-62
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
COMBINED INCOME STATEMENTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
<S> <C> <C> <C>
1998 1997 1996
------------- ------------- -------------
REVENUE
Fleet leasing revenue............................................. $ 1,286,896 $ 1,187,193 $ 1,128,495
Fleet management services......................................... 182,356 184,047 167,512
Other revenue..................................................... 135,811 81,455 61,032
------------- ------------- -------------
Total revenues.................................................. 1,605,063 1,452,695 1,357,039
------------- ------------- -------------
EXPENSES
Depreciation on leased vehicles................................... 1,015,511 953,551 912,830
Interest expense.................................................. 183,560 177,149 167,687
Selling, general and administrative expenses...................... 232,724 211,123 193,822
Depreciation and amortization on assets other than leased
vehicles........................................................ 25,680 14,943 16,585
Merger-related costs and other unusual (credits) charges.......... (1,280) 61,090 --
------------- ------------- -------------
Total expenses.................................................. 1,456,195 1,417,856 1,290,924
------------- ------------- -------------
INCOME BEFORE PROVISION FOR INCOME TAXES............................ 148,868 34,839 66,115
PROVISION FOR INCOME TAXES.......................................... 55,800 23,649 25,323
------------- ------------- -------------
NET INCOME.......................................................... $ 93,068 $ 11,190 $ 40,792
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See notes to combined financial statements.
F-63
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
1998 1997 1996
----------- ----------- -----------
OPERATING ACTIVITIES:
Net income.............................................................. $ 93,068 $ 11,190 $ 40,792
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation on leased vehicles....................................... 1,015,511 953,551 912,830
Depreciation and amortization on assets other than leased vehicles.... 25,680 14,943 16,585
Merger-related costs and other unusual (credits) charges.............. (1,280) 61,090 --
Other non-cash charges................................................ 5,140 2,961 2,047
Changes in other assets and liabilities:
Accounts and loans receivable....................................... (134,007) (25,022) (2,990)
Income taxes payable................................................ 101,511 35,732 (20,419)
Accounts payable and other accrued liabilities...................... 50,620 (28,957) 67,995
Due to affiliates................................................... (24,642) (89,600) (96,299)
Deferred income taxes............................................... (64,743) 44,784 55,432
Other assets, net................................................... (2,017) 602 (8,556)
----------- ----------- -----------
Net cash provided by operating activities......................... 1,064,841 981,274 967,417
----------- ----------- -----------
INVESTING ACTIVITIES:
Assets under management programs
Investment in leases and leased vehicles.............................. (2,516,895) (2,185,270) (1,918,531)
Repayments of investment in leases and leased vehicles................ 1,088,036 756,939 726,246
Proceeds from sales and transfers of leases and leased vehicles....... 224,597 229,303 117,753
Net purchases of property and equipment................................. (59,823) (13,171) (13,750)
Cash acquired in acquisition of business, net of contribution from
affiliates............................................................ 2,341 -- --
----------- ----------- -----------
Net cash used in investing activities............................. (1,261,744) (1,212,199) (1,088,282)
----------- ----------- -----------
FINANCING ACTIVITIES:
Proceeds from certificate of deposit.................................... 25,000 -- --
Net change in line of credit............................................ (18,360) 5,552 6,170
Payment of dividends to PHH Corporation................................. -- -- (19,302)
Capital contribution.................................................... -- -- 4,985
Liabilities under management programs
Proceeds from third party debt issuance............................... 4,431,004 1,596,668 1,669,418
Principal payments on third party debt issuance....................... (3,005,694) (1,611,431) (1,558,814)
Proceeds from debt from affiliates.................................... 1,401,573 2,078,077 1,026,697
Principal payments on debt from affiliates............................ (2,607,726) (1,843,035) (1,002,354)
----------- ----------- -----------
Net cash provided by financing activities......................... 225,797 225,831 126,800
----------- ----------- -----------
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS..................... (19,773) (2,806) 3,496
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...................... 9,121 (7,900) 9,431
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR.............................. 11,938 19,838 10,407
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR.................................... $ 21,059 $ 11,938 $ 19,838
----------- ----------- -----------
Interest paid............................................................. $ 184,285 $ 160,421 $ 148,320
----------- ----------- -----------
----------- ----------- -----------
Income taxes paid......................................................... $ 23,804 $ 22,422 $ 22,444
----------- ----------- -----------
----------- ----------- -----------
Non-cash investing and financing information:
Business acquired:
Fair value of assets acquired, excluding cash........................... $ 294,287
Liabilities assumed..................................................... (86,006)
Capital contribution from affiliate for acquisition..................... (190,597)
Additional purchase consideration payable............................... (20,025)
-----------
Net cash acquired....................................................... $ (2,341)
-----------
-----------
</TABLE>
See notes to combined financial statements.
F-64
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
COMBINED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<S> <C>
Balance, January 1, 1996......................................................... $ 352,353
Comprehensive income, net of tax:
Net income..................................................................... 40,792
Currency translation........................................................... 12,173
---------
Total comprehensive income....................................................... 52,965
---------
Capital contribution............................................................. 4,985
Dividends paid to PHH Corporation................................................ (19,302)
---------
Balance, December 31, 1996....................................................... 391,001
---------
Comprehensive loss, net of tax income:
Net income..................................................................... 11,190
Currency translation........................................................... (8,852)
---------
Total comprehensive income....................................................... 2,338
---------
Capital contribution............................................................. 46,827
---------
Balance, December 31, 1997....................................................... 440,166
---------
Comprehensive income (loss), net of tax:
Net income..................................................................... 93,068
Currency translation........................................................... 3,018
Pension plan additional minimum liability, net................................. (1,306)
---------
Total comprehensive income....................................................... 94,780
---------
Capital contribution............................................................. 190,597
Benefit of tax losses received from outside the Group............................ 5,281
---------
Balance, December 31, 1998....................................................... $ 730,824
---------
---------
</TABLE>
See notes to combined financial statements.
F-65
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
PHH Vehicle Management Services (the "Group") is a combined reporting entity
engaged in the business of providing fleet and fuel management services
primarily consisting of the management, purchase, leasing and resale of vehicles
for corporate and government agencies. All entities within the Group are
directly or indirectly wholly-owned subsidiaries of PHH Corporation ("PHH") and
PHH is a wholly-owned subsidiary of Cendant Corporation ("Cendant" or the
"Parent Company"). Services provided by the Group include fuel, maintenance,
safety, and accident management programs and other fee-based services for
vehicle fleets. The Group leases vehicles under operating and direct financing
lease arrangements. The Group operates in the United States, Canada, United
Kingdom, Ireland and Germany. The combined and consolidated financial statements
represent the aggregation of the accounts and transactions of the following
legal entities and their subsidiaries:
PHH Vehicle Management Services Corporation and its wholly-owned
subsidiaries ("PHH VMS Corporation"), excluding Trac Funding III, Inc.
PHH Vehicle Management Services Inc. and its subsidiaries ("PHH VMS Canada")
PHH Personalease Corporation
Dealers Holding, Inc. and its wholly-owned subsidiaries
PHH Commercial Leasing, Inc.
PHH Corner Leasing, Inc.
PHH Page Leasing, Inc.
PHH St. Paul Leasing, Inc.
PHH Continental Leasing, Inc.
PHH Caribbean Leasing, Inc.
PHH Market Leasing, Inc.
PHH Milford Leasing, Inc.
PHH National Leasing, Inc.
PHH Power Leasing, Inc.
PHH Vehicle Management Services Plc
PHH Investment Services Ltd.
PHH Financial Services Ltd.
PHH Leasing (No. 9) Ltd.
PHH Card Services Ltd.
Allstar Petrol Card Limited
PHH Truck Management Services Ltd.
Pointeuro Limited and its wholly-owned subsidiaries
Wright Express Corporation and its wholly-owned subsidiaries ("Wright
Express")
PHH Deutschland Inc.
PHH Charitable Trust
Wright Express Financial Services Corporation (the "Bank"), a subsidiary of
Wright Express, is licensed as an industrial loan corporation pursuant to the
laws of the State of Utah and its deposits
F-66
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (CONTINUED)
are insured by the Federal Deposit Insurance Corporation ("FDIC"). The Bank is
subject to competition from other financial institutions and to the regulations
of certain federal and state agencies and undergoes examination by those
agencies.
The combined financial statements include the accounts and transactions of
all of the above-mentioned legal entities. All significant balances and
transactions between the combined entities have been eliminated. Remaining
balances with affiliates relate to PHH and Cendant or their subsidiaries.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts and related disclosures. Actual results
could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Group considers highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
ACCOUNTS AND LOANS RECEIVABLE
Accounts and loans receivable at December 31, 1998 includes $122 million of
credit card receivables of the Bank.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost less accumulated depreciation and
amortization. Depreciation is computed by the straight-line method over the
estimated useful lives of the related assets. Amortization of leasehold
improvements is computed by the straight-line method over the estimated useful
lives of the related assets or the lease term, if shorter.
GOODWILL
Goodwill, which represents the excess of cost over fair value of net assets
acquired, is amortized on a straight-line basis over the estimated useful lives,
which range from 25 to 40 years.
INTANGIBLE ASSETS
Intangible assets represent the value placed on customer lists. Intangible
assets are amortized on a straight-line basis over their estimated useful lives
of 7 to 14 years.
ASSET IMPAIRMENT
The Company periodically evaluates the recoverability of its investments,
intangible assets and long-lived assets, comparing the respective carrying
values to the current and expected future cash
F-67
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
flows, on an undiscounted basis, to be generated from such assets. Property and
equipment is evaluated separately within each business. The recoverability of
goodwill is evaluated on a separate basis for each acquisition.
RECOGNITION OF REVENUES AND EXPENSES
FLEET LEASING SERVICES--The Group primarily leases vehicles under three
standard arrangements: open-end operating leases, closed-end operating leases or
open-end finance leases (direct financing leases). These leases are accounted
for in accordance with Statement of Financial Accounting Standards ("SFAS") No.
13, "Accounting for Leases." Each lease is either classified as an operating
lease or direct financing lease, as defined.
The Group records the cost of the leased vehicle as an "investment in leases
and leased vehicles." Vehicles are depreciated using the straight-line method
over the expected lease term. The lease terms range from 12 months to 144
months. Amounts charged to the lessees for interest on the unrecovered
investment are credited to income on a level yield method, which approximates
the contractual terms. Amounts received from the motor companies are partially
recognized at the time of acquisition of the leased vehicle, a portion is
deferred and recognized straight line over the lease term of the vehicle, and a
portion is deferred and recognized at the time the vehicle is disposed of.
FLEET MANAGEMENT SERVICES--Revenues from fleet management services other
than leasing are recognized over the period in which services are provided and
the related expenses are incurred.
SERVICE, MAINTENANCE AND REPAIRS PROVISION--Service, maintenance and repairs
("SMR") are provided for vehicles under certain leases. These leases include a
revenue component for SMR costs. The Group accrues estimated losses on those
leases where estimated SMR costs exceed revenues.
INCOME TAXES
The U.S. entities are included in the consolidated income tax return of
Cendant. In the United Kingdom, the Group files combined income tax returns with
other members of Cendant. The Group's share of the consolidated federal income
tax liability is allocated to each company on a separate return basis. Separate
income tax returns are filed in states or countries where consolidated returns
are not permitted. In 1998 the income taxes payable for the Group has been
reduced by approximately $5,281 for tax benefits received from other members of
Cendant. The benefit has been accounted for as a capital contribution. For the
other European companies, separate income tax returns are filed in countries
where consolidated returns are not permitted. The provision for income taxes
includes deferred income taxes resulting from items reported in different
periods for income tax and financial statement purposes. Deferred tax assets and
liabilities represent the expected future tax consequences of the differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. The effects of changes in tax rates
on deferred tax assets and liabilities are recognized in the period that
includes the enactment date.
F-68
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTERCOMPANY TRANSACTIONS
The Group borrows principally from PHH Corporation and PHH Dublin Unlimited
to fund its leasing operations, except for PHH VMS Canada which raises its own
funds through its commercial paper program. The costs of these funds are passed
on to the leasing customers. In addition, PHH Corporation has guaranteed certain
transactions entered into by the Group. Cendant provides certain administrative
services to the Group. The Group records the cost of these services as expenses
when incurred. These services are discussed in Note 12.
TRANSLATION OF FOREIGN CURRENCIES
The combined financial statements are expressed in U.S. dollars solely for
the purpose of presenting the Group's financial position and results of
operations. Assets and liabilities of foreign entities are translated at the
exchange rates as of the balance sheet dates, equity accounts are translated at
historical exchange rates and revenues, expenses and cash flows are translated
at the average exchange rates for the periods presented. Translation gains and
losses are included as a component of other comprehensive income in the
statement of shareholders' equity.
NEW ACCOUNTING PRONOUNCEMENTS
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES-The Financial
Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," in June 1998. This Standard establishes
accounting and reporting standards for derivative instruments including certain
derivative instruments embedded in other contracts, and for hedging activities.
It requires a company to recognize all derivatives as either assets or
liabilities in the balance sheet and to measure those instruments at fair value.
This standard is expected to be effective for fiscal years beginning after June
15, 2000. The Group has not completed its assessment of the effect on the
combined financial statements that will result from the adoption of SFAS No.
133.
3. MERGER RELATED COSTS AND OTHER UNUSUAL CHARGES
In connection with the merger of PHH with HFS Incorporated in the second
quarter of 1997 and the merger of HFS Incorporated with CUC International, Inc.
in the fourth quarter of 1997 (the "Mergers"), the Group recorded $62,662 of
merger-related costs and other unusual charges. The Mergers afforded the Parent
Company, at such time, an opportunity to rationalize its businesses, gain
organizational efficiencies and maximize profits. Parent Company management
initiated a plan to continue the downsizing of fleet operations by providing for
143 job reductions and eliminating unprofitable products. In conjunction with
these charges during 1997, the Parent Company made a non-cash capital
contribution of $46,827.
Personnel related charges of $7,662 included termination benefits such as
severance, medical and other benefits as well as retirement benefits pursuant to
pre-existing contracts resulting from a change in control. Business termination
charges of $55,000 represented costs to exit certain activities including: (i)
$30,000 payment to terminate a relationship with a third-party associated with
certain credit card operations and (ii) $25,000 goodwill impairment loss
recorded as a result of
F-69
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
3. MERGER RELATED COSTS AND OTHER UNUSUAL CHARGES (CONTINUED)
abandoning certain unprofitable closed-end leasing activities. The Group
determined that servicing certain small closed-end lease customers was not
profitable. The decision to discontinue service of such customers resulted in
reduced revenues and cash flows associated with operations previously acquired.
Undiscounted future expected cash flows were not sufficient to support the
carrying value of the related goodwill and accordingly, an impairment loss was
recorded based on the discounted cash flows. The plan was substantially
completed by December 31, 1997 and the Group recorded a credit to merger related
costs and other unusual charges in 1997 due to a change in estimate. The
remaining liability at December 31, 1997 represented severance payments, which
were paid in 1998 with any excess liability reversed as a credit to merger
related costs and other unusual charges as the plan was completed in 1998. The
following table summarizes the activity by category of expenditure:
<TABLE>
<CAPTION>
PERSONNEL BUSINESS
TOTAL RELATED TERMINATIONS
---------- ----------- -------------
<S> <C> <C> <C>
1997 ACTIVITY:
Original Charge........................................................... $ 62,662 $ 7,662 $ 55,000
Cash Payments............................................................. (34,028) (4,028) (30,000)
Non-cash reductions....................................................... (25,000) -- (25,000)
Adjustments............................................................... (1,572) (1,572) --
---------- ----------- -------------
Balance December 31, 1997................................................. $ 2,062 $ 2,062 $ --
---------- ----------- -------------
---------- ----------- -------------
1998 ACTIVITY:
Cash Payments............................................................. $ (782) $ (782)
Adjustments............................................................... (1,280) (1,280)
---------- -----------
Balance December 31, 1998................................................. $ -- $ --
---------- -----------
---------- -----------
</TABLE>
4. ACQUISITIONS AND DIVESTITURES
a) On January 20, 1998, Cendant acquired The Harpur Group Ltd ("Harpur") for
an initial purchase price of approximately $194 million, including acquisition
costs. Additional purchase consideration of approximately $20 million was
accrued as of December 31, 1998, upon the attainment of certain revenue
thresholds as specified in the purchase agreement. The excess of the aggregate
purchase price over the fair value of net assets acquired of approximately $189
million has been allocated to goodwill. Harpur was subsequently contributed by
Cendant to PHH and is included within the Pointeuro Limited legal entity. The
operating results of Harpur are included in the combined income statement of the
Group since the Cendant acquisition date. Harpur provides fuel card and fleet
management services to corporate clients in the United Kingdom.
Pro forma Information (unaudited)
The underlying unaudited pro forma information includes the amortization
expense associated with the assets acquired, the Group's financing arrangements
and related income tax effects. The pro forma results are not necessarily
indicative of the operating results that would have occurred
F-70
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
4. ACQUISITIONS AND DIVESTITURES (CONTINUED)
had the Harpur acquisition been consummated on January 1, 1997, nor are they
intended to be indicative of results that may occur in the future. The
underlying pro forma information includes the amortization expense associated
with assets acquired, the Group's financing arrangements and related income tax
effects. Pro forma results of operations for the year ended December 31, 1998,
assuming the acquisition of Harpur had occurred on January 1, 1998, have not
been presented as the effect is not material. The following table reflects the
operating results of the Group for the year ended December 31, 1997 on a pro
forma basis, which gives effect to the acquisition of Harpur as if such
acquisition occurred on January 1, 1997.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-------------------
<S> <C>
Net revenues............................................................. $ 1,475,034
-------------------
-------------------
Pre-tax.................................................................. $ 27,379
-------------------
-------------------
Net income............................................................... $ 7,179
-------------------
-------------------
</TABLE>
b) In January 1997, PHH VMS Corporation sold 50 percent of its interest in a
subsidiary, which contained certain credit card operations to a third party,
resulting in a gain of $17.5 million included in other revenue in the combined
statement of income.
5. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
USEFUL LIVES -----------------------
IN YEARS 1998 1997
------------ ---------- -----------
<S> <C> <C> <C>
Building.................................................................. 50 $ 22,106 $ 8,977
Leasehold improvements.................................................... 2-10 9,646 7,880
Software.................................................................. 3-5 7,033 4,187
Furniture, fixtures and equipment......................................... 3-8 146,047 88,034
Construction in progress.................................................. 7,879 1,521
---------- -----------
192,711 110,599
Accumulated depreciation and amortization................................. (99,182) (71,533)
---------- -----------
Property and equipment, net............................................... $ 93,529 $ 39,066
---------- -----------
---------- -----------
</TABLE>
6. NET INVESTMENT IN LEASES AND LEASED VEHICLES
The Group offers primarily three leasing arrangements to its customers.
These arrangements are:
OPEN-END OPERATING LEASES--Under these leases, the minimum lease term is 12
months with a month to month renewal thereafter. In addition, resale of the
vehicles upon termination of the lease is generally for the account of the
lessee except for a minimum residual value, which the Group has guaranteed. The
Group guarantees 16% of the original cost of the unit for the first 24 months of
the
F-71
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
6. NET INVESTMENT IN LEASES AND LEASED VEHICLES (CONTINUED)
lease, and then 16% of the fair market value of the unit at inception of the
month to month renewals thereafter. The original cost and accumulated
depreciation of vehicles under these leases was $5.1 billion and $2.5 billion,
respectively at December 31, 1998 and $4.9 billion and $2.4 billion,
respectively at December 31, 1997.
CLOSED-END OPERATING LEASES--Under these leases, the minimum lease term is
for 12 months or longer. However, 24 and 36 month lease terms are the most
prevalent. These leases are cancelable under certain conditions. Resale of the
vehicles upon termination is for the account of the lessor. The original cost
and accumulated depreciation of vehicles under these leases was $430 million and
$108 million, respectively at December 31, 1998. The original cost and
accumulated depreciation of vehicles under these leases were $328 million and
$75 million, respectively at December 31, 1997.
DIRECT FINANCING LEASES--Under these leases, the minimum lease term is 12
months with a month to month renewal thereafter. In addition, resale of the
vehicles upon termination of the lease is for either the account of the lessor
(Europe) or the lessee (both North America and Europe). The net investment in
leases and leased vehicles consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
<S> <C> <C>
1998 1997
------------- -------------
Vehicles under open-end operating leases........................ $ 2,634,000 $ 2,552,000
Vehicles under closed-end operating leases...................... 322,676 478,187
Direct financing leases......................................... 830,753 563,290
Accrued interest on leases...................................... 899 941
------------- -------------
Net investment in leases and leased vehicles.................... $ 3,788,328 $ 3,594,418
------------- -------------
------------- -------------
</TABLE>
At December 31, 1998, future minimum lease payments are as follows:
<TABLE>
<CAPTION>
DIRECT
OPERATING FINANCING
YEAR LEASES LEASES TOTAL
- ----------------------------------------------------- ----------- ----------- -------------
<S> <C> <C> <C>
1999................................................. $ 267,094 $ 280,317 $ 547,411
2000................................................. 37,289 218,825 256,114
2001................................................. 17,779 134,781 152,560
2002................................................. 3,013 42,223 45,236
2003................................................. 1,068 4,867 5,935
Thereafter........................................... 946 -- 946
----------- ----------- -------------
Total................................................ $ 327,189 $ 681,013 $ 1,008,202
----------- ----------- -------------
----------- ----------- -------------
</TABLE>
F-72
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
6. NET INVESTMENT IN LEASES AND LEASED VEHICLES (CONTINUED)
Fleet leasing revenue consisted of:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
1998 1997 1996
------------- ------------- -------------
Operating leases................................ $ 1,197,616 $ 1,121,722 $ 1,071,129
Direct financing leases......................... 89,280 65,471 57,366
------------- ------------- -------------
$ 1,286,896 $ 1,187,193 $ 1,128,495
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
Other managed vehicles with net carrying amounts of $222 million and $158
million at December 31, 1998 and 1997, respectively, are included in special
purpose entities which are not owned by the Group. These entities do not require
consolidation as they are not controlled by the Group and all risks and rewards
rest with the owners. Additionally, managed vehicles totaling approximately $82
and $70 million at December 31, 1998 and 1997, respectively, are owned by
special purpose entities, which are owned by the Group. However, such assets and
related liabilities have been netted in the combined balance sheets since there
is a two-party agreement with determinable accounts, a legal right of offset
exists and the Group exercises its right of offset in settlement with client
corporations.
F-73
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
7. DEBT UNDER MANAGEMENT PROGRAMS
The components of the Group's debt under management programs are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1997
---------- -----------
<S> <C> <C>
INSTALLMENT NOTES PAYABLE ON LEASED VEHICLES--Represents loans
under a loan agreement with PHH Corporation to fund specific
leases. Repayment of these notes is matched to payments on the
underlying leases including the disposal of the vehicles at
maturity. The interest rate can be either a fixed rate or
floating rate as it is matched to the underlying lease and is
based upon PHH Corporation's cost of funds. The average interest
rates were 5.92% and 5.93% for 1998 and 1997, respectively...... $1,012,712 $2,133,613
SECURED LOANS--Represents two five year secured transactions
completed in December 1998 through two wholly-owned
subsidiaries, PHH Trac Funding and PHH Trac Funding II, with
banks. Specified beneficial interests in leases totaling
$600,008 and $725,296, respectively, were contributed into the
subsidiaries by PHH VMS Corporation. The loans are secured by
the specified beneficial interests.............................. 1,104,300 --
COMMERCIAL PAPER--Borrowing outstanding which is used to fund the
leased inventory in Canada. At December 31, 1998, all
outstanding debt matured on February 1999. The average interest
rates were 5.41% and 3.37% for 1998 and 1997, respectively...... 89,042 117,178
SELF-FUND NOTES--Represents loans made by customers to purchase
leased vehicles. Repayment of these notes is matched to payments
on the underlying leases including the disposal of the vehicles
at maturity. Interest rate characteristics can be fixed or
floating, depending on the underlying leases. Notes in the
amount of $15,039 include full recourse provisions to the Group
during 1998. The average interest rates were 5.88% and 5.85% for
1998 and 1997, respectively..................................... 24,096 27,583
INTERCOMPANY POSITION--Short-term financing needs are met under
revolving loan agreements with PHH Corporation and PHH Dublin
Unlimited. Interest is based upon their average commercial paper
cost for the month the loan is outstanding. These loans fund
working capital needs and there is no stated maturity. Interest
is paid monthly with respect to PHH Corporation and twice yearly
for PHH Dublin Unlimited........................................ 846,971 421,474
OVERNIGHT LOAN--Short-term financing needs are met by overnight
loans from a bank. This loan funded working capital needs. The
rates of interest were 6% for 1998 and 1997..................... 33,190 101,228
---------- -----------
Total debt under management programs.............................. $3,110,311 $2,801,076
---------- -----------
---------- -----------
</TABLE>
F-74
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
7. DEBT UNDER MANAGEMENT PROGRAMS (CONTINUED)
PHH VMS Canada has an unsecured line of credit with a bank. The Group
carries the line as a backup for outstanding commercial paper. At December 31,
1998, the Group had no borrowings outstanding under this line of credit. The
total amount available under this line of credit is $3.3 million. The line of
credit does not have a stated maturity date.
Cendant Business Answers (Europe) Plc and its subsidiaries has an unsecured
line of credit providing for borrowing of up to $33.2 million with a bank
expiring in January 2000. At December 31, 1998 Cendant Business Answers (Europe)
Plc had no borrowings outstanding under this line.
Cendant Business Answers (Europe) Plc maintains Bills of Exchange available
to meet short-term financing needs. At December 31, 1998, Cendant Business
Answers (Europe) Plc had no borrowings outstanding under this arrangement.
Projections of estimated repayments of debt under management programs as of
December 31, 1998 are set forth as follows:
<TABLE>
<CAPTION>
YEAR
- -------------------------------------------------------------------------------
<S> <C>
1999........................................................................... $ 1,798,118
2000........................................................................... 774,753
2001........................................................................... 355,669
2002........................................................................... 115,720
2003........................................................................... 39,402
Thereafter..................................................................... 26,649
-------------
$ 3,110,311
-------------
-------------
</TABLE>
8. SALE-LEASEBACK TRANSACTIONS
The Group entered into several sale-leaseback transactions as described
below:
During 1998, the Group entered into an agreement with an independent third
party to sell and leaseback vehicles subject to operating leases. Accordingly,
vehicles with a net carrying amount of $100,600 were removed from the Group's
books. Since the net carrying value of these vehicles was equal to their sales
value, there was no gain or loss recognized on the sale. The lease agreement
entered into between the Group and the counterparty was for a minimum lease term
of 12 months with three one-year renewal options. This lease qualified as an
operating lease. For the year ended December 31, 1998, the total rental expense
incurred by the Group under this lease was $17,700.
The Group entered into two sale-leaseback transactions with an independent
third party ("Counterparty") in Canada. Under these arrangements, the Group
sells its net investment in operating leases and leased vehicles to the
Counterparty. Then, it repurchases the leased vehicles (the Counterparty retains
the lease rights). Subsequently, the Group leases the vehicles under a direct
financing lease to the Counterparty. The Counterparty prepays all lease payments
except for an agreed-upon residual amount. These residual amounts are typically
3% to 4.5% of the total lease payments. These residual amounts represent the
Group's total exposure from these transactions. The total amounts of net
investment in operating leases and leased vehicles sold under these
F-75
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
8. SALE-LEASEBACK TRANSACTIONS (CONTINUED)
agreements were $185,900 and $162,000 during 1998 and 1997, respectively. The
total outstanding prepaid rent under such agreements were $240,100 and $225,000
at December 31, 1998 and 1997, respectively. The residual amounts outstanding
were $9,400 and $8,000 at December 31, 1998 and 1997, respectively. The total
revenues recognized under these agreements were $90,600, $88,000 and $84,000 for
1998, 1997 and 1996, respectively.
During 1998, the Group purchased and leased back to a provincial government
unit a fleet of vehicles with a carrying value of $24,800. The lease under this
transaction qualified as an operating lease. Subsequent to this transaction, the
Group entered into a sale-leaseback transaction with a financial institution
similar to the arrangement with the Counterparty described above, except that
the financial institution prepaid all the rent. At December 31, 1998, the total
prepaid rent outstanding under this agreement was $19,000. For the year ended
December 31, 1998, the total rental revenue recognized from the provincial
government and rental expense incurred to the financial institution under these
agreements was $7,400.
9. DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments are used to manage exposure to market risks
associated with fluctuations in interest rates. Analyses are performed on an
on-going basis to determine that a high correlation exists between the
characteristics of derivative instruments and the assets or transactions being
hedged. As a matter of policy, derivatives activities are not engaged for
trading or speculative purposes. Exposure to credit-related losses exist in the
event of non-performance by counterparties to certain derivative financial
instruments. Such risk is managed by periodically evaluating the financial
position of counterparties and spreading the positions among multiple
counterparties. Non-performance is presently not expected by any of the
counterparties.
INTEREST RATE SWAPS--If the interest rate characteristics of the funding
mechanism that the Group uses does not match the interest rate characteristics
of the assets being funded, interest rate swap agreements are entered into to
offset the interest rate risk associated with such funding. The swap agreements
correlate the terms of the assets to the maturity and rollover of the debt by
effectively matching a fixed or floating interest rate with the stipulated
revenue stream generated from the portfolio of assets being funded. Amounts to
be paid or received under interest rate swap agreements are accrued as interest
rates change and are recognized over the life of the swap agreements as an
adjustment to interest expense. For the years ended December 31, 1998, 1997 and
1996, hedging activities increased interest expense $3,600, $7,800 and $7,060,
respectively, and had no effect on the weighted average borrowing rate. The fair
value of the swap agreements is not recognized in the combined financial
statements since they are accounted for as matched swaps.
F-76
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
9. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
The following table summarizes the maturity and weighted average rates of
interest rate swaps at December 31, 1998.
<TABLE>
<CAPTION>
MATURITIES
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
TOTAL 1999 2000 2001 2002
--------- --------- --------- --------- ---------
NORTH AMERICA
Pay fixed/receive floating:
Notional value........................................... $ 42,061 $ 35,690 $ 5,526 $ 845
Weighted average receive rate............................ 5.07% 5.07% 5.07%
Weighted average pay rate................................ 5.10% 4.89% 4.93%
Pay floating/receive floating:
Notional value........................................... $ 47,852 $ 29,055 $ 13,208 $ 4,486 $ 1,103
Weighted average receive rate............................ 5.45% 5.30% 5.24% 5.23%
Weighted average pay rate................................ 5.46% 5.45% 5.45% 5.45%
UNITED KINGDOM
Pay fixed/receive floating
Notional value........................................... $ 663,800 $ 256,392 $ 207,438 $ 145,206 $ 54,764
Weighted average receive rate............................ 6.26% 6.26% 6.26% 6.26%
Weighted average pay rate................................ 6.81% 6.71% 6.30% 6.30%
DEUTSCHLAND
Pay fixed/receive floating
Notional value........................................... $ 31,897 $ 21,165 $ 9,242 $ 1,490
Weighted average receive rate............................ 3.24% 3.24% 3.24%
Weighted average pay rate................................ 4.28% 4.29% 4.29%
</TABLE>
Additionally, depending on market fundamentals of the price of gasoline and
other conditions, Wright Express may purchase put options to reduce or eliminate
the risk of gasoline price declines. Put options purchased by Wright Express
effectively establish a minimum sales transaction fee for the volume of gasoline
purchased on Wright Express's programs. An increase in the value of the options
is highly correlated to a decrease in the average price of gasoline purchased by
Wright Express's cardholders. Put options permit Wright Express to participate
in price increases above the option price. The cost of an option is amortized in
the month the option expires. Gains from the sale or exercise of options are
recognized when the underlying option is sold.
At December 31, 1998, the total contract amount of such options was 32.4
million gallons of gasoline and the unamortized cost of options was $499 and is
included in other assets in the accompanying combined balance sheet. There were
no gasoline option contracts during 1997.
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Group in estimating
fair value disclosures for material financial instruments. The fair values of
the financial instruments presented may not be indicative of their future
values.
CASH AND CASH EQUIVALENTS -The carrying amounts for cash and cash
equivalents approximate fair value.
LOANS RECEIVABLE -The carrying amounts for loans receivable approximate fair
value.
F-77
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
10. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
DIRECT FINANCING LEASES--The contractual minimum lease terms on these
contracts is 12 months. The estimated fair value of these short-term instruments
approximates the carrying amounts.
BORROWED FUNDS--The carrying amount of borrowed funds approximates fair
value.
DEBT UNDER MANAGEMENT PROGRAMS--The fair value was determined based on
quoted market prices for similar issues or on current rates available to the
Group for debt on similar terms.
INTEREST RATE SWAPS--The fair value of interest rate swaps are estimated,
using dealer quotes, as the amount that the Group would receive or pay to
execute a new agreement with terms identical to those remaining on the current
agreement, considering interest rates at the reporting date.
The carrying amounts and fair values of the Group's financial instruments at
December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------- ---------------------------------
ESTIMATED ESTIMATED
NOTIONAL CARRYING FAIR NOTIONAL CARRYING FAIR
AMOUNT AMOUNT VALUE AMOUNT AMOUNT VALUE
--------- --------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalent.................. $ 21,059 $ 21,059 $ 11,938 $ 11,938
Loans receivable.......................... 121,705 121,705 -- --
Options................................... 499 1,233 -- --
Direct financing leases................... 830,753 830,753 563,290 563,290
Borrowed funds............................ 22,207 22,207 39,677 39,677
Liabilities under management programs:
Debt
Affiliates............................ 1,859,683 1,859,683 2,531,863 2,531,863
Third party........................... 1,250,628 1,250,628 269,213 269,213
Off balance sheet derivatives:
Interest rate swaps..................... $ 785,611 $ 634,332
In a gain position.................... 828 2,823
In a loss position.................... (13,470) (1,370)
</TABLE>
F-78
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
11. INCOME TAXES
The income tax provision consisted of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
1998 1997 1996
---------- ---------- ----------
Current:
U.S. federal.......................................... $ 91,096 $ 24,518 $ (23,483)
State and local....................................... 13,621 2,734 (1,918)
Foreign............................................... 14,523 17,429 648
---------- ---------- ----------
119,240 44,681 (24,753)
---------- ---------- ----------
Deferred:
U.S. federal.......................................... (65,476) (13,308) 38,186
State and local....................................... (10,205) (791) 4,251
Foreign............................................... 12,241 (6,933) 7,639
---------- ---------- ----------
(63,440) (21,032) 50,076
---------- ---------- ----------
Provision for income taxes.............................. $ 55,800 $ 23,649 $ 25,323
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Net deferred income tax assets and liabilities are comprised of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Net deferred income taxes:
Provision for doubtful accounts.................... $ 3,721 $ 2,382
Net operating losses............................... 510 941
Accrued liabilities and deferred income............ 11,344 16,358
Alternative minimum tax credit carry forward....... 19,800 19,800
Other.............................................. 4,570 215
--------- ---------
Net deferred tax asset............................... $ 39,945 $ 39,696
--------- ---------
--------- ---------
Management program net deferred income taxes:........
Depreciation....................................... $(214,898) $(243,938)
Other.............................................. 1,454 (303)
--------- ---------
Net deferred tax liability........................... $(213,444) $(244,241)
--------- ---------
--------- ---------
</TABLE>
At December 31, 1998, Wright Express had net operating losses of
approximately $1,300 available for tax purposes which expire through 2001.
Deferred taxes have not been provided on approximately $169,000 of
cumulative undistributed earnings of foreign subsidiaries at December 31, 1998,
as those earnings are considered to be permanently reinvested. The determination
of unrecognized deferred US tax liability for unremitted
F-79
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
11. INCOME TAXES (CONTINUED)
earnings is not practicable. The Group's effective income tax rate differs from
the statutory federal rate as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ---------
Federal statutory rate........................................... 35.0% 35.0% 35.0%
State income taxes net of federal benefit........................ 1.5% 3.5% 2.3%
Foreign taxes differential....................................... (0.9%) 0.8% (0.5%)
Non-deductible goodwill.......................................... 1.2% 1.7% 1.2%
Merger-related costs............................................. -- 24.3% --
Other............................................................ 0.7% 2.6% 0.3%
--- --- ---
37.5% 67.9% 38.3%
--- --- ---
--- --- ---
</TABLE>
12. RELATED PARTY TRANSACTIONS
The Group receives the benefit of certain administrative services from
Cendant and subsidiaries. For these administrative services, the Group was
charged $6,970, $18,892 and $4,379 for the years ended December 31, 1998, 1997
and 1996, respectively. The Group also purchases data processing services from
Cendant, which amounted to $4,947, $5,094 and $5,509 for the years ended
December 31, 1998, 1997 and 1996, respectively. Such expenses are included in
selling, general and administrative expenses in the combined income statement.
These charges represent allocations from the parent companies who owned the
Group during each of the three years and are not indicative of amounts which
would have been incurred had the Group been under common ownership for all years
or if the Group had operated independently.
PHH Financial Services Limited makes loans from time to time to Cendant
Relocation Plc. The balance of such loans receivable were $55,500 and $18,200 at
December 31, 1998 and 1997, respectively. Associated interest charges were
$1,940, $1,276 and $1,476 for 1998, 1997 and 1996, respectively. Overhead
expenses of $1,720, $453 and $628 were also allocated to this subsidiary by
Cendant Business Answers (Europe) Plc during 1998, 1997 and 1996 respectively.
During 1998, PHH Deutschland, Inc. charged Cendant $703 in respect to office
expenses for shared facilities.
The Group established a $7,000 revolving loan agreement with Cendant
effective December 23, 1998. At December 31, 1998, the Group had $5,847
outstanding under this revolving loan with an interest rate of approximately 6%.
This liability is included in Due to Affiliates in the combined balance sheet.
During February 1999, such revolving loan availability was increased to $40,000.
During 1996, Deutschland, Inc. received a cash capital contribution from PHH
of approximately $4,985 to meet minimum capital requirements.
See Note 7 for a description of related party financing activities.
F-80
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
13. BENEFIT PLANS
The majority of domestic employees of the Group are participants in the
defined benefit and defined contribution plans of Cendant. Effective May 1,
1998, former defined contribution plans of PHH Corporation were merged into
Cendant's plans. Substantially all domestic employees are covered. Accumulated
plan benefit data is not available for the individual companies participating in
the defined benefit plan. Employees of Wright Express are also participants in
the defined contribution plan. Benefit plan expenses were $2,583, $2,300 and
$2,006 for the years ended December 31, 1998, 1997 and 1996, respectively.
Foreign employees can participate in a contributory defined benefit pension
plan, at the employee's option. Benefits are based on an employee's years of
credited service and a percentage of final average compensation.
Net costs for the foreign plan included the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Service cost..................................... $ 1,147 $ 1,343 $ 853
Interest cost.................................... 1,123 1,074 714
Actual return on assets.......................... (1,330) (1,091) (664)
Net amortization and deferral.................... 55 53 56
--------- --------- ---------
Net periodic pension cost........................ $ 995 $ 1,379 $ 959
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-81
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
13. BENEFIT PLANS (CONTINUED)
The changes in benefit obligations and plan assets, as well as the funded
status of the foreign pension plan are as follows:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at January 1,....................................... $ 16,097 $ 12,718
Service cost........................................................... 1,147 1,343
Interest cost.......................................................... 1,123 1,074
Benefit payments....................................................... (209) (198)
Net loss/gain.......................................................... 7,391 (29)
Contributions.......................................................... 737 371
Translation............................................................ -- 818
--------- ---------
Benefit obligation at December 31,..................................... $ 26,286 $ 16,097
--------- ---------
--------- ---------
CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1,................................ $ 15,491 $ 10,857
Actual return of plan assets........................................... 1,332 2,317
Benefit payments....................................................... (378) (361)
Contributions.......................................................... 2,515 1,891
Other.................................................................. 696 --
Translation............................................................ 88 787
--------- ---------
Fair value of plan assets at December 31,.............................. $ 19,744 $ 15,491
--------- ---------
--------- ---------
Funded status.......................................................... $ (6,542) $ (606)
Unrecognized net gain/loss from past experience different from that 6,514 (248)
assumed and effects of change in assumptions.........................
Unrecognized prior service cost........................................ 237 260
Unrecognized net obligation............................................ 91 132
--------- ---------
Prepaid/(accrued) benefit cost......................................... $ 300 $ (462)
--------- ---------
--------- ---------
</TABLE>
The plan resulted in a net prepaid pension asset of $300 at December 31,
1998 and a liability of $462 at 1997. This amount is classified as other assets
and accrued liabilities in the Group's combined balance sheet at December 31,
1998 and 1997, respectively.
The Group recorded an additional minimum liability of $2,222 at December 31,
1998. This liability represents the amount by which the accumulated benefit
obligation exceeds the sum of the fair market value of plan assets and accrued
amounts previously recorded. The additional liability may be offset by an asset
to the extent of previously unrecognized prior service cost. The asset amount of
$328 is included in other assets in the Group's combined balance sheet at
December 31, 1998. The remaining amount of $1,976 is recorded as a reduction to
other comprehensive income, net of related tax benefits of $670.
F-82
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
13. BENEFIT PLANS (CONTINUED)
The following weighted-average assumptions were used to determine the
obligations under the foreign plan:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Discount rate......................................... 5.25% 7.00% 8.50%
Expected rate of return on plan assets................ 6.25% 8.00% 9.50%
Rate of compensation increase......................... 3.25% 3.25% 5.50%
</TABLE>
14. PROFIT INCENTIVE PLANS
The Group has established Incentive Plans for both Sales/Client Relations
personnel and managerial positions. Sales/Client Relations personnel's
incentives are based upon revenues, profitability, individual objectives and the
department's and Cendant's earnings before interest, taxes, depreciation and
amortization adjusted to exclude nonrecurring or unusual items ("Adjusted
EBITDA"). The incentive plan for managers is based upon individual objectives
and the department's and Cendant's Adjusted EBITDA targets. The total expense
was $5,111, $7,394 and $5,631 for 1998, 1997 and 1996, respectively.
15. COMMITMENTS AND CONTINGENCIES
LINES OF CREDIT--Wright Express has entered into commitments to extend
credit in the normal course of business in order to meet the financing needs of
its customers. Wright Express's exposure to loss in the event of nonperformance
by the other party for commitments to extend credit is represented by the
contractual notional amount of those instruments. Wright Express uses the same
credit policies in making commitments as it does for on-balance sheet
instruments. Commitments to extend credit are agreements to lend to a customer
as long as there is no violation of any condition established in the contract.
Since many of the commitments significantly exceed the normal draw upon the
line, the total commitment amounts do not necessarily represent future cash
requirements. Wright Express evaluates each customer's creditworthiness on a
case-by-case basis. At December 31, 1998, Wright Express had $361,000 of
commitments to extend additional credit.
LEASES--Certain facilities and equipment are leased under short-term lease
agreements expiring at various dates through 2002 and beyond. All such leases
are accounted for as operating leases. Total rental expense for premises and
equipment amounted to $11,841, $6,135 and $5,308 for the years ended December
31, 1998, 1997 and 1996, respectively.
F-83
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
15. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Future minimum lease payments under non-cancelable operating leases which
have an initial term of more than twelve months are as follows:
<TABLE>
<CAPTION>
YEAR
- -----------------------------------------------------------------------------------
<S> <C>
1999............................................................................... $ 7,238
2000............................................................................... 6,854
2001............................................................................... 6,297
2002............................................................................... 5,606
2003............................................................................... 2,453
Thereafter......................................................................... 21,031
---------
Total minimum lease payments....................................................... $ 49,479
---------
---------
</TABLE>
GROUP GUARANTEES--A composite cross guarantee exists between companies
included within the Cendant Business Answers (Europe) Plc group and The Harpur
Group Limited group, with National Westminster Bank Plc. This guarantee includes
Cendant Relocation Plc.
A cross guarantee exists between Cendant Business Answers (Europe) Plc and
PHH Allstar Limited, with Bank of Ireland.
LITIGATION--In April 1998, Cendant publicly announced that it discovered
accounting irregularities in the former business units of CUC International Inc.
Such discovery prompted investigations into such matters by Cendant and the
Audit Committee of Cendant's Board of Directors. As a result of the findings
from the investigations, Cendant restated its previously reported financial
results for 1997, 1996 and 1995. Since such announcement, more than 70 lawsuits
claiming to be class actions, two lawsuits claiming to be brought derivatively
on Cendant's behalf and several individual lawsuits have been filed in various
courts against Cendant and other defendants. The Court has ordered consolidation
of many of the actions. The SEC and the United States Attorney for the district
of New Jersey are conducting investigations relating to the matters referenced
above. The SEC advised Cendant that its inquiry should not be construed as an
indication by the SEC or its staff that any violations of law have occurred. As
a result of the findings from the investigations, Cendant made all adjustments
considered necessary which are reflected in its financial statements. However,
Cendant can provide no assurances that additional adjustments will not be
necessary as a result of these government investigations.
Cendant does not believe that it is feasible to predict or determine the
final outcome of these proceedings or investigations or to estimate the amount
or potential range of loss with respect to these proceedings or investigations.
The possible outcome or resolutions of the proceedings could include judgments
against Cendant or settlements and could require substantial payments by
Cendant. In addition, the timing of the final resolution of the proceedings or
investigations is uncertain. The Group is currently not a party to such
litigation and management does not currently believe that there is any basis for
asserting a claim thereunder against the Group.
In the ordinary course of business, the Group has various outstanding
commitments and contingent liabilities that are not reflected in the
accompanying combined financial statements. In addition, the Group is a
defendant in several claims and legal actions arising in the ordinary course of
business. In the opinion of management, the ultimate disposition of these
matters is not expected to have a material adverse effect on the financial
condition of the Group.
F-84
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
16. SEGMENT INFORMATION
Effective December 31, 1998, the Group adopted SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information". The provisions of SFAS
No. 131 established revised standards for public companies relating to reporting
information about operating segments in annual financial statements and requires
selected information about operating segments in interim financial reports. It
also established standards for related disclosures about products and services,
and geographic areas. The Group operates in a single segment, fleet and fuel
card management.
GEOGRAPHIC SEGMENT INFORMATION
<TABLE>
<CAPTION>
UNITED UNITED ALL OTHER
TOTAL STATES KINGDOM COUNTRIES
------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
1998
Total revenues............................... $ 1,605,063 $ 1,286,368 $ 231,363 $ 87,332
Assets....................................... 4,728,299 3,199,614 1,326,890(1) 201,795
Long-lived assets............................ 93,529 27,095 61,734 4,700
1997
Total revenues............................... $ 1,452,695 $ 1,218,104 $ 153,556 $ 81,035
Assets....................................... 4,135,112 3,165,686 788,859 180,567
Long-lived assets............................ 39,066 16,009 22,065 992
1996
Total revenues............................... $ 1,357,039 $ 1,151,353 $ 125,312 $ 80,374
Assets....................................... 3,852,827 2,934,683 639,843 278,301
Long-lived assets............................ 39,364 14,435 23,346 1,583
</TABLE>
- ------------------------
(1) Includes $294.3 million of assets acquired in connection with the Harpur
acquisition.
Geographic segment information is classified based on the geographic
location of the subsidiary. Long-lived assets are comprised of property and
equipment.
17. SUBSEQUENT EVENT
On May 24, 1999, PHH executed an agreement with Avis Rent A Car, Inc.
("Avis"), pursuant to which Avis will acquire the net assets of the Group from
PHH for $1.44 billion in assumed intercompany debt of PHH Holdings, a
wholly-owned subsidiary of PHH, and the issuance of $360 million in convertible
preferred stock of Avis Fleet Leasing and Management Corporation, a wholly-owned
subsidiary of Avis. The transaction is subject to customary regulatory approvals
and closed on June 30, 1999.
18. COMBINING FINANCIAL INFORMATION
In conjunction with the June 30, 1999 closing of the transaction detailed in
Note 17, Avis has issued $500,000 in Senior Subordinated Notes due 2009 (the
"Note"). Certain companies included in the Group ("Guarantor Companies")
unconditionally guaranteed the Notes on a joint and several basis. The following
tables summarize the financial position, results of operations, and cash flows
for the Group, the Guarantor Companies and the companies in the Group that did
not guarantee the Notes (the "Non-Guarantor Companies").
F-85
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
18. COMBINING FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1998
--------------------------------------------------------
<S> <C> <C> <C>
GUARANTOR NON-GUARANTOR PHH VMS
COMPANIES COMPANIES COMBINED
------------- -------------------------- -------------
ASSETS
Cash and cash equivalents............................ $ 15,039 $ 6,020 $ 21,059
Accounts and loans receivable........................ 82,293 426,608 508,901
Property and equipment............................... 29,831 63,698 93,529
Goodwill............................................. 29,783 189,409 219,192
Other intangibles.................................... -- 17,246 17,246
Deferred income taxes................................ 39,421 524 39,945
Other assets......................................... 245,651 (205,552) 40,099
------------- ----------- -------------
Total assets exclusive of assets under management
programs......................................... 442,018 497,953 939,971
------------- ----------- -------------
ASSETS UNDER MANAGEMENT PROGRAMS:
Net investment in leases and leased vehicles
Operating leases................................... 1,227,132 1,729,544 2,956,676
Direct financing leases............................ 103,061 727,692 830,753
Accrued interest................................... 776 123 899
------------- ----------- -------------
1,330,969 2,457,359 3,788,328
------------- ----------- -------------
TOTAL ASSETS........................................... $ 1,772,987 $ 2,955,312 $ 4,728,299
------------- ----------- -------------
------------- ----------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable..................................... $ 88,560 $ 93,158 $ 181,718
Accrued liabilities.................................. 29,460 84,039 113,499
Income taxes payable................................. 91,208 16,881 108,089
Deferred revenue..................................... 26,115 15,031 41,146
Due to affiliates.................................... (48,580) 230,641 182,061
Certificate of deposit............................... (7,000) 32,000 25,000
Borrowed funds....................................... 22,207 -- 22,207
------------- ----------- -------------
Total liabilities exclusive of liabilities under
management programs.............................. 201,970 471,750 673,720
------------- ----------- -------------
LIABILITIES UNDER MANAGEMENT PROGRAMS:
Debt
Affiliates......................................... 1,059,999 799,684 1,859,683
Third party........................................ -- 1,250,628 1,250,628
Deferred income taxes................................ 198,816 14,628 213,444
------------- ----------- -------------
1,258,815 2,064,940 3,323,755
------------- ----------- -------------
TOTAL LIABILITIES...................................... 1,460,785 2,536,690 3,997,475
COMMITMENTS AND CONTINGENCIES..........................
SHAREHOLDERS' EQUITY................................... 312,202 418,622 730,824
------------- ----------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............. $ 1,772,987 $ 2,955,312 $ 4,728,299
------------- ----------- -------------
------------- ----------- -------------
</TABLE>
F-86
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
18. COMBINING FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
---------------------------------------------
<S> <C> <C> <C>
GUARANTOR NON-GUARANTOR PHH VMS
COMPANIES COMPANIES COMBINED
------------- --------------- -------------
ASSETS
Cash and cash equivalents........................................ $ 17,976 $ (6,038) $ 11,938
Accounts and loans receivable.................................... 171,636 212,194 383,830
Property and equipment........................................... 16,311 22,755 39,066
Goodwill......................................................... 31,307 132 31,439
Other intangibles................................................ -- 1,179 1,179
Deferred income taxes............................................ 39,696 -- 39,696
Other assets..................................................... 19,051 14,495 33,546
------------- --------------- -------------
Total assets exclusive of assets under management programs..... 295,977 244,717 540,694
------------- --------------- -------------
ASSETS UNDER MANAGEMENT PROGRAMS:
Net investment in leases and leased vehicles
Operating leases............................................... 2,395,995 634,192 3,030,187
Direct financing leases........................................ 147,156 416,134 563,290
Accrued interest............................................... 798 143 941
------------- --------------- -------------
2,543,949 1,050,469 3,594,418
------------- --------------- -------------
TOTAL ASSETS....................................................... $ 2,839,926 $ 1,295,186 $ 4,135,112
------------- --------------- -------------
------------- --------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable................................................. $ 113,597 $ 105,632 $ 219,229
Accrued liabilities.............................................. 30,296 26,302 56,598
Income taxes payable............................................. 9,497 35,331 44,828
Deferred revenue................................................. 25,230 21,217 46,447
Due to affiliates................................................ (34,296) 277,146 242,850
Borrowed funds................................................... 39,677 -- 39,677
------------- --------------- -------------
Total liabilities exclusive of liabilities under management
programs..................................................... 184,001 465,628 649,629
------------- --------------- -------------
LIABILITIES UNDER MANAGEMENT PROGRAMS:
Debt
Affiliates..................................................... 2,156,696 375,167 2,531,863
Third party.................................................... -- 269,213 269,213
Deferred income taxes............................................ 218,774 25,467 244,241
------------- --------------- -------------
2,375,470 669,847 3,045,317
------------- --------------- -------------
TOTAL LIABILITIES.................................................. 2,559,471 1,135,475 3,694,946
COMMITMENTS AND CONTINGENCIES......................................
SHAREHOLDERS' EQUITY............................................... 280,455 159,711 440,166
------------- --------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY......................... $ 2,839,926 $ 1,295,186 $ 4,135,112
------------- --------------- -------------
------------- --------------- -------------
</TABLE>
F-87
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
18. COMBINING FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
<S> <C> <C> <C>
GUARANTOR NON-GUARANTOR PHH VMS
COMPANIES COMPANIES COMBINED
------------- --------------- -------------
REVENUE
Fleet leasing revenue............................................ $ 943,501 $ 343,395 $ 1,286,896
Fleet management services........................................ 124,041 58,315 182,356
Other revenue.................................................... 38,628 97,183 135,811
------------- --------------- -------------
Total revenues................................................. 1,106,170 498,893 1,605,063
------------- --------------- -------------
EXPENSES
Depreciation on leased vehicles.................................. 804,598 210,913 1,015,511
Interest expense................................................. 89,942 93,618 183,560
Selling, general and administrative expenses..................... 126,729 105,995 232,724
Depreciation and amortization on assets other than leased
vehicles....................................................... 10,146 15,534 25,680
Merger-related costs and other unusual charges (credits)......... -- (1,280) (1,280)
------------- --------------- -------------
Total expenses................................................. 1,031,415 424,780 1,456,195
------------- --------------- -------------
INCOME BEFORE PROVISION FOR INCOME TAXES........................... 74,755 74,113 148,868
PROVISION FOR INCOME TAXES......................................... 27,528 28,272 55,800
------------- --------------- -------------
NET INCOME......................................................... $ 47,227 $ 45,841 $ 93,068
------------- --------------- -------------
------------- --------------- -------------
</TABLE>
F-88
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
18. COMBINING FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
<S> <C> <C> <C>
GUARANTOR NON-GUARANTOR PHH VMS
COMPANIES COMPANIES COMBINED
------------- --------------- -------------
REVENUE
Fleet leasing revenue............................................ $ 940,815 $ 246,378 $ 1,187,193
Fleet management services........................................ 114,348 69,699 184,047
Other revenue.................................................... 52,203 29,252 81,455
------------- --------------- -------------
Total revenues................................................. 1,107,366 345,329 1,452,695
------------- --------------- -------------
EXPENSES
Depreciation on leased vehicles.................................. 783,920 169,631 953,551
Interest expense................................................. 114,776 62,373 177,149
Selling, general and administrative expenses..................... 135,534 75,589 211,123
Depreciation and amortization on assets other than leased
vehicles....................................................... 10,575 4,368 14,943
Merger-related costs and other unusual charges (credits)......... 56,572 4,518 61,090
------------- --------------- -------------
Total expenses................................................. 1,101,377 316,479 1,417,856
------------- --------------- -------------
INCOME BEFORE PROVISION FOR INCOME TAXES........................... 5,989 28,850 34,839
PROVISION FOR INCOME TAXES......................................... 12,752 10,897 23,649
------------- --------------- -------------
NET (LOSS) INCOME.................................................. $ (6,763) $ 17,953 $ 11,190
------------- --------------- -------------
------------- --------------- -------------
</TABLE>
F-89
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
18. COMBINING FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
<S> <C> <C> <C>
GUARANTOR NON-GUARANTOR PHH VMS
COMPANIES COMPANIES COMBINED
------------- --------------- -------------
REVENUE
Fleet leasing revenue............................................ $ 930,672 $ 197,823 $ 1,128,495
Fleet management services........................................ 109,707 57,805 167,512
Other revenue.................................................... 37,698 23,334 61,032
------------- --------------- -------------
Total revenues................................................. 1,078,077 278,962 1,357,039
------------- --------------- -------------
EXPENSES
Depreciation on leased vehicles.................................. 779,993 132,837 912,830
Interest expense................................................. 130,632 37,055 167,687
Selling, general and administrative expenses..................... 125,899 67,923 193,822
Depreciation and amortization on assets other than leased
vehicles....................................................... 12,360 4,225 16,585
------------- --------------- -------------
Total expenses..................................................... 1,048,884 242,040 1,290,924
------------- --------------- -------------
INCOME BEFORE PROVISION FOR INCOME TAXES........................... 29,193 36,922 66,115
PROVISION FOR INCOME TAXES......................................... 11,623 13,700 25,323
------------- --------------- -------------
NET INCOME......................................................... $ 17,570 $ 23,222 $ 40,792
------------- --------------- -------------
------------- --------------- -------------
</TABLE>
F-90
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
18. COMBINING FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
<S> <C> <C> <C>
GUARANTOR NON-GUARANTOR PHH VMS
COMPANIES COMPANIES COMBINED
------------- --------------- -------------
OPERATING ACTIVITIES
Net income...................................................... $ 47,227 $ 45,841 $ 93,068
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation on leased vehicles............................. 804,598 210,913 1,015,511
Depreciation and amortization on assets other than leased
vehicles.................................................. 10,146 15,534 25,680
Merger-related costs and other unusual charges (credits).... -- (1,280) (1,280)
Other non-cash charges...................................... 1,502 3,638 5,140
Changes in other assets and liabilities:
Accounts and loans receivable............................. (3,572) (130,435) (134,007)
Income taxes payable...................................... 139,293 (37,782) 101,511
Accounts payable and other accrued liabilities............ 29,684 20,936 50,620
Due to affiliates......................................... (39,351) 14,709 (24,642)
Deferred income taxes..................................... (58,032) (6,711) (64,743)
Other assets, net......................................... (336,775) 334,758 (2,017)
------------- --------------- -------------
Net cash provided by operating activities..................... 594,720 470,121 1,064,841
------------- --------------- -------------
INVESTING ACTIVITIES
Assets under management programs
Investment in leases and leased vehicles...................... (1,298,916) (1,217,979) (2,516,895)
Repayments of investment in leases and leased vehicles........ 1,708,235 (620,199) 1,088,036
Proceeds from sales and transfers of leases and leased
vehicles.................................................... -- 224,597 224,597
Net purchases of property and equipment....................... (16,471) (43,352) (59,823)
Cash acquired in acquisition of business, net of contribution
from affiliates............................................. -- 2,341 2,341
------------- --------------- -------------
Net cash provided by (used in) investing activities........... 392,848 (1,654,592) (1,261,744)
------------- --------------- -------------
FINANCING ACTIVITIES:
Proceeds from certificate of deposit............................ (7,000) 32,000 25,000
Net change in line of credit.................................... 13,020 (31,380) (18,360)
Investment in subsidiary........................................ (10,500) 10,500 --
Liabilities under management programs
Proceeds from third party debt issuance....................... 1,108,300 3,322,704 4,431,004
Principal payments on third party debt issuance............... (1,108,120) (1,897,574) (3,005,694)
Proceeds from debt from affiliates............................ 1,013,606 387,967 1,401,573
Principal payments on debt from affiliates.................... (2,000,103) (607,623) (2,607,726)
------------- --------------- -------------
Net cash (used in) provided by financing activities........... (990,797) 1,216,594 225,797
------------- --------------- -------------
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS............. 292 (20,065) (19,773)
------------- --------------- -------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS.............. (2,937) 12,058 9,121
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR...................... 17,976 (6,038) 11,938
------------- --------------- -------------
CASH AND CASH EQUIVALENTS, END OF YEAR............................ $ 15,039 $ 6,020 $ 21,059
------------- --------------- -------------
------------- --------------- -------------
</TABLE>
F-91
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
18. COMBINING FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
<S> <C> <C> <C>
GUARANTOR NON-GUARANTOR PHH VMS
COMPANIES COMPANIES COMBINED
-------------- --------------- --------------
OPERATING ACTIVITIES:
Net (loss) income.............................................. $ (6,763) $ 17,953 $ 11,190
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation on leased vehicles............................ 783,920 169,631 953,551
Depreciation and amortization on assets other than leased
vehicles................................................. 10,575 4,368 14,943
Merger-related costs and other unusual charges............. 56,572 4,518 61,090
Other non-cash charges..................................... 26,150 (23,189) 2,961
Changes in other assets and liabilities:
Accounts and loans receivable............................ 38,396 (63,418) (25,022)
Income taxes payable..................................... 15,435 20,297 35,732
Accounts payable and other accrued liabilities........... (7,623) (21,334) (28,957)
Due to affiliates........................................ 28,067 (117,667) (89,600)
Deferred income taxes.................................... 41,538 3,246 44,784
Other assets, net........................................ (12,860) 13,462 602
-------------- --------------- --------------
Net cash provided by operating activities.................... 973,407 7,867 981,274
-------------- --------------- --------------
INVESTING ACTIVITIES:
Assets under management programs
Investment in leases and leased vehicles..................... (1,179,099) (1,006,171) (2,185,270)
Repayments of investment in leases and leased vehicles....... 292,438 464,501 756,939
Proceeds from sales and transfers of leases and leased
vehicles................................................... -- 229,303 229,303
Net purchases of property and equipment...................... (9,713) (3,458) (13,171)
-------------- --------------- --------------
Net cash used in investing activities........................ (896,374) (315,825) (1,212,199)
-------------- --------------- --------------
FINANCING ACTIVITIES:
Net change in line of credit................................... 5,552 -- 5,552
Liabilities under management programs
Proceeds from third party debt issuance...................... 5,768 1,590,900 1,596,668
Principal payments on third party debt issuance.............. (1,278) (1,610,153) (1,611,431)
Proceeds from debt from affiliates........................... 1,038,541 1,039,536 2,078,077
Principal payments on debt from affiliates................... (1,115,409) (727,626) (1,843,035)
-------------- --------------- --------------
Net cash (used in) provided by financing activities.......... (66,826) 292,657 225,831
-------------- --------------- --------------
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS............ 130 (2,936) (2,806)
-------------- --------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............. 10,337 (18,237) (7,900)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR..................... 7,639 12,199 19,838
-------------- --------------- --------------
CASH AND CASH EQUIVALENTS, END OF YEAR........................... $ 17,976 $ (6,038) $ 11,938
-------------- --------------- --------------
-------------- --------------- --------------
</TABLE>
F-92
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS UNLESS IDENTIFIED DIFFERENTLY)
18. COMBINING FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
<S> <C> <C> <C>
GUARANTOR NON-GUARANTOR PHH VMS
COMPANIES COMPANIES COMBINED
-------------- --------------- --------------
OPERATING ACTIVITIES:
Net income..................................................... $ 17,570 $ 23,222 $ 40,792
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation on leased vehicles............................ 779,993 132,837 912,830
Depreciation and amortization on assets other than leased
vehicles................................................. 12,360 4,225 16,585
Other non-cash charges..................................... 319 1,728 2,047
Changes in other assets and liabilities:
Accounts and loans receivable............................ (25,540) 22,550 (2,990)
Income taxes payable..................................... (15,960) (4,459) (20,419)
Accounts payable and other accrued liabilities........... 49,158 18,837 67,995
Due to affiliates........................................ (375,062) 278,763 (96,299)
Deferred income taxes.................................... 42,144 13,288 55,432
Other assets, net........................................ 2,557 (11,113) (8,556)
-------------- --------------- --------------
Net cash provided by operating activities.................... 487,539 479,878 967,417
-------------- --------------- --------------
INVESTING ACTIVITIES:
Assets under management programs
Investment in leases and leased vehicles..................... (1,222,726) (695,805) (1,918,531)
Repayments of investment in leases and leased vehicles....... 427,236 299,010 726,246
Proceeds from sales and transfers of leases and leased
vehicles................................................... -- 117,753 117,753
Net purchases of property and equipment...................... (8,805) (4,945) (13,750)
-------------- --------------- --------------
Net cash used in investing activities........................ (804,295) (283,987) (1,088,282)
-------------- --------------- --------------
FINANCING ACTIVITIES:
Net change in line of credit................................... 6,170 -- 6,170
Payment of dividends to PHH.................................... (18,106) (1,196) (19,302)
Capital contribution........................................... 4,985 -- 4,985
Liabilities under management programs
Proceeds from third party debt issuance...................... 3,461 1,665,957 1,669,418
Principal payments on third party debt issuance.............. (278) (1,558,536) (1,558,814)
Proceeds from debt from affiliates........................... 1,241,754 (215,057) 1,026,697
Principal payments on debt from affiliates................... (914,304) (88,050) (1,002,354)
-------------- --------------- --------------
Net cash provided by financing activities.................... 323,682 (196,882) 126,800
-------------- --------------- --------------
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS............ (7,354) 10,850 3,496
-------------- --------------- --------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS............. (428) 9,859 9,431
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR..................... 8,067 2,340 10,407
-------------- --------------- --------------
CASH AND CASH EQUIVALENTS, END OF YEAR........................... $ 7,639 $ 12,199 $ 19,838
-------------- --------------- --------------
-------------- --------------- --------------
</TABLE>
F-93
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
CONDENSED COMBINED BALANCE SHEET
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
MARCH 31,
1999
-------------
<S> <C>
ASSETS
Cash and cash equivalents........................................................................ $ 74,211
Accounts and loans receivable, net............................................................... 506,325
Property and equipment, net...................................................................... 96,919
Goodwill and other intangibles, net.............................................................. 227,351
Deferred income taxes............................................................................ 39,200
Other assets..................................................................................... 20,272
-------------
Total assets exclusive of assets under management programs................................. 964,278
-------------
ASSETS UNDER MANAGEMENT PROGRAMS:
Net investment in leases and leased vehicles..................................................... 3,867,856
-------------
TOTAL ASSETS....................................................................................... $ 4,832,134
-------------
-------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities......................................................... $ 443,596
Income taxes payable............................................................................. 119,093
Deferred revenue................................................................................. 43,590
Due to affiliates................................................................................ 228,160
Borrowed funds................................................................................... 20,769
-------------
Total liabilities exclusive of liabilities under management programs....................... 855,208
-------------
LIABILITIES UNDER MANAGEMENT PROGRAMS:
Debt............................................................................................. 3,014,758
Deferred income taxes............................................................................ 213,059
-------------
3,227,817
TOTAL LIABILITIES.................................................................................. 4,083,025
-------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY............................................................................... 749,109
-------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY......................................................... $ 4,832,134
-------------
-------------
</TABLE>
See notes to condensed combined financial statements.
F-94
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
CONDENSED COMBINED INCOME STATEMENTS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
<S> <C> <C>
MARCH 31, 1999 MARCH 31, 1998
--------------- ---------------
REVENUE........................................................................ $ 400,253 $ 391,305
EXPENSES
Depreciation on leased vehicles.............................................. 253,743 249,384
Interest expense............................................................. 46,457 43,183
Selling, general and administrative expenses................................. 63,569 55,425
Depreciation and amortization on assets other than leased vehicles........... 7,332 6,341
--------------- ---------------
Total expenses............................................................. 371,101 354,333
--------------- ---------------
INCOME BEFORE PROVISION FOR INCOME TAXES....................................... 29,152 36,972
PROVISION FOR INCOME TAXES..................................................... 11,002 13,857
--------------- ---------------
NET INCOME..................................................................... $ 18,150 $ 23,115
--------------- ---------------
--------------- ---------------
</TABLE>
See notes to condensed combined financial statements.
F-95
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
<S> <C> <C>
1999 1998
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES.................................................... $ 509,890 $ 284,470
INVESTING ACTIVITIES:
Assets under management programs
Investment in leases and leased vehicles............................................ (560,758) (626,170)
Repayments of investment in leases and leased vehicles.............................. 133,455 222,021
Proceeds from sales and transfers of leases and leased vehicles..................... 44,640 27,284
Net purchases of property and equipment............................................... (8,586) (14,852)
Cash acquired in acquisition of business, net of contribution from affiliates......... -- 2,341
----------- -----------
Net cash used in investing activities............................................... (391,249) (389,376)
----------- -----------
FINANCING ACTIVITIES:
Other, net............................................................................ (26,438) 23,023
Liabilities under management programs
Proceeds from debt issuance......................................................... 112,061 162,789
Principal payments on debt issuance................................................. (162,574) (103,292)
----------- -----------
Net cash (used in) provided by financing activities................................. (76,951) 82,520
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS................................... 11,462 10,448
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.................................... 53,152 (11,938)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.......................................... 21,059 11,938
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD................................................ $ 74,211 $ --
----------- -----------
----------- -----------
Non-cash investing and financing information:
Business acquired:
Fair value of assets acquired, excluding cash......................................... $ 294,287
Liabilities assumed................................................................... (86,006)
Capital contribution from affiliate for acquisition................................... (190,597)
Additional purchase consideration payable............................................. (20,025)
-----------
Net cash acquired..................................................................... $ (2,341)
-----------
-----------
</TABLE>
See notes to condensed combined financial statements
F-96
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The condensed combined balance sheet of PHH Vehicle Management Services (the
"Group") as of March 31, 1999 and the condensed combined statements of income
and cash flows for the three months ended March 31, 1999 and 1998 are unaudited.
In the opinion of management, all adjustments consisting of normal recurring
accruals considered necessary for a fair presentation of such financial
statements are included. The accompanying unaudited combined financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information. The December 31, 1998 condensed
combined balance sheet was derived from the Group's audited financial statements
for the year ended December 31, 1998, and should be read in conjunction with
such combined financial statements and notes thereto.
Operating results for the three months ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999.
2. ACQUISITIONS
On January 20, 1998, Pointeuro Limited acquired the Harpur Group Limited
("Harpur") for an initial purchase price of approximately $194 million,
including acquisition costs. Additional purchase consideration of approximately
$20 million was accrued as of December 31, 1998, upon the attainment of certain
revenue thresholds as specified in the purchase agreement. Harpur provides fuel
card and fleet management services to corporate clients in the United Kingdom.
The transaction was accounted for as a purchase and, accordingly, the operating
results of Harpur have been included in the Group's combined financial
statements since the date of acquisition.
The excess of the aggregate purchase price over the fair value of net assets
acquired of approximately $189 million has been allocated to goodwill. Pro forma
results of operations for the three months ended March 31, 1998, assuming the
acquisition of Harpur had occurred on January 1, 1998, have not been presented
as the effect is not material.
3. SEGMENT INFORMATION
The Group operates in a single segment, fleet and fuel card management.
GEOGRAPHIC SEGMENT INFORMATION
<TABLE>
<CAPTION>
UNITED UNITED ALL OTHER
TOTAL STATES KINGDOM COUNTRIES
------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
1999
Revenue................................................ $ 400,253 $ 333,464 $ 59,316 $ 7,473
Assets................................................. 4,832,134 3,216,939 1,386,131 229,064
Long-lived assets...................................... 96,919 27,396 64,653 4,870
1998
Revenue................................................ $ 391,305 $ 330,306 $ 54,195 $ 6,804
Assets................................................. 4,483,710 3,184,333 1,072,076 227,301
Long-lived assets...................................... 50,373 16,664 32,718 991
</TABLE>
F-97
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
4. COMPREHENSIVE INCOME
Components of comprehensive income are summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
<S> <C> <C>
1999 1998
--------- ---------
Net income............................................................. $ 18,150 $ 23,115
Other comprehensive income (loss), net of tax:
Currency translation................................................. 201 (1,630)
--------- ---------
Comprehensive income................................................... $ 18,351 $ 21,485
--------- ---------
--------- ---------
</TABLE>
5. SUBSEQUENT EVENT
On May 22, 1999, PHH executed an agreement with Avis Rent A Car, Inc.
("Avis") pursuant to which Avis will acquire the net assets of the Group from
PHH for $1.44 billion in assumed intercompany debt of PHH Holdings, a
wholly-owned subsidiary of PHH and the issuance of $360 million in convertible
preferred stock of Avis Fleet Leasing and Management Corporation, a wholly-owned
subsidiary of Avis. The transaction is subject to customary regulatory approvals
and closed on June 30, 1999.
6. CONDENSED COMBINING FINANCIAL INFORMATION
In conjunction with the June 30, 1999 closing of the transaction detailed in
Note 5, Avis has issued $500,000 in Senior Subordinated Notes due 2009 (the
"Notes"). Certain companies included in the Group ("Guarantor Companies")
unconditionally guaranteed the Notes on a joint and several basis. The following
condensed tables summarize the financial position, results of operations, and
F-98
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
6. CONDENSED COMBINING FINANCIAL INFORMATION (CONTINUED)
cash flows for the Group, the Guarantor Companies and the companies in the Group
that did not guarantee the Notes (the "Non-Guarantor Companies").
<TABLE>
<CAPTION>
MARCH 31, 1999
---------------------------------------------
<S> <C> <C> <C>
GUARANTOR NON-GUARANTOR PHH VMS
COMPANIES COMPANIES COMBINED
------------- --------------- -------------
ASSETS
Cash and cash equivalents........................................ $ 15,332 $ 58,879 $ 74,211
Accounts and loans receivable, net............................... 39,169 467,156 506,325
Property and equipment, net...................................... 30,299 66,620 96,919
Goodwill and other intangibles, net.............................. 29,403 197,948 227,351
Deferred income taxes............................................ 20,879 18,321 39,200
Other assets..................................................... 248,186 (227,914) 20,272
------------- --------------- -------------
Total assets exclusive of assets under management programs..... 383,268 581,010 964,278
------------- --------------- -------------
ASSETS UNDER MANAGEMENT PROGRAMS:
Net investment in leases and leased vehicles..................... 1,534,894 2,332,962 3,867,856
------------- --------------- -------------
TOTAL ASSETS....................................................... $ 1,918,162 $ 2,913,972 $ 4,832,134
------------- --------------- -------------
------------- --------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities......................... $ 129,390 $ 314,206 $ 443,596
Income taxes payable............................................. (19,101) 138,194 119,093
Deferred revenue................................................. 25,840 17,750 43,590
Due to affiliates................................................ 110,583 117,577 228,160
Borrowed funds................................................... 574 20,195 20,769
------------- --------------- -------------
Total liabilities exclusive of liabilities under management
programs..................................................... 247,286 607,922 855,208
------------- --------------- -------------
LIABILITIES UNDER MANAGEMENT PROGRAMS:
Debt............................................................. 1,113,957 1,900,801 3,014,758
Deferred income taxes............................................ 238,505 (25,446) 213,059
------------- --------------- -------------
1,352,462 1,875,355 3,227,817
------------- --------------- -------------
TOTAL LIABILITIES.................................................. 1,599,748 2,483,277 4,083,025
------------- --------------- -------------
COMMITMENTS AND CONTINGENCIES......................................
SHAREHOLDERS' EQUITY............................................... 318,414 430,695 749,109
------------- --------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY......................... $ 1,918,162 $ 2,913,972 $ 4,832,134
------------- --------------- -------------
------------- --------------- -------------
</TABLE>
F-99
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
6. CONDENSED COMBINING FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
<S> <C> <C> <C>
GUARANTOR NON-GUARANTOR PHH VMS
COMPANIES COMPANIES COMBINED
----------- --------------- -----------
REVENUE.............................................................. $ 143,673 $ 256,580 $ 400,253
EXPENSES
Depreciation on leased vehicles.................................... 79,903 173,840 253,743
Interest expense................................................... 14,662 31,795 46,457
Selling, general and administrative expenses....................... 36,395 27,174 63,569
Depreciation and amortization on assets other than
leased vehicles................................................ 1,300 6,032 7,332
----------- --------------- -----------
Total expenses................................................. 132,260 238,841 371,101
----------- --------------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES............................. 11,413 17,739 29,152
PROVISION FOR INCOME TAXES........................................... 5,287 5,715 11,002
----------- --------------- -----------
NET INCOME........................................................... $ 6,126 $ 12,024 $ 18,150
----------- --------------- -----------
----------- --------------- -----------
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
<S> <C> <C> <C>
GUARANTOR NON-GUARANTOR PHH VMS
COMPANIES COMPANIES COMBINED
----------- --------------- -----------
REVENUE.............................................................. $ 296,997 $ 94,308 $ 391,305
EXPENSES
Depreciation on leased vehicles.................................... 211,193 38,191 249,384
Interest expense................................................... 27,677 15,506 43,183
Selling, general and administrative expenses....................... 34,451 20,974 55,425
Depreciation and amortization on assets other than leased
vehicles......................................................... 1,245 5,096 6,341
----------- --------------- -----------
Total expenses................................................... 274,566 79,767 354,333
----------- --------------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES............................. 22,431 14,541 36,972
PROVISION FOR INCOME TAXES........................................... 7,484 6,373 13,857
----------- --------------- -----------
NET INCOME........................................................... $ 14,947 $ 8,168 $ 23,115
----------- --------------- -----------
----------- --------------- -----------
</TABLE>
F-100
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
6. CONDENSED COMBINING FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
<S> <C> <C> <C>
GUARANTOR NON-GUARANTOR PHH VMS
COMPANIES COMPANIES COMBINED
----------- --------------- -----------
CASH FLOW FROM OPERATING ACTIVITIES............................. $ 198,521 $ 311,369 $ 509,890
INVESTING ACTIVITIES:
Assets under management programs
Investment in leases and leased vehicles...................... (348,914) (211,844) (560,758)
Repayments of investment in leases and leased vehicles........ 65,086 68,369 133,455
Proceeds from sales and transfers of leases and leased
vehicles.................................................... -- 44,640 44,640
Net purchases of property and equipment....................... (1,388) (7,198) (8,586)
Cash acquired in acquisition of business, net of contribution
from affiliates............................................. -- -- --
----------- --------------- -----------
Net cash used in investing activities......................... (285,216) (106,033) (391,249)
----------- --------------- -----------
FINANCING ACTIVITIES:
Other, net.................................................... 33,467 (59,905) (26,438)
Liabilities under management programs
Proceeds from debt issuance................................. 55,780 56,281 112,061
Principal payments on debt issuance......................... (1,822) (160,752) (162,574)
----------- --------------- -----------
Net cash provided (used in) by financing activities......... 87,425 (164,376) (76,951)
----------- --------------- -----------
EFFECT OF EXCHANGE RATES ON CASH AND
CASH EQUIVALENTS.............................................. (437) 11,899 11,462
----------- --------------- -----------
NET INCREASE IN CASH AND
CASH EQUIVALENTS.............................................. 293 52,859 53,152
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.................. 15,039 6,020 21,059
----------- --------------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD........................ $ 15,332 $ 58,879 $ 74,211
----------- --------------- -----------
----------- --------------- -----------
</TABLE>
F-101
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
6. CONDENSED COMBINING FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
<S> <C> <C> <C>
GUARANTOR NON-GUARANTOR PHH VMS
COMPANIES COMPANIES COMBINED
----------- --------------- -----------
CASH FLOW FROM OPERATING ACTIVITIES.............................. $ 206,683 $ 77,787 $ 284,470
INVESTING ACTIVITIES:
Assets under management programs
Investment in leases and leased vehicles....................... (351,708) (274,462) (626,170)
Repayments of investment in leases and leased vehicles......... 116,336 105,685 222,021
Proceeds from sales and transfers of leases and leased
vehicles..................................................... -- 27,284 27,284
Net purchases of property and equipment........................ (2,925) (11,927) (14,852)
Cash acquired in acquisition of business, net of contribution
from affiliates.............................................. -- 2,341 2,341
----------- --------------- -----------
Net cash used in investing activities.......................... (238,297) (151,079) (389,376)
----------- --------------- -----------
FINANCING ACTIVITIES:
Other, net..................................................... (105) 23,128 23,023
Liabilities under management programs
Proceeds from debt issuance.................................. 104,455 58,334 162,789
Principal payments on debt issuance.......................... (66,461) (36,831) (103,292)
----------- --------------- -----------
Net cash provided by financing activities.................... 37,889 44,631 82,520
----------- --------------- -----------
EFFECT OF EXCHANGE RATES ON CASH AND
CASH EQUIVALENTS............................................... 341 10,107 10,448
----------- --------------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS............................................... 6,616 (18,554) (11,938)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD................... 18,004 (6,066) 11,938
----------- --------------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD......................... $ 24,620 $ (24,620) $ --
----------- --------------- -----------
----------- --------------- -----------
</TABLE>
F-102
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
1. DELAWARE (Avis Rent A Car, Inc., Avis Rent A Car System, Inc., Avis
International, Ltd., Avis Management Services, Ltd., Avis Caribbean, Limited,
Avis Asia and Pacific Limited, Avis Enterprises, Inc., Avis Service, Inc., Avis
Lube, Inc., Avis Leasing Corporation, Reserve Claims Management Co., PHH Vehicle
Management Services, LLC, Wright Express LLC, PHH Canadian Holdings, Inc.,
PHH/Paymentech LLC and FAH Company, Inc.)
Section 145 of the Delaware General Corporation Law (the "DGCL") permits a
Delaware corporation to indemnify any person who was or is a party or witness or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reasons of the
fact that he or she is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise.
Depending on the character of the proceeding, a corporation may indemnify
against expenses, costs and fees (including attorneys' fees) judgments, fines
and amounts paid in settlement actually and reasonably incurred in connection
with such action, suit or proceeding if the person indemnified acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. If the person indemnified is not wholly successful in such action,
suit or proceeding, but is successful, on the merits or otherwise, in one or
more but less than all claims, issues or matters in such proceeding, he or she
may be indemnified against expenses actually and reasonably incurred in
connection with each successfully resolved claim, issue or matter. In the case
of an action or suit by or in the right of the corporation, no indemnification
may be made in respect to any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery of the State of Delaware, or the court in
which such action or suit was brought, shall determine that, despite the
adjudication of liability, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper. Section 145
provides that, to the extent a director, officer, employee or agent of a
corporation has been successful in the defense of any claim, issue or manner
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith.
The Amended and Restated Certificate of Incorporation and Amended and
Restated By-Laws of Avis Rent A Car, Inc. (the "Company") and the Certificates
of Incorporation or By-Laws, each if amended and restated then as amended and
restated, of each of Avis Rent A Car System, Inc., Avis International, Ltd.,
Avis Management Services, Ltd., Avis Caribbean, Limited, Avis Asia and Pacific
Limited, Avis Enterprises, Inc., Avis Service, Inc., Avis Lube, Inc., Avis
Leasing Corporation, Reserve Claims Management Co., PHH Canadian Holdings, Inc.,
and FAH Company, Inc., provide for indemnification by such entity of its
respective directors and officers to the fullest extent permitted by the DGCL
and such right to indemnification shall continue as to a person who has ceased
to be a director or officer and shall inure to the benefit of his or her heirs,
executors and administrators. The Certificate of Incorporation or By-Laws, each
if amended and restated then as amended and restated, of the Company and each of
the aforementioned subsidiaries provide that every person will be indemnified
against any and all judgments, fines, amounts paid in settling or otherwise
disposing of threatened, pending or complete actions, suits or proceedings
(including an action by or in the right of the Company or the respective
subsidiary, subject to certain conditions), whether by fact that he is or was a
director or officer of the Company or the respective subsidiary
II-1
<PAGE>
or is or was serving at the request of the Company or the respective subsidiary
as a director or officer of another corporation, subject in all instances to the
requirements that such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the Company
or the respective subsidiary, and with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. While these provisions provide directors with protection from awards
for monetary damages for breaches of their duty of care, they do not eliminate
such duty. Accordingly, these provisions will have no effect on the availability
of equitable remedies such as an injunction or rescission based on a director's
breach of his or her duty of care.
Section 18-108 of the Delaware Limited Liability Company Act (the "LLC Act")
empowers a Delaware limited liability company to indemnify and hold harmless any
member, manager or other person from and against any and all claims and demands
whatsoever. In accordance with such section, the Limited Liability Company
Agreement of PHH Vehicle Management Services LLC, dated as of April 5, 1999 (the
"PHH Agreement"), the Limited Liability Company Agreement of PHH/ Paymentech
LLC, dated as of January 31, 1997 (the "Paymentech Agreement"), and the Limited
Liability Company Agreement of Wright Express LLC, dated as May 24, 1999 (the
"WEX Agreement" and, together with the Paymentech Agreement and the PHH
Agreement, the "LLC Agreements"), each provide that the Company shall, to the
fullest extent authorized by the LLC Act, as in effect from time to time,
indemnify and hold harmless any member, manager, officer, employee or agent of
PHH Vehicle Management Services LLC, PHH/Paymentech LLC and Wright Express LLC,
as the case may be, from and against any and all claims and demands arising by
reason of the fact that such person is, or was, a member, manager, officer,
employee or agent of the respective LLC. The LLC Agreements further provide that
expenses incurred by any member, manager, officer, employee or agent of PHH
Vehicle Management Services LLC, PHH/Paymentech LLC and Wright Express LLC, as
the case may be, in defending a proceeding shall be paid by the respective LLC
in advance of such proceeding's final disposition unless otherwise determined by
the manager or the president of such LLC in the specific case upon receipt of an
undertaking by or on behalf of the member, manager or officer to repay such
amount if it shall ultimately be determined that he or she is not entitled to be
indemnified by the respective LLC. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions if any, as the manager or
the president of PHH Vehicle Management Services LLC, PHH/Paymentech LLC and
Wright Express LLC, as the case may be, deems appropriate.
2. MARYLAND (PHH Deutschland, Inc., Williamsburg Motors, Inc., Edenton Motors,
Inc., and Dealers Holdings, Inc.)
Section 2-418 of the Annotated Code of Maryland requires indemnification
against expenses incurred in successful defense, unless limited by charter, of a
director who has been successful, on the merits or otherwise, in the defense of
any proceeding, judgment, penalty, fine or settlement. A corporation may
indemnify any director made a party to any proceeding by reason of service in
that capacity unless it is established that the act or omission of the director
was material to the matter giving rise to the proceeding and was committed in
bad faith; or was the result of active and deliberate dishonesty; or the
director actually received an improper personal benefit in money, property, or
services, or in the case of any criminal proceeding, the director had reasonable
cause to believe that the act was unlawful. Additionally, a court may order
indemnification if it finds that the director is entitled to reimbursement under
Section 2-418 or if it determines that the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances. Section 6
of the By-Laws of PHH Deutschland, Inc. provides that it shall indemnify its
directors and officers and such indemnification shall apply to all proceedings.
II-2
<PAGE>
3. VIRGINIA (Rent-A-Car Company, Incorporated)
The Virginia Stock Corporations Act permits, and the By-Laws of Rent-A-Car
Company, Inc. require, indemnification of the officers and directors of
Rent-A-Car Company, Inc. against all liabilities imposed or asserted against
them by reason of having been an officer or director of Rent-A-Car Company, Inc.
(including derivative actions), except in the case of willful misconduct or a
knowing violation of criminal law.
4. TEXAS (Avis Fleet Leasing and Management Corporation)
Under the Texas Business Corporations Act, a corporation has the power to
indemnify directors, officers, employees and agents of the corporation against
certain liabilities and to purchase and maintain liability insurance for those
persons. The By-Laws of Avis Fleet Leasing and Management Corporation provide
that Avis Fleet Leasing and Management Corporation will indemnify any person who
was or is a named defendant or respondent or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, arbitrative, or investigative, or any appeal of such
action, suit or proceeding and any inquiry or investigation that could lead to
such an action, suit or proceeding, by reason of the fact that he is or was a
director, officer or employee of Avis Fleet Leasing and Management Corporation,
or is or was serving at the request of Avis Fleet Leasing and Management
Corporation as a director, officer or employee of another foreign or domestic
corporation, against judgments, penalties, fines, amounts paid in settlement and
reasonable expenses actually incurred by him in connection with such action,
suit or proceeding, if he acted in good faith and in a manner he reasonably
believed, (i) in the case of conduct in his or her official capacity as a
director of Avis Fleet Leasing and Management Corporation, to be in the best
interests of Avis Fleet Leasing and Management Corporation, and (ii) in all
other cases, to be not opposed to the best interests of Avis Fleet Leasing and
Management Corporation, except that no indemnification shall be made available
where such person is found liable for willful or intentional misconduct in the
performance of his or her duty to Avis Fleet Leasing and Management Corporation.
II-3
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
1.01 Purchase Agreement, dated as of June 25, 1999, among Avis Rent A Car, Inc. (the "Company"), the
Subsidiary Guarantors (as defined therein) and Chase Securities Inc. and Lehman Brothers Inc. (the
"Initial Purchasers").*
2.01 Agreement and Plan of Merger and Reorganization by and among PHH Corporation, PHH Holdings
Corporation, the Company and Avis Fleet Leasing and Management Corporation, dated as of May 22,
1999.*
3. CERTIFICATE OF INCORPORATION AND BY-LAWS.
3.01 Certificate of Incorporation of Avis Rent A Car, Inc.***
3.02(a) Certificate of Incorporation of Avis Rent A Car System, Inc.*
3.02(b) Restated Certificate of Incorporation of Avis Rent A Car System, Inc.*
3.02(c) Corrected Restated Certificate of Incorporation of Avis Rent A Car System, Inc.*
3.02(d) Certificate of Ownership and Merger merging The First Gray Line Corporation into Avis Rent A Car
System, Inc.*
3.03(a) Certificate of Incorporation of Avis International, Ltd.*
3.03(b) Certificate of Change of Location of Registered Office and Registered Agent of Avis International,
Ltd.*
3.03(c) Certificate of Change of Registered Agent and Registered Office of Avis International, Ltd.*
3.04(a) Certificate of Incorporation of Avis Management Services, Ltd.*
3.04(b) Certificate of Change of Location of Registered Office and Registered Agent of Avis Management
Services, Ltd.*
3.04(c) Certificate of Change of Registered Agent and Registered Office of Avis Management Services, Ltd.*
3.05 Certificate of Incorporation of Avis Caribbean, Limited.*
3.06 Certificate of Incorporation of Avis Asia and Pacific, Limited.*
3.07(a) Certificate of Incorporation of Avis Enterprises, Inc.*
3.07(b) Certificate of Amendment of Certificate of Incorporation of Avis Enterprises, Inc.*
3.07(c) Certificate of Amendment of Certificate of Incorporation of Avis Enterprises, Inc.*
3.08 Certificate of Incorporation of Avis Service, Inc.*
3.09 Certificate of Incorporation of Avis Lube, Inc.*
3.10 Certificate of Incorporation of Avis Leasing Corporation.*
3.11(a) Certificate of Incorporation of Rent-A-Car Company, Incorporated.*
3.11(b) Articles of Reduction of Rent-A-Car Company, Incorporated.*
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
3.11(c) Articles of Amendment to Articles of Incorporation of Rent-A-Car Company, Incorporated.*
3.11(d) Articles of Amendment to Articles of Incorporation of Rent-A-Car Company, Incorporated.*
3.11(e) Articles of Amendment to the Articles of Incorporation of Rent-A-Car Company, Incorporated.*
3.11(f) Articles of Amendment of Rent-A-Car Company, Incorporated.*
3.12(a) Certificate of Incorporation of Reserve Claims Management Co.*
3.12(b) Certificate of Change of Registered Agent and Registered Office of Reserve Claims Management Co.
f/k/a Avis Leasing International, Ltd.*
3.12(c) Restated Certificate of Incorporation of Avis Leasing International, Ltd.*
3.13(a) Certificate of Incorporation of Avis Fleet Leasing and Management Corporation.*
3.13(b) Articles of Correction of Avis Fleet Leasing and Management Corporation.*
3.13(c) Certificate of Designation of Powers, Preferences and Special Rights of Series A Cumulative
Participating Redeemable Convertible Preferred Stock and Qualifications, Limitations and Restrictions
Thereof of Avis Fleet Leasing and Management Corporation.******
3.13(d) Certificate of Designation of Powers, Preferences and Special Rights of Series B Cumulative PIK
Preferred Stock and Qualifications, Limitations and Restrictions Thereof of Avis Fleet Leasing and
Management Corporation.*****
3.13(e) Certificate of Designation of Powers, Preferences and Special Rights of Series C Cumulative
Redeemable Preferred Stock and Qualifications, Limitations and Restrictions Thereof of Avis Fleet
Leasing and Management Corporation.*****
3.14(a) Certificate of Incorporation of Dealers Holding, Inc.*
3.14(b) Notice of Change of Resident Agent of Dealers Holding, Inc.*
3.14(c) Notice of Change of Resident Agent of Dealers Holding, Inc.*
3.14(d) Change of Address of Resident Agent of Dealers Holding, Inc.*
3.14(e) Certified Copy of Resolution of Board of Directors for Designation or Change of Resident Agent and/or
Principal Office of Dealers Holdings, Inc.*
3.15(a) Articles of Incorporation of Williamsburg Motors, Inc.*
3.15(b) Notice of Change of Resident Agent of Williamsburg Motors, Inc.*
3.15(c) Change of Resident Agent of Williamsburg Motors, Inc.*
3.15(d) Change of Address of Resident Agent of Williamsburg Motors, Inc.*
3.15(e) Certified Copy of Resolution of Board of Directors for Designation or Change of Resident Agent and/or
Principal Office.*
3.15(f) Articles of Amendment of Articles of Incorporation of Williamsburg Motors, Inc.*
3.16(a) Articles of Incorporation of Edenton Motors, Inc.*
3.16(b) Notice of Change of Resident Agent of Edenton Motors, Inc.*
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
3.16(c) Articles of Amendment of Edenton Motors, Inc.*
3.16(d) Articles of Amendment of Edenton Motors, Inc.*
3.16(e) Change of Resident Agent of Edenton Motors, Inc.*
3.16(f) Change of Address of Resident Agent of Edenton Motors, Inc.*
3.16(g) Certified Copy of Resolution of Board of Directors for Designation or Change of Resident Agent and/or
Principal Office of Edenton Motors, Inc.*
3.17 Certificate of Incorporation of PHH Canadian Holdings, Inc.*
3.18(a) Articles of Incorporation of PHH Deutschland, Inc.*
3.18(b) Articles of Amendment of PHH Deutschland, Inc.*
3.18(c) Articles of Amendment of PHH Deutschland, Inc.*
3.18(d) Articles of Amendment of PHH Deutschland, Inc.*
3.18(e) Change of Resident Agent of PHH Deutschland, Inc.*
3.18(f) Articles of Amendment of PHH Deutschland, Inc.*
3.18(g) Articles of Amendment of PHH Deutschland, Inc.*
3.18(h) Certified Copy of Resolution of Board of Directors for Designation or Change of Resident Agent and/or
Principal Office of PHH Deutschland, Inc.*
3.18(i) Change of Address of Resident Agent of PHH Deutschland, Inc.*
3.19(a) Certificate of Incorporation of FAH Company, Inc.*
3.19(b) Certificate of Amendment to Certificate of Incorporation of FAH Company, Inc.*
3.19(c) Certificate of Amendment to Certificate of Incorporation of FAH Company, Inc.*
3.19(d) Certificate of Amendment to Certificate of Incorporation of FAH Company, Inc.*
3.20 Limited Liability Company Agreement of PHH Vehicle Management Services LLC.*
3.21 Limited Liability Company Agreement of Wright Express LLC.*
3.22 Operating Agreement of PHH/Paymentech LLC.*
3.50 By-Laws of Avis Rent A Car, Inc.***
3.51 By-Laws of Avis Rent A Car System, Inc.*
3.52 By-Laws of Avis International, Ltd.*
3.53 By-Laws of Avis Management Services, Ltd.*
3.54 By-Laws of Avis Caribbean, Limited.*
3.55 By-Laws of Avis Asia and Pacific, Limited.*
3.56 By-Laws of Avis Enterprises, Inc.*
3.57 By-Laws of Avis Service, Inc.*
3.58 By-Laws of Avis Lube, Inc.*
3.59 By-Laws of Avis Leasing Corporation.*
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
3.60 By-Laws of Rent-A-Car Company, Incorporated.*
3.61 By-Laws of Reserve Claims Management Co.*
3.62 By-Laws of Avis Fleet Leasing and Management Corporation.*
3.63 By-Laws of Dealers Holdings, Inc.*
3.64 By-Laws of Williamsburg Motors, Inc.*
3.65 By-Laws of Edenton Motors, Inc.*
3.66 By-Laws of PHH Canadian Holdings, Inc.*
3.67 By-Laws of PHH Deutschland, Inc.*
3.68 By-Laws of FAH Company, Inc.*
4.03 Series 1997-1 Supplement, dated as of July 30, 1997 between AESOP Funding II L.L.C. and the Avis ABS
Trustee, to the Amended and Restated Base Indenture, dated as of July 30, 1997, between AESOP Funding
II and the Avis ABS Trustee.**
4.04 Series 1997-1 Supplement, dated as of July 30, 1997 between AESOP Funding II L.L.C. and the Avis ABS
Trustee, to the Amended and Restated Base Indenture, dated as of July 30, 1997, between AESOP Funding
II and the Avis ABS Trustee.**
4.05 Loan Agreement, dated as of July 30, 1997, between AESOP Leasing L.P., as borrower, and AESOP Funding
II L.L.C. as lender.**
4.06 Loan Agreement, dated as of July 30, 1997, among AESOP Leasing L.P., as borrower, PV Holding Corp.,
as a permitted nominee of the borrower, Quartz Fleet Management, Inc., as a permitted nominee of the
borrower, and AESOP Funding I L.L.C., as lender.**
4.07 Loan Agreement, dated as of July 30, 1997, between AESOP Leasing Corp II, as borrower, AESOP Leasing
Corp., as permitted nominee of the borrower, and AESOP Funding II L.L.C., as lender.**
4.08 Master Motor Vehicle Finance Lease Agreement, dated as of July 30, 1997, by and among AESOP Leasing
L.P., as lessor, Avis Rent A Car System, Inc., as lessee, individually and as the administrator and
Avis Rent A Car, Inc., as guarantor.**
4.09 Master Motor Vehicle Operating Lease Agreement, dated as of July 30, 1997, by and among AESOP Leasing
L.P., as lessor, Avis Rent A Car System, Inc., individually and as the administrator, certain
Eligible Rental Car Companies, as lessees, and Avis Rent A Car, Inc., as guarantor.**
4.10 Master Motor Vehicle Operating Lease Agreement, dated as of July 30, 1997, by and among AESOP Leasing
Corp. II, as lessor, Avis Rent A Car System, Inc., individually and as the administrator, certain
Eligible Rental Car Companies, as lessees, and Avis Rent A Car, Inc., as guarantor.**
4.11 Credit Agreement, dated as of July 30, 1997, among Avis Rent A Car, Inc., Avis Rent A Car System,
Inc., The Chase Manhattan Bank, as administrative agent, Lehman Commercial Paper, Inc., as
syndication agent and the other lenders party thereto (the "Credit Agreement").**
4.12 Guarantee, dated as of July 30, 1997, in favor of The Chase Manhattan Bank, as administrative agent
for the lenders from time to time parties to the Credit Agreement.**
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
4.13 Security Agreement, dated as of July 30, 1997, in favor of The Chase Manhattan Bank, as
administrative agent for the lenders from time to time parties to the Credit Agreement.**
4.14 Pledge Agreement, dated as of July 30, 1997, in favor of The Chase Manhattan Bank, as administrative
agent for the lenders from time to time parties to the Credit Agreement.**
4.15 Supplemental Indenture No. 1, dated as of July 31, 1998, to the Amended and Restated Base Indenture,
dated as of July 30, 1997, between AESOP Funding I L.L.C. as issuer and the Avis ABS Trustee.****
4.16 Amendment No. 1, dated as of July 31, 1998, to Loan Agreement, dated as of July 30, 1997, between
AESOP Leasing L.P., as borrower, and AESOP Funding I L.L.C., as lender.****
4.17 Amendment No. 1, dated as of July 31, 1998, to Loan Agreement, dated as of July 30, 1997, among AESOP
Leasing L.P., as borrower, PV Holding Corp., as a permitted nominee of the borrower, Quartz Fleet
Management, Inc., as a permitted nominee of the borrower, and AESOP Funding II L.L.C., as lender.****
4.18 Amendment No. 1, dated as of July 31, 1998, to Master Motor Vehicle Finance Lease Agreement, dated as
of July 30, 1997, among AESOP Leasing L.P., as lessor, Avis Rent A Car Systems, Inc., as Lessee
individually and as Administrator, and Avis Rent A Car, Inc., as guarantor.****
4.19 Amended and Restated Loan Agreement, dated as of September 15, 1998, among AESOP Leasing L.P., as
borrower, PV Holding Corp., as a permitted nominee of the borrower, Quartz Fleet Management, Inc., as
a permitted nominee of the borrower, and AESOP Funding II L.L.C.****
4.20 Amended and Restated Master Motor Vehicle Operating Lease Agreement, dated as of September 15, 1998,
among AESOP Leasing L.P., as lessor, Avis Rent Car System, Inc., individually and as Administrator,
certain Eligible Rental Car Companies, as lessees, and Avis Rent A Car, Inc., as guarantor.****
4.21 Supplemental Indenture No. 2, dated as of September 15, 1998, to Amended and Restated Base Indenture,
dated as of July 30, 1997, between AESOP Funding I L.L.C., as issuer and the Avis ABS Trustee.****
4.22 Series 1998-1 Supplement, dated as of February 26, 1998 between AESOP Funding II L.L.C., as issuer,
and the Avis ABS Trustee, as trustee and Series 1998-1 agent, to the Amended and Restated Base
Indenture, dated as of July 30, 1997, between AESOP Funding II L.L.C., as issuer, and the Avis ABS
Trustee.****
4.30 Indenture, dated as of June 30, 1999, among the Company, the Subsidiary Guarantors and the Bank of
New York (the "Notes Trustee").*
4.31 Exchange and Registration Rights Agreement, dated as of June 30, 1999, among the Company, the
Subsidiary Guarantors, the Initial Purchasers and the Notes Trustee.*
4.32 Credit Agreement, dated as of June 30, 1999, among the Company, as borrower, the financial
institutions party thereto, the Chase Manhattan Bank (the "Administrative Agent"), and Lehman
Commercial Paper Inc.*
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
4.33 Guarantee and Collateral Agreement, dated as of June 30, 1999, among the Company, the Subsidiary
Guarantors and the Administrative Agent.*
4.40 Origination Trust Agreement, dated as of June 30, 1999 (the "Origination Trust Agreement"), among
Raven Funding LLC (the "SPV"), PHH Vehicle Management Services LLC ("VMS LLC") and Wilmington Trust
Company (the "VMS ABS Trustee").*
4.41 Sold SUBI Supplement 1999-1A to the Origination Trust Agreement, dated as of June 30, 1999 (the
"1999-1A SUBI Supplement"), among the SPV, VMS LLC and the VMS ABS Trustee.*
4.42 Sold SUBI Supplement 1999-1B to the Origination Trust Agreement, dated as of June 30, 1999 (the
"1999-1B SUBI Supplement"), among the SPV, VMS LLC and the VMS ABS Trustee.*
4.43 Servicing Agreement, dated as of June 30, 1999 (the "Servicing Agreement"), between D.L. Peterson
Trust (the "Origination Trust") and VM LLC.*
4.44 Sold SUBI Supplement 1999-1 to the Servicing Agreement, dated as of June 30, 1999 (the "Sold SUBI
Servicing Supplement"), among the Origination Trust, the VMS ABS Trustee and VMS LLC.*
4.45 Asset Sale Agreement, dated as of June 30, 1999, between VMS LLC and the SPV.*
4.46 Receivables Purchase Agreement, dated as of June 30, 1999, by and between VMS LLC and the SPV.*
4.47 Contribution Agreement, dated as of June 30, 1999 between the SPV and the VMS ABS Trustee as trustee
for the Organization Trust and by VMS LLC for the Origination Trust.*
4.48 Transfer Agreement, dated as of June 30, 1999, between the SPV and Greyhound Funding LLC
("Greyhound"), together with the Origination Trust, VM LLC and the SPV.*
4.49 Base Indenture, dated as of June 30, 1999, between Greyhound and The Chase Manhattan Bank (the "VMS
ABS Indenture Trustee").*
4.50 Series 1999-1 Supplement, dated as of June 30, 1999, among Greyhound, VMS LLC, Park Avenue
Receivables Corporation and the VMS ABS Indenture Trustee.*
4.51 Custodian Agreement dated as of June 30, 1999, among the Origination Trust, Wilmington Trust Company
as Trustee, VMS LLC, as Servicer and All First Financial Center, as Custodian.*
4.52 Lockbox Services Agreement, dated as of June 30, 1999 among the Origination Trust, VMS LLC, in its
capacity as servicer of the Trust, and Bank of America National Trust and Savings Association.*
4.53 Preferred Membership Interest Purchase Agreement, dated as of June 0, 1999, among Greyhound Funding
LLC, Park Avenue Receivables Corporation, The Chase Manhattan Bank, individually as the APA Bank and
as Funding Agent, PHH Vehicle Management Services LLC, as Administrator.*
4.54 Administration Agreement, dated as of June 30, 1999, among Greyhound Funding LLC, Raven Funding LLC,
The Chase Manhattan Bank, as Indenture Trustee, PHH Vehicle Management Services LLC, as
Administrator.*
5.0 OPINIONS
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
5.1 Opinion of White & Case LLP regarding the legality of the securities being registered hereby.*
10. MATERIAL CONTRACTS.
10.01 Form of Registration Rights Agreement**
10.02 Separation Agreement, dated as of July 30, 1997, between Cendant Car Rental, Inc. and Avis Rent A
Car, Inc.**
10.03 Master License Agreement, dated as of July 30, 1997, among Cendant Car Rental, Inc., Avis Rent A Car
System, Inc. and Wizard Co., Inc.**
10.04 Computer Services Agreement, dated as of July 30, 1997, between Avis Rent A Car System, Inc. and
WizCom International, Ltd.**
10.05 Reservation Services Agreement, dated as of July 30, 1997, between Cendant Incorporated and Avis Rent
A Car System, Inc.**
10.06 Form of Tax Disaffiliation Agreement among Cendant Incorporated, Cendant Car Rental, Inc. and Avis
Rent A Car, Inc.**
10.07 Form of Lease Agreement by and between WizCom International, Ltd., as lessor, and Avis Rent A Car
System, Inc., as lessee (Virginia Beach, Virginia).**
10.08 Form of Sublease Agreement by and between WizCom International, Ltd., as sublessor, and Avis Rent A
Car System, Inc., as sublessee (Tulsa, Oklahoma).**
10.09 Form of Sublease Agreement by and between WizCom International, Ltd., as sublessor, and Avis Rent A
Car System, Inc., as sublessee (Garden City, New York).**
10.10 Wizard Note Assignment, Assumption and Release Agreement, dated as of July 30, 1997, by and between
Wizard Co., Inc., Avis Rent A Car System, Inc. and Reserve Claims Management Co.**
10.11 Termination Services Agreement, dated as of July 30, 1997, among Harris Trust and Savings Bank, AESOP
Funding II L.L.C., Avis Rent A Car System, Inc., and WizCom International, Ltd.**
10.13 Call Transfer Agreement, dated March 4, 1997, between HFS Incorporated and Avis Rent A Car System,
Inc.**
10.15 Retention Agreement, dated as of January 1, 1999, between Avis Rent A Car System, Inc. and F. Robert
Salerno.****
10.16 Retention Agreement, dated as of January 1, 1999, between Avis Rent A Car System, Inc. and Kevin M.
Sheehan.****
10.17 Avis Rent A Car, Inc. 1997 Stock Option Plan.**
10.18 Avis Rent A Car System, Inc. Nonqualified Deferred Compensation Plan.****
10.20 Information Technology Services Agreement, dated as of June 29, 1999, between PHH Vehicle Management
Services, LLC and Cendant Corporation.*
10.21 Corporate Services Transition Agreement, dated as of June 30, 1999 between Cendant Operations, Inc.
and Avis Fleet Leasing and Management Corporation.*
10.22 Corporate Services Transition Agreement, dated as of June 30, 1999 between PHH Corporation and Avis
Fleet Leasing and Management Corporation.*
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
10.23 VMS Acquisition Registration Rights Agreement, dated as of June 30, 1999, among Avis Rent A Car,
Inc., Avis Fleet Leasing and Management Corporation, PHH Corporation and PHH Holdings Corporation.*
10.24 Non-Competition Agreement, dated as of June 30, 1999, among Avis Rent Car, Inc., Avis Fleet Leasing
and Management Corporation, PHH Corporation and PHH Holdings Corporation.*
10.25 Stockholders' Agreement, dated as of June 30, 1999, among Avis Rent A Car, Inc., Avis Fleet Leasing
and Management Corporation, and PHH Corporation.*
10.26 Trademark License Agreement, dated as of June 30, 1999, between Avis Fleet Leasing and Management
Corporation and PHH Holdings Corporation.*
10.27 Transitional License Agreement, dated as of June 30, 1999, between Cendant Corporation and Avis Fleet
Leasing and Management Corporation.*
10.28 Undertaking, dated as of June 30, 1999 by Avis Fleet Leasing and Management Corporation.*
10.29 Instrument of Assumption, dated as of June 30, 1999 by Avis Fleet Leasing and Management
Corporation.*
12.1 Computation of Ratio of Earnings to Fixed Charges and Combined Fixed Charges.*
21 Subsidiaries of the Registrants.*
23.01 Consent of Deloitte & Touche LLP relating to Avis Financial Statements.*
23.02 Consent of Deloitte & Touche LLP relating to VMS Financial Statements.*
23.03 Consent of White & Case LLP (included in opinion).*
24.1 Powers of Attorney (included in the signature pages to the Registration Statement).*
25.1 Form T-1 Statement of Eligibility of The Bank of New York, as trustee.*
99.1 Form of Letter of Transmittal.*******
99.2 Notice of Guaranteed Delivery.*******
99.3 Form of Letter from Registered Holders to clients.*******
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees.*******
</TABLE>
- ------------------------
* Filed herewith.
** Incorporated by reference to the Registrant's Registration Statement on
Form S-1, 333-28609
*** Incorporated by reference to the Registrant's Registration Statement on
Form S-1, 333-46737.
**** Incorporated by reference to the Registrant's Form 10-K for the fiscal
year ended December 31, 1998.
***** Incorporated by reference to the Registrant's Current Report on Form 8-K
dated July 15, 1999.
II-11
<PAGE>
****** Incorporated by reference to Amendment No. 1 to the Registrant's Current
Report on Form 8-K/A dated July 15, 1999.
******* To be filed by amendment.
(b) Financial Statement Schedule
- Schedule II--Valuation and Qualifying Accounts of Avis Rent A Car, Inc.
and subsidiaries.
- Report of Deloitte & Touche LLP, independent auditors on Financial
Statement Schedule of Avis Rent A Car, Inc. and subsidiaries for the years
ended December 31, 1996, 1997 and 1998.
All other schedules have been omitted because the information required to be
set forth therein is not applicable or is shown in the consolidated or combined
financial statements or notes thereto.
ITEM 22. UNDERTAKINGS.
The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by any of the registrants of expenses
incurred or paid by a director, officer or controlling person of the registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Garden City, state of New
York, on August 30, 1999.
<TABLE>
<S> <C> <C>
AVIS RENT A CAR, INC.
By: /s/ F. ROBERT SALERNO
-----------------------------------------
Name: F. Robert Salerno
TITLE: PRESIDENT--RENTAL CAR GROUP
AVIS RENT A CAR SYSTEM, INC.
By: /s/ F. ROBERT SALERNO
-----------------------------------------
Name: F. Robert Salerno
TITLE: PRESIDENT
AVIS INTERNATIONAL, LTD.
By: /s/ F. ROBERT SALERNO
-----------------------------------------
Name: F. Robert Salerno
TITLE: PRESIDENT
AVIS MANAGEMENT SERVICES, LTD.
By: /s/ F. ROBERT SALERNO
-----------------------------------------
Name: F. Robert Salerno
TITLE: PRESIDENT
AVIS CARIBBEAN, LIMITED
By: /s/ F. ROBERT SALERNO
-----------------------------------------
Name: F. Robert Salerno
TITLE: PRESIDENT
AVIS ASIA AND PACIFIC, LIMITED
By: /s/ F. ROBERT SALERNO
-----------------------------------------
Name: F. Robert Salerno
TITLE: PRESIDENT
</TABLE>
II-13
<PAGE>
<TABLE>
<S> <C> <C>
AVIS ENTERPRISES, INC.
By: /s/ F. ROBERT SALERNO
-----------------------------------------
Name: F. Robert Salerno
TITLE: PRESIDENT
AVIS SERVICE, INC.
By: /s/ F. ROBERT SALERNO
-----------------------------------------
Name: F. Robert Salerno
TITLE: PRESIDENT
AVIS LUBE, INC.
By: /s/ F. ROBERT SALERNO
-----------------------------------------
Name: F. Robert Salerno
TITLE: PRESIDENT
AVIS LEASING CORPORATION
By: /s/ F. ROBERT SALERNO
-----------------------------------------
Name: F. Robert Salerno
TITLE: PRESIDENT
RENT-A-CAR COMPANY, INCORPORATED
By: /s/ F. ROBERT SALERNO
-----------------------------------------
Name: F. Robert Salerno
TITLE: PRESIDENT
RESERVE CLAIMS MANAGEMENT CO.
By: /s/ F. ROBERT SALERNO
-----------------------------------------
Name: F. Robert Salerno
TITLE: PRESIDENT
AVIS FLEET LEASING AND MANAGEMENT CORPORATION
By: /s/ F. ROBERT SALERNO
-----------------------------------------
Name: F. Robert Salerno
TITLE: PRESIDENT
</TABLE>
II-14
<PAGE>
<TABLE>
<S> <C> <C>
PHH VEHICLE MANAGEMENT SERVICES LLC
By: /s/ MARK E. MILLER
-----------------------------------------
Name: Mark E. Miller
TITLE: PRESIDENT
DEALERS HOLDINGS, INC.
By: /s/ MARK E. MILLER
-----------------------------------------
Name: Mark E. Miller
TITLE: PRESIDENT
WILLIAMSBURG MOTORS, INC.
By: /s/ MARK E. MILLER
-----------------------------------------
Name: Mark E. Miller
TITLE: PRESIDENT
EDENTON MOTORS, INC.
By: /s/ MARK E. MILLER
-----------------------------------------
Name: Mark E. Miller
TITLE: PRESIDENT
WRIGHT EXPRESS LLC
By: /s/ MICHAEL E. DUBYAK
-----------------------------------------
Name: Michael E. Dubyak
TITLE: PRESIDENT
PHH CANADIAN HOLDINGS, INC.
By: /s/ MARK E. MILLER
-----------------------------------------
Name: Mark E. Miller
TITLE: PRESIDENT
PHH DEUTSCHLAND, INC.
By: /s/ MARK E. MILLER
-----------------------------------------
Name: Mark E. Miller
TITLE: PRESIDENT
</TABLE>
II-15
<PAGE>
<TABLE>
<S> <C> <C>
PHH/PAYMENTECH LLC
By: /s/ MARK E. MILLER
-----------------------------------------
Name: Mark E. Miller
TITLE: PRESIDENT
FAH COMPANY, INC.
By: /s/ KEVIN M. SHEEHAN
-----------------------------------------
Name: Kevin M. Sheehan
TITLE: PRESIDENT
</TABLE>
II-16
<PAGE>
POWER OF ATTORNEY
Each of the directors and officers of Avis Rent A Car, Inc., Avis Rent A Car
System, Inc., Avis International, Ltd., Avis Management Services, Ltd., Avis
Caribbean Limited, Avis Asia and Pacific, Limited, Avis Enterprises, Inc., Avis
Service, Inc., Avis Lube, Inc., Avis Leasing Corporation, Rent-A-Car Company,
Incorporated, Reserve Claims Management Co., Avis Fleet Leasing and Management
Corporation, PHH Vehicle Management Services, LLC, Dealers Holdings, Inc.,
Williamsburg Motors, Inc., Edenton Motors, Inc., Wright Express LLC, PHH
Canadian Holdings, Inc., PHH Deutschland, Inc., PHH/Paymentech LLC and FAH
Company, Inc., whose signature appears below hereby authorizes each of Kevin M.
Sheehan and Karen C. Sclafani, as attorney-in-fact and agent, with full powers
of substitution, to sign on his or her behalf, individually and in the
capacities stated below, and to file any and all amendments (including
post-effective amendments) to this Registration Statement with the Securities
and Exchange Commission, granting to said attorney-in-fact and agents full power
and authority to perform any other act on behalf of the undersigned required to
be done in the premises.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
AVIS RENT A CAR, INC.
/s/ F. ROBERT SALERNO President and Chief
- ------------------------------ Operating Officer-Rental August 30, 1999
F. Robert Salerno Car Group and Director
President-Corporate and
/s/ KEVIN M. SHEEHAN Business Affairs, Chief
- ------------------------------ Financial Officer and August 30, 1999
Kevin M. Sheehan Director
President and Chief
/s/ MARK E. MILLER Operating
- ------------------------------ Officer-Vehicle August 20, 1999
Mark E. Miller Management Services
Group
/s/ TIMOTHY M. SHANLEY Vice President and
- ------------------------------ Controller (Chief August 30, 1999
Timothy M. Shanley Accounting Officer)
/s/ MARTIN L. EDELMAN
- ------------------------------ Chairman of the Board and August 30, 1999
Martin L. Edelman Director
- ------------------------------ Director
W. Alun Cathcart
/s/ LEONARD S. COLEMAN
- ------------------------------ Director August 30, 1999
Leonard S. Coleman, Jr.
</TABLE>
II-17
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ ALFONSE M. D'AMATO
- ------------------------------ Director
Alfonse M. D'Amato
- ------------------------------ Director
Deborah L. Harmon
- ------------------------------ Director
Stephen P. Holmes
/s/ MICHAEL J. KENNEDY
- ------------------------------ Director
Michael J. Kennedy
- ------------------------------ Director
Michael P. Monaco
AVIS RENT A CAR SYSTEM, INC.
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ GERARD J. KENNELL
- ------------------------------ Director August 30, 1999
Gerard J. Kennell
AVIS INTERNATIONAL, LTD.
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ MICHAEL P. COLLINS
- ------------------------------ Director August 30, 1999
Michael P. Collins
</TABLE>
II-18
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
AVIS MANAGEMENT SERVICES, LTD.
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ MICHAEL P. COLLINS
- ------------------------------ Director August 30, 1999
Michael P. Collins
AVIS CARIBBEAN, LIMITED
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ MICHAEL P. COLLINS
- ------------------------------ Director August 30, 1999
Michael P. Collins
AVIS ASIA AND PACIFIC, LIMITED
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ MICHAEL P. COLLINS
- ------------------------------ Director August 30, 1999
Michael P. Collins
AVIS ENTERPRISES, INC.
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ MICHAEL P. COLLINS
- ------------------------------ Director August 30, 1999
Michael P. Collins
</TABLE>
II-19
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
AVIS SERVICE, INC.
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ MICHAEL P. COLLINS
- ------------------------------ Director August 30, 1999
Michael P. Collins
AVIS LUBE, INC.
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ MICHAEL P. COLLINS
- ------------------------------ Director August 30, 1999
Michael P. Collins
AVIS LEASING CORPORATION
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVEIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ GERARD J. KENNELL
- ------------------------------ Director August 30, 1999
Gerard J. Kennell
</TABLE>
II-20
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
RENT-A-CAR COMPANY,
INCORPORATED
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ GERARD J. KENNELL
- ------------------------------ Director August 30, 1999
Gerard J. Kennell
RESERVE CLAIMS MANAGEMENT CO.
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ GERARD J. KENNELL
- ------------------------------ Director August 30, 1999
Gerard J. Kennell
AVIS FLEET LEASING AND
MANAGEMENT CORPORATION
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ RICHARD S. JACOBSON
- ------------------------------ Director August 30, 1999
Richard S. Jacobson
</TABLE>
II-21
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
PHH VEHICLE MANAGEMENT
SERVICES, LLC
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ MARK E. MILLER
- ------------------------------ Director August 20, 1999
Mark E. Miller
DEALERS HOLDINGS, INC.
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ MARK E. MILLER
- ------------------------------ Director August 20, 1999
Mark E. Miller
WILLIAMSBURG MOTORS, INC.
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ MARK E. MILLER
- ------------------------------ Director August 20, 1999
Mark E. Miller
</TABLE>
II-22
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
EDENTON MOTORS, INC.
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ MARK E. MILLER
- ------------------------------ Director August 20, 1999
Mark E. Miller
WRIGHT EXPRESS LLC
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ MICHAEL E. DUBYAK
- ------------------------------ Director August 30, 1999
Michael E. Dubyak
PHH CANADIAN HOLDINGS, INC.
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ MARK E. MILLER
- ------------------------------ Director August 20, 1999
Mark E. Miller
</TABLE>
II-23
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
PHH DEUTSCHLAND, INC.
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
PHH/PAYMENTECH LLC
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ MARK E. MILLER
- ------------------------------ Director August 20, 1999
Mark E. Miller
FAH COMPANY, INC.
/s/ F. ROBERT SALERNO
- ------------------------------ Director August 30, 1999
F. Robert Salerno
/s/ KEVIN M. SHEEHAN
- ------------------------------ Director August 30, 1999
Kevin M. Sheehan
/s/ MARK E. MILLER
- ------------------------------ Director August 20, 1999
Mark E. Miller
</TABLE>
II-24
<PAGE>
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Stockholders of
Avis Rent A Car, Inc.
Garden City, NY
We have audited the consolidated statements of financial position of Avis
Rent A Car, Inc. and subsidiaries (successors to Rental Car System Holdings,
Inc. and subsidiaries, Avis International, Ltd. and subsidiaries, Avis
Enterprises, Inc. and subsidiaries, Pathfinder Insurance Company and Global
Excess & Reinsurance, Ltd., all previously wholly-owned by Avis, Inc.,
collectively the "Predecessor Companies") (collectively referred to as "Avis
Rent A Car, Inc." or the "Company") as of December 31, 1998 and 1997, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years ended December 31, 1998 and 1997 and for the period October
17, 1996 (Date of Acquisition) to December 31, 1996 and as to the Predecessor
Companies the related consolidated statements of operations, stockholders'
equity and cash flows for the period January 1, 1996 to October 16, 1996, and
have issued our report thereon dated January 25, 1999 (March 19, 1999 as to Note
21 and August 23, 1999 as to Note 22) (included elsewhere in this Registration
Statement). Our audits also included the consolidated financial statement
schedule of the Company and the Predecessor Companies, listed in Item 21. This
consolidated financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, such consolidated financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
<TABLE>
<S> <C>
/s/ DELOITTE & TOUCHE LLP
- ----------------------------
Deloitte & Touche LLP
</TABLE>
New York, New York
January 25, 1999
(March 19,1999 as to Note 21 and
August 23, 1999 as to Note 22)
<PAGE>
AVIS RENT A CAR, INC.
FINANCIAL STATEMENT SCHEDULE
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT CHARGED TO OTHER BALANCE AT
BEGINNING COSTS AND ADDITIONS, END OF
DESCRIPTION OF PERIOD EXPENSES NET(A) DEDUCTIONS PERIOD
- ------------------------------------------------ ----------- ----------- ----------- ----------- -----------
January 1, 1996 to October 16, 1996:
Allowance for doubtful accounts-- accounts
receivable.................................... $ 2,746 $ 1,238 $ 794 $ 3,190
Accumulated amortization--goodwill.............. $ 37,471 $ 3,782 $ 41,253
Public liability and property damage and other
insurance liabilities......................... $ 194,677 $ 74,109 $ 56,315 $ 212,471
October 17, 1996 (Date of Acquisition) to
December 31, 1996:
Allowance for doubtful accounts-- accounts
receivable.................................... $ 227 $ 227
Accumulated amortization--goodwill.............. $ 1,026 $ 1,026
Public liability and property damage and other
insurance liabilities......................... $ 212,471 $ 17,355 $ 16,041 $ 213,785
Year ended December 31, 1997:
Allowance for doubtful accounts-- accounts
receivable.................................... $ 227 $ 3,208 $ 1,149 $ 2,286
Accumulated amortization--goodwill.............. $ 1,026 $ 6,860 $ 7,886
Public liability and property damage and other
insurance liabilities......................... $ 213,785 $ 96,663 $ 16,670 $ 71,089 $ 256,029
Year ended December 31, 1998:
Allowance for doubtful accounts-- accounts
receivable.................................... $ 2,286 $ 2,961 $ 1,897 $ 3,350
Accumulated amortization--goodwill.............. $ 7,886 $ 11,854 $ 19,740
Public liability and property damage and other
insurance liabilities......................... $ 256,029 $ 93,038 $ 79,858 $ 269,209
</TABLE>
- ------------------------
a) Includes additions of $16,838 relating to the acquisition of The First Gray
Line Corporation on August 20, 1997.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
1.01 Purchase Agreement, dated as of June 25, 1999, among Avis Rent A Car, Inc. (the "Company"), the
Subsidiary Guarantors (as defined therein) and Chase Securities Inc. and Lehman Brothers Inc. (the
"Initial Purchasers").*
2.01 Agreement and Plan of Merger and Reorganization by and among PHH Corporation, PHH Holdings
Corporation, the Company and Avis Fleet Leasing and Management Corporation, dated as of May 22,
1999.*
3. CERTIFICATE OF INCORPORATION AND BY-LAWS.
3.01 Certificate of Incorporation of Avis Rent A Car, Inc.***
3.02(a) Certificate of Incorporation of Avis Rent A Car System, Inc.*
3.02(b) Restated Certificate of Incorporation of Avis Rent A Car System, Inc.*
3.02(c) Corrected Restated Certificate of Incorporation of Avis Rent A Car System, Inc.*
3.02(d) Certificate of Ownership and Merger merging The First Gray Line Corporation into Avis Rent A Car
System, Inc.*
3.03(a) Certificate of Incorporation of Avis International, Ltd.*
3.03(b) Certificate of Change of Location of Registered Office and Registered Agent of Avis International,
Ltd.*
3.03(c) Certificate of Change of Registered Agent and Registered Office of Avis International, Ltd.*
3.04(a) Certificate of Incorporation of Avis Management Services, Ltd.*
3.04(b) Certificate of Change of Location of Registered Office and Registered Agent of Avis Management
Services, Ltd.*
3.04(c) Certificate of Change of Registered Agent and Registered Office of Avis Management Services, Ltd.*
3.05 Certificate of Incorporation of Avis Caribbean, Limited.*
3.06 Certificate of Incorporation of Avis Asia and Pacific, Limited.*
3.07(a) Certificate of Incorporation of Avis Enterprises, Inc.*
3.07(b) Certificate of Amendment of Certificate of Incorporation of Avis Enterprises, Inc.*
3.07(c) Certificate of Amendment of Certificate of Incorporation of Avis Enterprises, Inc.*
3.08 Certificate of Incorporation of Avis Service, Inc.*
3.09 Certificate of Incorporation of Avis Lube, Inc.*
3.10 Certificate of Incorporation of Avis Leasing Corporation.*
3.11(a) Certificate of Incorporation of Rent-A-Car Company, Incorporated.*
3.11(b) Articles of Reduction of Rent-A-Car Company, Incorporated.*
3.11(c) Articles of Amendment to Articles of Incorporation of Rent-A-Car Company, Incorporated.*
3.11(d) Articles of Amendment to Articles of Incorporation of Rent-A-Car Company, Incorporated.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
3.11(e) Articles of Amendment to the Articles of Incorporation of Rent-A-Car Company, Incorporated.*
3.11(f) Articles of Amendment of Rent-A-Car Company, Incorporated.*
3.12(a) Certificate of Incorporation of Reserve Claims Management Co.*
3.12(b) Certificate of Change of Registered Agent and Registered Office of Reserve Claims Management Co.
f/k/a Avis Leasing International, Ltd.*
3.12(c) Restated Certificate of Incorporation of Avis Leasing International, Ltd.*
3.13(a) Certificate of Incorporation of Avis Fleet Leasing and Management Corporation.*
3.13(b) Articles of Correction of Avis Fleet Leasing and Management Corporation.*
3.13(c) Certificate of Designation of Powers, Preferences and Special Rights of Series A Cumulative
Participating Redeemable Convertible Preferred Stock and Qualifications, Limitations and Restrictions
Thereof of Avis Fleet Leasing and Management Corporation.******
3.13(d) Certificate of Designation of Powers, Preferences and Special Rights of Series B Cumulative PIK
Preferred Stock and Qualifications, Limitations and Restrictions Thereof of Avis Fleet Leasing and
Management Corporation.*****
3.13(e) Certificate of Designation of Powers, Preferences and Special Rights of Series C Cumulative
Redeemable Preferred Stock and Qualifications, Limitations and Restrictions Thereof of Avis Fleet
Leasing and Management Corporation.*****
3.14(a) Certificate of Incorporation of Dealers Holding, Inc.*
3.14(b) Notice of Change of Resident Agent of Dealers Holding, Inc.*
3.14(c) Notice of Change of Resident Agent of Dealers Holding, Inc.*
3.14(d) Change of Address of Resident Agent of Dealers Holding, Inc.*
3.14(e) Certified Copy of Resolution of Board of Directors for Designation or Change of Resident Agent and/or
Principal Office of Dealers Holdings, Inc.*
3.15(a) Articles of Incorporation of Williamsburg Motors, Inc.*
3.15(b) Notice of Change of Resident Agent of Williamsburg Motors, Inc.*
3.15(c) Change of Resident Agent of Williamsburg Motors, Inc.*
3.15(d) Change of Address of Resident Agent of Williamsburg Motors, Inc.*
3.15(e) Certified Copy of Resolution of Board of Directors for Designation or Change of Resident Agent and/or
Principal Office.*
3.15(f) Articles of Amendment of Articles of Incorporation of Williamsburg Motors, Inc.*
3.16(a) Articles of Incorporation of Edenton Motors, Inc.*
3.16(b) Notice of Change of Resident Agent of Edenton Motors, Inc.*
3.16(c) Articles of Amendment of Edenton Motors, Inc.*
3.16(d) Articles of Amendment of Edenton Motors, Inc.*
3.16(e) Change of Resident Agent of Edenton Motors, Inc.*
3.16(f) Change of Address of Resident Agent of Edenton Motors, Inc.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
3.16(g) Certified Copy of Resolution of Board of Directors for Designation or Change of Resident Agent and/or
Principal Office of Edenton Motors, Inc.*
3.17 Certificate of Incorporation of PHH Canadian Holdings, Inc.*
3.18(a) Articles of Incorporation of PHH Deutschland, Inc.*
3.18(b) Articles of Amendment of PHH Deutschland, Inc.*
3.18(c) Articles of Amendment of PHH Deutschland, Inc.*
3.18(d) Articles of Amendment of PHH Deutschland, Inc.*
3.18(e) Change of Resident Agent of PHH Deutschland, Inc.*
3.18(f) Articles of Amendment of PHH Deutschland, Inc.*
3.18(g) Articles of Amendment of PHH Deutschland, Inc.*
3.18(h) Certified Copy of Resolution of Board of Directors for Designation or Change of Resident Agent and/or
Principal Office of PHH Deutschland, Inc.*
3.18(i) Change of Address of Resident Agent of PHH Deutschland, Inc.*
3.19(a) Certificate of Incorporation of FAH Company, Inc.*
3.19(b) Certificate of Amendment to Certificate of Incorporation of FAH Company, Inc.*
3.19(c) Certificate of Amendment to Certificate of Incorporation of FAH Company, Inc.*
3.19(d) Certificate of Amendment to Certificate of Incorporation of FAH Company, Inc.*
3.20 Limited Liability Company Agreement of PHH Vehicle Management Services LLC.*
3.21 Limited Liability Company Agreement of Wright Express LLC.*
3.22 Operating Agreement of PHH/Paymentech LLC.*
3.50 By-Laws of Avis Rent A Car, Inc.***
3.51 By-Laws of Avis Rent A Car System, Inc.*
3.52 By-Laws of Avis International, Ltd.*
3.53 By-Laws of Avis Management Services, Ltd.*
3.54 By-Laws of Avis Caribbean, Limited.*
3.55 By-Laws of Avis Asia and Pacific, Limited.*
3.56 By-Laws of Avis Enterprises, Inc.*
3.57 By-Laws of Avis Service, Inc.*
3.58 By-Laws of Avis Lube, Inc.*
3.59 By-Laws of Avis Leasing Corporation.*
3.60 By-Laws of Rent-A-Car Company, Incorporated.*
3.61 By-Laws of Reserve Claims Management Co.*
3.62 By-Laws of Avis Fleet Leasing and Management Corporation.*
3.63 By-Laws of Dealers Holdings, Inc.*
3.64 By-Laws of Williamsburg Motors, Inc.*
3.65 By-Laws of Edenton Motors, Inc.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
3.66 By-Laws of PHH Canadian Holdings, Inc.*
3.67 By-Laws of PHH Deutschland, Inc.*
3.68 By-Laws of FAH Company, Inc.*
4.03 Series 1997-1 Supplement, dated as of July 30, 1997 between AESOP Funding II L.L.C. and the Avis ABS
Trustee, to the Amended and Restated Base Indenture, dated as of July 30, 1997, between AESOP Funding
II and the Avis ABS Trustee.**
4.04 Series 1997-1 Supplement, dated as of July 30, 1997 between AESOP Funding II L.L.C. and the Avis ABS
Trustee, to the Amended and Restated Base Indenture, dated as of July 30, 1997, between AESOP Funding
II and the Avis ABS Trustee.**
4.05 Loan Agreement, dated as of July 30, 1997, between AESOP Leasing L.P., as borrower, and AESOP Funding
II L.L.C. as lender.**
4.06 Loan Agreement, dated as of July 30, 1997, among AESOP Leasing L.P., as borrower, PV Holding Corp.,
as a permitted nominee of the borrower, Quartz Fleet Management, Inc., as a permitted nominee of the
borrower, and AESOP Funding I L.L.C., as lender.**
4.07 Loan Agreement, dated as of July 30, 1997, between AESOP Leasing Corp II, as borrower, AESOP Leasing
Corp., as permitted nominee of the borrower, and AESOP Funding II L.L.C., as lender.**
4.08 Master Motor Vehicle Finance Lease Agreement, dated as of July 30, 1997, by and among AESOP Leasing
L.P., as lessor, Avis Rent A Car System, Inc., as lessee, individually and as the administrator and
Avis Rent A Car, Inc., as guarantor.**
4.09 Master Motor Vehicle Operating Lease Agreement, dated as of July 30, 1997, by and among AESOP Leasing
L.P., as lessor, Avis Rent A Car System, Inc., individually and as the administrator, certain
Eligible Rental Car Companies, as lessees, and Avis Rent A Car, Inc., as guarantor.**
4.10 Master Motor Vehicle Operating Lease Agreement, dated as of July 30, 1997, by and among AESOP Leasing
Corp. II, as lessor, Avis Rent A Car System, Inc., individually and as the administrator, certain
Eligible Rental Car Companies, as lessees, and Avis Rent A Car, Inc., as guarantor.**
4.11 Credit Agreement, dated as of July 30, 1997, among Avis Rent A Car, Inc., Avis Rent A Car System,
Inc., The Chase Manhattan Bank, as administrative agent, Lehman Commercial Paper, Inc., as
syndication agent and the other lenders party thereto (the "Credit Agreement").**
4.12 Guarantee, dated as of July 30, 1997, in favor of The Chase Manhattan Bank, as administrative agent
for the lenders from time to time parties to the Credit Agreement.**
4.13 Security Agreement, dated as of July 30, 1997, in favor of The Chase Manhattan Bank, as
administrative agent for the lenders from time to time parties to the Credit Agreement.**
4.14 Pledge Agreement, dated as of July 30, 1997, in favor of The Chase Manhattan Bank, as administrative
agent for the lenders from time to time parties to the Credit Agreement.**
4.15 Supplemental Indenture No. 1, dated as of July 31, 1998, to the Amended and Restated Base Indenture,
dated as of July 30, 1997, between AESOP Funding I L.L.C. as issuer and the Avis ABS Trustee.****
</TABLE>
<PAGE>
<TABLE>
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<S> <C>
4.16 Amendment No. 1, dated as of July 31, 1998, to Loan Agreement, dated as of July 30, 1997, between
AESOP Leasing L.P., as borrower, and AESOP Funding I L.L.C., as lender.****
4.17 Amendment No. 1, dated as of July 31, 1998, to Loan Agreement, dated as of July 30, 1997, among AESOP
Leasing L.P., as borrower, PV Holding Corp., as a permitted nominee of the borrower, Quartz Fleet
Management, Inc., as a permitted nominee of the borrower, and AESOP Funding II L.L.C., as lender.****
4.18 Amendment No. 1, dated as of July 31, 1998, to Master Motor Vehicle Finance Lease Agreement, dated as
of July 30, 1997, among AESOP Leasing L.P., as lessor, Avis Rent A Car Systems, Inc., as Lessee
individually and as Administrator, and Avis Rent A Car, Inc., as guarantor.****
4.19 Amended and Restated Loan Agreement, dated as of September 15, 1998, among AESOP Leasing L.P., as
borrower, PV Holding Corp., as a permitted nominee of the borrower, Quartz Fleet Management, Inc., as
a permitted nominee of the borrower, and AESOP Funding II L.L.C.****
4.20 Amended and Restated Master Motor Vehicle Operating Lease Agreement, dated as of September 15, 1998,
among AESOP Leasing L.P., as lessor, Avis Rent Car System, Inc., individually and as Administrator,
certain Eligible Rental Car Companies, as lessees, and Avis Rent A Car, Inc., as guarantor.****
4.21 Supplemental Indenture No. 2, dated as of September 15, 1998, to Amended and Restated Base Indenture,
dated as of July 30, 1997, between AESOP Funding I L.L.C., as issuer and the Avis ABS Trustee.****
4.22 Series 1998-1 Supplement, dated as of February 26, 1998 between AESOP Funding II L.L.C., as issuer,
and the Avis ABS Trustee, as trustee and Series 1998-1 agent, to the Amended and Restated Base
Indenture, dated as of July 30, 1997, between AESOP Funding II L.L.C., as issuer, and the Avis ABS
Trustee.****
4.30 Indenture, dated as of June 30, 1999, among the Company, the Subsidiary Guarantors and the Bank of
New York (the "Notes Trustee").*
4.31 Exchange and Registration Rights Agreement, dated as of June 30, 1999, among the Company, the
Subsidiary Guarantors, the Initial Purchasers and the Notes Trustee.*
4.32 Credit Agreement, dated as of June 30, 1999, among the Company, as borrower, the financial
institutions party thereto, the Chase Manhattan Bank (the "Administrative Agent"), and Lehman
Commercial Paper Inc.*
4.33 Guarantee and Collateral Agreement, dated as of June 30, 1999, among the Company, the Subsidiary
Guarantors and the Administrative Agent.*
4.40 Origination Trust Agreement, dated as of June 30, 1999 (the "Origination Trust Agreement"), among
Raven Funding LLC (the "SPV"), PHH Vehicle Management Services LLC ("VMS LLC") and Wilmington Trust
Company (the "VMS ABS Trustee").*
4.41 Sold SUBI Supplement 1999-1A to the Origination Trust Agreement, dated as of June 30, 1999 (the
"1999-1A SUBI Supplement"), among the SPV, VMS LLC and the VMS ABS Trustee.*
4.42 Sold SUBI Supplement 1999-1B to the Origination Trust Agreement, dated as of June 30, 1999 (the
"1999-1B SUBI Supplement"), among the SPV, VMS LLC and the VMS ABS Trustee.*
4.43 Servicing Agreement, dated as of June 30, 1999 (the "Servicing Agreement"), between D.L. Peterson
Trust (the "Origination Trust") and VM LLC.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
4.44 Sold SUBI Supplement 1999-1 to the Servicing Agreement, dated as of June 30, 1999 (the "Sold SUBI
Servicing Supplement"), among the Origination Trust, the VMS ABS Trustee and VMS LLC.*
4.45 Asset Sale Agreement, dated as of June 30, 1999, between VMS LLC and the SPV.*
4.46 Receivables Purchase Agreement, dated as of June 30, 1999, by and between VMS LLC and the SPV.*
4.47 Contribution Agreement, dated as of June 30, 1999 between the SPV and the VMS ABS Trustee as trustee
for the Organization Trust and by VMS LLC for the Origination Trust.*
4.48 Transfer Agreement, dated as of June 30, 1999, between the SPV and Greyhound Funding LLC
("Greyhound"), together with the Origination Trust, VM LLC and the SPV.*
4.49 Base Indenture, dated as of June 30, 1999, between Greyhound and The Chase Manhattan Bank (the "VMS
ABS Indenture Trustee").*
4.50 Series 1999-1 Supplement, dated as of June 30, 1999, among Greyhound, VMS LLC, Park Avenue
Receivables Corporation and the VMS ABS Indenture Trustee.*
4.51 Custodian Agreement dated as of June 30, 1999, among the Origination Trust, Wilmington Trust Company
as Trustee, VMS LLC, as Servicer and All First Financial Center, as Custodian.*
4.52 Lockbox Services Agreement, dated as of June 30, 1999 among the Origination Trust, VMS LLC, in its
capacity as servicer of the Trust, and Bank of America National Trust and Savings Association.*
4.53 Preferred Membership Interest Purchase Agreement, dated as of June 0, 1999, among Greyhound Funding
LLC, Park Avenue Receivables Corporation, The Chase Manhattan Bank, individually as the APA Bank and
as Funding Agent, PHH Vehicle Management Services LLC, as Administrator.*
4.54 Administration Agreement, dated as of June 30, 1999, among Greyhound Funding LLC, Raven Funding LLC,
The Chase Manhattan Bank, as Indenture Trustee, PHH Vehicle Management Services LLC, as
Administrator.*
5.0 OPINIONS
5.1 Opinion of White & Case LLP regarding the legality of the securities being registered hereby.*
10. MATERIAL CONTRACTS.
10.01 Form of Registration Rights Agreement**
10.02 Separation Agreement, dated as of July 30, 1997, between Cendant Car Rental, Inc. and Avis Rent A
Car, Inc.**
10.03 Master License Agreement, dated as of July 30, 1997, among Cendant Car Rental, Inc., Avis Rent A Car
System, Inc. and Wizard Co., Inc.**
10.04 Computer Services Agreement, dated as of July 30, 1997, between Avis Rent A Car System, Inc. and
WizCom International, Ltd.**
10.05 Reservation Services Agreement, dated as of July 30, 1997, between Cendant Incorporated and Avis Rent
A Car System, Inc.**
10.06 Form of Tax Disaffiliation Agreement among Cendant Incorporated, Cendant Car Rental, Inc. and Avis
Rent A Car, Inc.**
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
10.07 Form of Lease Agreement by and between WizCom International, Ltd., as lessor, and Avis Rent A Car
System, Inc., as lessee (Virginia Beach, Virginia).**
10.08 Form of Sublease Agreement by and between WizCom International, Ltd., as sublessor, and Avis Rent A
Car System, Inc., as sublessee (Tulsa, Oklahoma).**
10.09 Form of Sublease Agreement by and between WizCom International, Ltd., as sublessor, and Avis Rent A
Car System, Inc., as sublessee (Garden City, New York).**
10.10 Wizard Note Assignment, Assumption and Release Agreement, dated as of July 30, 1997, by and between
Wizard Co., Inc., Avis Rent A Car System, Inc. and Reserve Claims Management Co.**
10.11 Termination Services Agreement, dated as of July 30, 1997, among Harris Trust and Savings Bank, AESOP
Funding II L.L.C., Avis Rent A Car System, Inc., and WizCom International, Ltd.**
10.13 Call Transfer Agreement, dated March 4, 1997, between HFS Incorporated and Avis Rent A Car System,
Inc.**
10.15 Retention Agreement, dated as of January 1, 1999, between Avis Rent A Car System, Inc. and F. Robert
Salerno.****
10.16 Retention Agreement, dated as of January 1, 1999, between Avis Rent A Car System, Inc. and Kevin M.
Sheehan.****
10.17 Avis Rent A Car, Inc. 1997 Stock Option Plan.**
10.18 Avis Rent A Car System, Inc. Nonqualified Deferred Compensation Plan.****
10.20 Information Technology Services Agreement, dated as of June 29, 1999, between PHH Vehicle Management
Services, LLC and Cendant Corporation.*
10.21 Corporate Services Transition Agreement, dated as of June 30, 1999 between Cendant Operations, Inc.
and Avis Fleet Leasing and Management Corporation.*
10.22 Corporate Services Transition Agreement, dated as of June 30, 1999 between PHH Corporation and Avis
Fleet Leasing and Management Corporation.*
10.23 VMS Acquisition Registration Rights Agreement, dated as of June 30, 1999, among Avis Rent A Car,
Inc., Avis Fleet Leasing and Management Corporation, PHH Corporation and PHH Holdings Corporation.*
10.24 Non-Competition Agreement, dated as of June 30, 1999, among Avis Rent Car, Inc., Avis Fleet Leasing
and Management Corporation, PHH Corporation and PHH Holdings Corporation.*
10.25 Stockholders' Agreement, dated as of June 30, 1999, among Avis Rent A Car, Inc., Avis Fleet Leasing
and Management Corporation, and PHH Corporation.*
10.26 Trademark License Agreement, dated as of June 30, 1999, between Avis Fleet Leasing and Management
Corporation and PHH Holdings Corporation.*
10.27 Transitional License Agreement, dated as of June 30, 1999, between Cendant Corporation and Avis Fleet
Leasing and Management Corporation.*
10.28 Undertaking, dated as of June 30, 1999 by Avis Fleet Leasing and Management Corporation.*
10.29 Instrument of Assumption, dated as of June 30, 1999 by Avis Fleet Leasing and Management
Corporation.*
12.1 Computation of Ratio of Earnings to Fixed Charges and Combined Fixed Charges.*
</TABLE>
<PAGE>
<TABLE>
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EXHIBIT NO. DESCRIPTION
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<S> <C>
21 Subsidiaries of the Registrants.*
23.01 Consent of Deloitte & Touche LLP relating to Avis Financial Statements.*
23.02 Consent of Deloitte & Touche LLP relating to VMS Financial Statements.*
23.03 Consent of White & Case LLP (included in opinion).*
24.1 Powers of Attorney (included in the signature pages to the Registration Statement).*
25.1 Form T-1 Statement of Eligibility of The Bank of New York, as trustee.*
99.1 Form of Letter of Transmittal.*******
99.2 Notice of Guaranteed Delivery.*******
99.3 Form of Letter from Registered Holders to clients.*******
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees.*******
</TABLE>
- ------------------------
* Filed herewith.
** Incorporated by reference to the Registrant's Registration Statement on
Form S-1, 333-28609.
*** Incorporated by reference to the Registrant's Registration Statement on
Form S-1, 333-46737.
**** Incorporated by reference to the Registrant's Form 10-K for the fiscal
year ended December 31, 1998.
***** Incorporated by reference to the Registrant's Current Report on Form 8-K
dated July 15, 1999.
****** Incorporated by reference to Amendment No. 1 to the Registrant's Current
Report on Form 8-K/A dated July 15, 1999.
******* To be filed by amendment.
<PAGE>
Exhibit 1.01
EXECUTION COPY
AVIS RENT A CAR, INC.
$500,000,000
11% Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
June 25, 1999
CHASE SECURITIES INC.
LEHMAN BROTHERS INC.
c/o Chase Securities Inc.
270 Park Avenue, 4th Floor
New York, New York 10017
Ladies and Gentlemen:
Avis Rent A Car, Inc., a Delaware corporation (the "Company" or
"Avis "), proposes to issue and sell $500,000,000 aggregate principal amount of
its 11% Senior Subordinated Notes due 2009 (the "Securities"). The Securities
will be guaranteed (the "Subsidiary Guarantees") on a senior subordinated basis
jointly and severally by the Subsidiary Guarantors named in Schedule 1 hereto
(the "Subsidiary Guarantors"). The Securities will be issued pursuant to an
Indenture to be dated as of June 30, 1999 (the "Indenture") among the Company,
the Subsidiary Guarantors and The Bank of New York, as trustee (the "Trustee").
The Company hereby confirms its agreement with Chase Securities Inc. ("CSI") and
Lehman Brothers Inc. (together with CSI, the "Initial Purchasers") concerning
the purchase of the Securities from the Company by the several Initial
Purchasers. References to the Indenture shall be deemed to include the
Subsidiary Guarantees.
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon an exemption therefrom. The Company has
prepared a preliminary offering memorandum dated June 14, 1999 (the "Preliminary
Offering Memorandum") and will prepare an offering memorandum dated the date
hereof (the "Offering Memorandum") setting forth information concerning the
Company, the Securities and the Subsidiary Guarantees. Copies of the Preliminary
Offering Memorandum have been, and copies of the Offering Memorandum will be,
delivered by the Company to the Initial Purchasers pursuant to the terms of this
Agreement. Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall
<PAGE>
2
be deemed to include all amendments and supplements thereto, unless otherwise
noted. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in connection with
the offering and resale of the Securities by the Initial Purchasers in
accordance with Section 2.
Holders of the Securities (including the Initial Purchasers and
their direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A (the "Registration Rights Agreement"), pursuant to which the
Company will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of senior
subordinated notes of the Company (the "Exchange Securities") which are
identical in all material respects to the Securities (except that the Exchange
Securities will not contain terms with respect to transfer restrictions) and
(ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "Shelf Registration Statement").
In connection with the issuance of the Securities, the Company has
agreed to acquire the vehicle management and fuel card businesses operated by
subsidiaries of Cendant Corporation ("VMS") for approximately $1.8 billion (the
"Merger"), consisting of approximately $1.4 billion of cash and $362.0 million
in preferred stock, plus the refinancing of approximately $3.5 billion of VMS
debt pursuant to the Agreement and Plan of Merger and Reorganization by and
among PHH Corporation, PHH Holdings Corporation, the Company and Avis Fleet
Leasing and Management Corporation, dated as of May 22, 1999 (the "Merger
Agreement"). Concurrently with the consummation of the Merger, and in addition
to issuing the Securities, the Company expects to finance the cash to be used to
repay the assumed debt and to refinance the $3.5 billion of existing VMS debt by
(i)(a) entering into a $1.35 billion senior secured credit facility consisting
of three tranches of term loans in an aggregate principal amount of $1.0 billion
(the "Term Loans") and (i)(b) obtaining $350.0 million of revolving credit
commitments which will replace the Company's existing bank credit facility (the
"Revolving Credit Facility", together with the Term Loans, the "New Credit
Facility") and (ii) issuing $3.4 billion of asset-backed securities under a $3.6
billion interim facility pursuant to the agreements listed on Schedule 2 hereto
(the "Interim VMS ABS Facility" and, together with the New Credit Facility, the
"Financings"). The Merger, the Financings, the offering of the Securities and
the application of the proceeds therefrom and each of the related transactions
are herein collectively referred to as the "Transactions".
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
<PAGE>
3
1. Representations, Warranties and Agreements of the Company and the
Subsidiary Guarantors. Each of the Company and the Subsidiary Guarantors
represents and warrants to, and agrees with, the several Initial Purchasers on
and as of the date hereof and the Closing Date (as defined in Section 3) that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date
the Offering Memorandum will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided
that neither the Company nor any Subsidiary Guarantor makes any
representation or warranty as to information contained in or omitted from
the Preliminary Offering Memorandum or the Offering Memorandum in reliance
upon and in conformity with written information relating to the Initial
Purchasers furnished to the Company and the Subsidiary Guarantors by or on
behalf of any Initial Purchaser specifically for use therein and as
specified in Section 16 (the "Initial Purchasers' Information").
(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 2 and their compliance with
the agreements set forth therein, it is not necessary, in connection with
the issuance and sale of the Securities to the Initial Purchasers and the
offer, resale and delivery of the Securities by the Initial Purchasers in
the manner contemplated by this Agreement and the Offering Memorandum, to
register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(d) The Company and each of its subsidiaries (which shall include,
as of the Closing Date, each of the VMS entities to be acquired in the
Merger listed on Schedule 3 hereto, including, without limitation, Wright
Express Financial Services Corporation) (the "Subsidiaries") have been
duly incorporated and are validly existing as corporations, limited
liability companies or other entities in good standing under the laws of
their respective jurisdictions of organization, are duly qualified to do
business and are in good standing in each jurisdiction in which their
respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged, except where the failure
to so qualify or have such
<PAGE>
4
power or authority would not, singularly or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), results
of operations, business or prospects of the Company and its Subsidiaries
taken as a whole (a "Material Adverse Effect").
(e) The Company has an authorized capitalization as set forth in the
Offering Memorandum under the heading "Capitalization"; all of the
outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable; and
the capital stock of the Company conforms in all material respects to the
description thereof contained in the Offering Memorandum. Except as set
forth on Schedule 4 hereto, all of the outstanding shares of capital stock
of each Subsidiary have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned directly or indirectly by the
Company, free and clear of any lien, charge, encumbrance, security
interest, restriction upon voting or transfer or any other claim of any
third party, except for liens securing the New Credit Facility. The
Acquisition Company Preferred Stock conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(f) The Company has full corporate right, power and authority to
execute and deliver this Agreement, the Indenture, the Registration Rights
Agreement, the Securities and any other agreement or instrument entered
into or to be entered into in connection with the Transactions, including,
without limitation, the Merger Agreement, the New Credit Facility and the
Interim VMS ABS Facility (collectively, the "Transaction Documents") and
to perform its obligations hereunder and thereunder; and all corporate
action required to be taken for the due and proper authorization,
execution and delivery of each of the Transaction Documents and the
consummation of the transactions contemplated thereby will have been duly
and validly taken prior to the Closing Date.
(g) Each Subsidiary Guarantor has full corporate right, power and
authority to execute and deliver this Agreement, the Indenture (which
includes the Subsidiary Guarantees) and the Registration Rights Agreement
and to perform its obligations hereunder and thereunder; and all corporate
action required to be taken by such Subsidiary Guarantor for the due and
proper authorization, execution and delivery of this Agreement, the
Indenture and the Registration Rights Agreement and the consummation of
the transactions contemplated thereby will have been duly and validly
taken prior to the Closing Date.
(h) This Agreement has been duly authorized, executed and delivered
by the Company and each Subsidiary Guarantor and constitutes a valid and
legally binding agreement of the Company and each Subsidiary Guarantor.
Each Subsidiary of the
<PAGE>
5
Company which is not (i) organized under the laws of a jurisdiction
outside the United States of America, (ii) a company subject to the
banking or insurance laws of its state of its incorporation or the Federal
laws or (iii) a Securitization Entity or a Specified Financing Subsidiary
(each as defined in the Indenture) is listed on Schedule I hereto as a
Subsidiary Guarantor.
(i) The Registration Rights Agreement has been duly authorized by
the Company and each Subsidiary Guarantor and, when duly executed and
delivered in accordance with its terms by each of the parties thereto,
will constitute a valid and legally binding agreement of the Company and
each Subsidiary Guarantor enforceable against the Company in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether considered
in a proceeding in equity or at law).
(j) The Indenture has been duly authorized by the Company and each
Subsidiary Guarantor and, when duly executed and delivered in accordance
with its terms by each of the parties thereto, will constitute a valid and
legally binding agreement of the Company and each Subsidiary Guarantor
enforceable against the Company and each Subsidiary Guarantor in
accordance with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law). On the Closing Date, the
Indenture will conform in all material respects to the requirements of the
Trust Indenture Act and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder.
(k) The Securities have been duly authorized by the Company and,
when duly executed, authenticated, issued and delivered as provided in the
Indenture and paid for as provided herein, will be duly and validly issued
and outstanding and will constitute valid and legally binding obligations
of the Company entitled to the benefits of the Indenture and enforceable
against the Company in accordance with their terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law).
(l) Each of the Transaction Documents not referred to in the
preceding clauses (h) through (k) has been duly authorized, executed and
delivered by the Company and each Subsidiary Guarantor and, when duly
executed and delivered by each of the
<PAGE>
6
parties thereto will constitute a valid and legally binding agreement of
the Company enforceable against the Company in accordance with their
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding in
equity or at law).
(m) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(n) The execution, delivery and performance by the Company and each
Subsidiary Guarantor of each of the Transaction Documents, the issuance,
sale and delivery of the Securities and compliance by the Company with the
terms thereof and the consummation of the transactions contemplated by the
Transaction Documents (i) will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any Subsidiary
Guarantor pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any
Subsidiary Guarantor is a party or by which the Company or any Subsidiary
Guarantor is bound or to which any of the property or assets of the
Company or any Subsidiary Guarantor is subject, (ii) (a) nor will such
actions result in any violation of the provisions of the charter or
by-laws of the Company or any Subsidiary Guarantor or (b) any statute or
any judgment, order, decree, rule or regulation of any court or arbitrator
or governmental agency or body having jurisdiction over the Company or any
Subsidiary Guarantor or any of their properties or assets, except, with
respect to clauses (i) or (ii)(b), to the extent that any of the foregoing
would not, singly or in the aggregate, have a Material Adverse Effect; and
no consent, approval, authorization or order of, or filing or registration
with, any such court or arbitrator or governmental agency or body under
any such statute, judgment, order, decree, rule or regulation is required
for the execution, delivery and performance by the Company or the
Subsidiary Guarantor of each of the Transaction Documents, the issuance,
authentication, sale and delivery of the Securities and compliance by the
Company with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents, except for such consents,
approvals, authorizations, filings, registrations or qualifications which
shall have been obtained or made prior to the Closing Date and as may be
required to be obtained or made under the Securities Act and applicable
state securities laws as provided in the Registration Rights Agreement.
(o) Deloitte & Touche LLP, who have certified certain financial
statements of the Company, VMS and their respective subsidiaries, are
independent public accountants
<PAGE>
7
with respect to the Company, VMS and their respective subsidiaries within
the meaning of Rule 101 of the Code of Professional Conduct of the
American Institute of Certified Public Accountants ("AICPA") and its
interpretations and rulings thereunder. The historical financial
statements (including the related notes) contained in the Offering
Memorandum comply in all material respects with the requirements
applicable to a registration statement on Form S-1 under the Securities
Act (except that certain supporting schedules are omitted and VMS has
included only the last two fiscal years of audited financial statements
and separate audited financial statements for the Subsidiary Guarantors
are not included); such financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods covered thereby and fairly present the
financial position of the entities purported to be covered thereby at the
respective dates indicated and the results of their operations and their
cash flows for the respective periods indicated; and the financial
information contained in the Offering Memorandum under the headings
"Summary--Summary Unaudited Pro Forma Combined Financial Data",
"Summary--Summary Historical Consolidated Financial Data (Avis)",
"Summary--Summary Historical Combined Financial Data (VMS)",
"Capitalization", "Unaudited Pro Forma Combined Financial Data", "Selected
Historical Consolidated Financial Data (AVIS)", "Selected Historical
Combined Financial Data (VMS)", "Management's Discussion and Analysis of
Results of Operations and Financial Condition" and "Management--Executive
Compensation" are derived from the accounting records of the Company, VMS
and their respective subsidiaries and fairly present the information
purported to be shown thereby. The pro forma financial information
contained in the Offering Memorandum has been prepared on a basis
consistent with the historical financial statements contained in the
Offering Memorandum (except for the pro forma adjustments specified
therein), includes all material adjustments to the historical financial
information required by Rule 11-02 of Regulation S-X under the Securities
Act and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to reflect the transactions described in the Offering Memorandum,
gives effect to assumptions made on a reasonable basis and fairly presents
the historical and proposed transactions contemplated by the Offering
Memorandum and the Transaction Documents. The other historical financial
and statistical information and data included in the Offering Memorandum
are, in all material respects, fairly presented.
(p) Except as disclosed in the Offering Memorandum, there are no
legal or governmental proceedings pending to which the Company or any of
its Subsidiaries is a party or of which any property or assets of the
Company or any of its Subsidiaries is the subject which, singularly or in
the aggregate, if determined adversely to the Company or any of its
Subsidiaries, could reasonably be expected to have a Material Adverse
Effect, and to the best knowledge of the Company, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others.
<PAGE>
8
(q) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency or
body which prevents the issuance of the Securities or the Subsidiary
Guarantees or suspends the sale of the Securities or the Subsidiary
Guarantees in any jurisdiction; no injunction, restraining order or order
of any nature by any federal or state court of competent jurisdiction has
been issued with respect to the Company or any of its Subsidiaries which
would prevent or suspend the issuance or sale of the Securities or the use
of the Preliminary Offering Memorandum or the Offering Memorandum in any
jurisdiction; no action, suit or proceeding is pending against or, to the
best knowledge of the Company, threatened against or affecting the Company
or any of its Subsidiaries before any court or arbitrator or any
governmental agency, body or official, domestic or foreign, which could
reasonably be expected to interfere with or adversely affect the issuance
of the Securities or in any manner draw into question the validity or
enforceability of any of the Transaction Documents or any action taken or
to be taken pursuant thereto; and the Company has complied with any and
all requests by any securities authority in any jurisdiction for
additional information to be included in the Preliminary Offering
Memorandum and the Offering Memorandum.
(r) Neither the Company nor any of its Subsidiaries is (i) in
violation of its charter or by-laws, (ii) in default, and no event has
occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is subject or
(iii) in violation of any law, ordinance, governmental rule, regulation or
court decree to which it or its property or assets may be subject, except,
with respect to clauses (ii) and (iii), to the extent that any of the
foregoing would not, singly or in the aggregate, have a Material Adverse
Effect.
(s) The Company and each of its Subsidiaries possess all material
licenses, certificates, authorizations and permits issued by, and have
made all declarations and filings with, the appropriate federal, state or
foreign regulatory agencies or bodies which are necessary or desirable for
the ownership of their respective properties or the conduct of their
respective businesses as described in the Offering Memorandum, except
where the failure to possess or make the same would not, singularly or in
the aggregate, have a Material Adverse Effect, and neither the Company nor
any of its Subsidiaries has received written notification of any
revocation or modification of any such license, certificate, authorization
or permit or has any reason to believe that any such license, certificate,
authorization or permit will not be renewed in the ordinary course.
<PAGE>
9
(t) The Company and each of its Subsidiaries have filed all federal,
state, local and foreign income and franchise tax returns required to be
filed through the date hereof and have paid all taxes due thereon, and no
tax deficiency has been determined adversely to the Company or any of its
Subsidiaries which has had (nor does the Company or any of its
Subsidiaries have any knowledge of any tax deficiency which, if determined
adversely to the Company or any of its Subsidiaries, could reasonably be
expected to have) a Material Adverse Effect.
(u) Neither the Company nor any of the Subsidiary Guarantors is an
"investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules and regulations of the Commission
thereunder or a "holding company" or a "subsidiary company" of a holding
company or an "affiliate" thereof within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(v) The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that transactions are executed in accordance with management's general or
specific authorizations; transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; access to
assets is permitted only in accordance with management's general or
specific authorization; and the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any difference.
(w) The Company and each of its Subsidiaries have insurance covering
their respective properties, operations, personnel and businesses, which
insurance is in amounts and insures against such losses and risks as are
adequate to protect the Company and its Subsidiaries and their respective
businesses. Neither the Company nor any of its Subsidiaries has received
notice from any insurer or agent of such insurer that material capital
improvements or other material expenditures are required or necessary to
be made in order to continue such insurance.
(x) The Company and each of its Subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses and know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) necessary for the conduct of their
respective businesses, except to the extent that the lack of any of the
foregoing would not,
<PAGE>
10
singly or in the aggregate, have a Material Adverse Effect; and the
conduct of their respective businesses will not conflict in any material
respect with, and the Company and each of its Subsidiaries have not
received any written notice (except in the case of Cendant Corporation and
its affiliates, of any notice, written or otherwise) of any claim of
conflict with, any such rights of others.
(y) There has been no default or other breach by the Company and/or
its Subsidiaries of their respective obligations under the agreements
described under the captions "Certain Relationships and Related Party
Transactions" or "The VMS Acquisition" in the Offering Memorandum and
neither Cendant has given notice to the Company of any such breach by the
Company or its Subsidiaries nor has the Company or its Subsidiaries
delivered notice to Cendant of any such breach by Cendant that could
result in the termination of such agreements or preclude the effective
realization of the benefits thereunder or require the payment of
additional amounts, whether as damages or otherwise.
(z) The Company and each of its Subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property which are material
to the business of the Company and its Subsidiaries, in each case free and
clear of all liens, encumbrances, claims and defects and imperfections of
title except such as do not materially interfere with the use made and
proposed to be made of such property by the Company and its Subsidiaries
or could not reasonably be expected to have a Material Adverse Effect.
(aa) No labor disturbance by or dispute with the employees of the
Company or any of its Subsidiaries exists or, to the best knowledge of the
Company, is contemplated or threatened.
(bb) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of EISA has been waived) has occurred with respect to
any employee benefit plan of the Company or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect; each such
employee benefit plan is in compliance in all material respects with
applicable law, including ERISA and the Code; the Company and each of its
Subsidiaries have not incurred and do not expect to incur liability under
Title IV of ERISA with respect to the termination of, or withdrawal from,
<PAGE>
11
any pension plan for which the Company or any of its Subsidiaries would
have any liability; and each such pension plan that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act,
which could reasonably be expected to cause the loss of such
qualification.
(cc) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release of any
kind of toxic or other wastes or other hazardous substances by, due to or
caused by the Company or any of its Subsidiaries (or, to the best
knowledge of the Company, any other entity (including any predecessor) for
whose acts or omissions the Company or any of its Subsidiaries is or could
reasonably be expected to be liable) upon any of the property now or
previously owned or leased by the Company or any of its Subsidiaries, or
upon any other property in violation of any statute or any ordinance,
rule, regulation, order, judgment, decree or permit or which would, under
any statute or any ordinance, rule (including rule of common law),
regulation, order, judgment, decree or permit, give rise to any liability,
except for any violation or liability could not reasonably be expected to
have, singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; and there has been no disposal,
discharge, emission or other release of any kind onto such property or
into the environment surrounding such property of any toxic or other
wastes or other hazardous substances with respect to which the Company or
any of its Subsidiaries has any knowledge, except for any such disposal,
discharge, emission or other release of any kind which could not
reasonably be expected to have, singularly or in the aggregate with all
such discharges and other releases, a Material Adverse Effect.
(dd) Neither the Company nor any of its Subsidiaries, to the best
knowledge of the Company and each of its Subsidiaries, nor any director,
officer, agent, employee or other person associated with or acting on
behalf of the Company or its Subsidiaries has used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity, made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provisions of the
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(ee) On and immediately after the Closing Date, the Company and its
Subsidiaries, taken as a whole, (after giving effect to the issuance of
the Securities, the Merger and to each of the other Transactions related
thereto as described in the Offering Memorandum) will be Solvent. As used
in this paragraph, the term "Solvent" means, with respect to a particular
date, that on such date the present fair market value (or present
<PAGE>
12
fair saleable value) of the assets of the Company and its Subsidiaries is
not less than the total amount required to pay the probable liabilities of
the Company and its Subsidiaries, taken as a whole, on its total existing
debts and liabilities (including contingent liabilities) as they become
absolute and matured; the Company and its Subsidiaries, taken as a whole,
are able to realize upon their assets and pay their debts and other
liabilities, contingent obligations and commitments as they mature and
become due in the normal course of business, assuming the sale of the
Securities as contemplated by this Agreement and the Offering Memorandum;
the Company and its Subsidiaries, taken as a whole, are not incurring
debts or liabilities beyond their ability to pay as such debts and
liabilities mature; and the Company and its Subsidiaries, taken as a
whole, are not engaged in any business or transaction, and are not about
to engage in any business or transaction, for which their property would
constitute unreasonably small capital after giving due consideration to
the prevailing practice in the industry in which the Company or such
Subsidiary is engaged. In computing the amount of such contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
(ff) Except as described in the Offering Memorandum, there are no
outstanding subscriptions, rights, warrants, calls or options to acquire,
or instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares of
capital stock of or other equity or other ownership interest in the
Company or any of its Subsidiaries.
(gg) Except for put options owned by Wright Express LLC, neither the
Company nor any of its Subsidiaries owns any "margin securities" as that
term is defined in Regulation U of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), and none of the proceeds of
the sale of the Securities will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security, for the purpose of
reducing or retiring any indebtedness which was originally incurred to
purchase or carry any margin security or for any other purpose which might
cause any of the Securities to be considered a "purpose credit" within the
meanings of Regulation T, U or X of the Federal Reserve Board.
(hh) Neither the Company nor any of its Subsidiaries is a party to
any contract, agreement or understanding with any person that would give
rise to a valid claim against the Company (other than this Agreement) or
the Initial Purchasers for a brokerage commission, finder's fee or like
payment in connection with the offering and sale of the Securities.
<PAGE>
13
(ii) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(jj) None of the Company, any of its affiliates or any person acting
on its or their behalf has engaged or will engage in any directed selling
efforts (as such term is defined in Regulation S under the Securities Act
("Regulation S")), and all such persons have complied and will comply with
the offering restrictions requirement of Regulation S to the extent
applicable.
(kk) Neither the Company nor any of its affiliates has, directly or
through any agent, sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as such term is defined
in the Securities Act), which is or will be integrated with the sale of
the Securities in a manner that would require registration of the
Securities under the Securities Act.
(ll) None of the Company or any of its affiliates or any other
person acting on its or their behalf has engaged, in connection with the
offering of the Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act.
(mm) Except as described in the Offering Memorandum, there are no
securities of the Company registered under the Exchange Act or listed on a
national securities exchange or quoted in a U.S. automated inter-dealer
quotation system.
(nn) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange Act
in connection with the offering of the Securities.
(oo) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in
the Preliminary Offering Memorandum or the Offering Memorandum has been
made or reaffirmed without a reasonable basis or has been disclosed other
than in good faith.
(pp) None of the Company or any of its Subsidiaries does business
with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Florida Statutes Section 517.075.
(qq) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (i) there has been no
material adverse change or any development involving a prospective
material adverse change in the
<PAGE>
14
condition, financial or otherwise, or in the earnings, business affairs,
management or business prospects of the Company and its Subsidiaries taken
as a whole, whether or not arising in the ordinary course of business,
(ii) neither the Company nor its Subsidiaries have incurred any material
liability or obligation, direct or contingent, other than in the ordinary
course of business, (iii) neither the Company nor its Subsidiaries have
entered into any material transaction other than in the ordinary course of
business and (iv) there has not been any change in the capital stock or
long-term debt of the Company, or any dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
2. Purchase and Resale of the Securities. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Company, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule 5 hereto at a purchase price equal to 97.5% of the
principal amount thereof. The Company shall not be obligated to deliver any of
the Securities except upon payment for all of the Securities to be purchased as
provided herein.
(b) The Initial Purchasers have advised the Company that they
propose to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. Each Initial
Purchaser, severally and not jointly, represents, warrants and agrees that (i)
it is purchasing the Securities pursuant to a private sale exempt from
registration under the Securities Act, (ii) it has not solicited offers for, or
offered or sold, and will not solicit offers for, or offer or sell, the
Securities by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D under the Securities Act
("Regulation D") or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act and (iii) it has solicited and will
solicit offers for the Securities only from, and has offered or sold and will
offer, sell or deliver the Securities, as part of their initial offering, only
(A) within the United States to persons whom it reasonably believes to be
qualified institutional buyers ("Qualified Institutional Buyers"), as defined in
Rule 144A under the Securities Act ("Rule 144A"), or if any such person is
buying for one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to it that each such
account is a Qualified Institutional Buyer to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A and in each case,
in transactions in accordance with Rule 144A and (B) outside the United States
to persons other than U.S. persons in reliance on Regulation S under the
Securities Act ("Regulation S").
<PAGE>
15
(c) In connection with the offer and sale of Securities in reliance
on Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) The Securities have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except pursuant to an exemption from,
or in transactions not subject to, the registration requirements of the
Securities Act.
(ii) Such Initial Purchaser has offered and sold the Securities, and
will offer and sell the Securities, (A) as part of their distribution at
any time and (B) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the Closing Date, only
in accordance with Regulation S or Rule 144A or any other available
exemption from registration under the Securities Act.
(iii) None of such Initial Purchaser or any of its affiliates or any
other person acting on its or their behalf has engaged or will engage in
any directed selling efforts with respect to the Securities, and all such
persons have complied and will comply with the offering restrictions
requirement of Regulation S.
(iv) At or prior to the confirmation of sale of any Securities sold
in reliance on Regulation S, it will have sent to each distributor, dealer
or other person receiving a selling concession, fee or other remuneration
that purchases Securities from it during the restricted period a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the offering of the Securities and the
date of original issuance of the Securities, except in accordance
with Regulation S or Rule 144A or any other available exemption from
registration under the Securities Act. Terms used above have the
meanings given to them by Regulation S."
(v) It has not and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the Securities,
except with its affiliates or with the prior written consent of the
Company.
Terms used in this Section 2(c) have the meanings given to them by Regulation S.
<PAGE>
16
(d) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) it has not offered or sold and prior to the date
six months after the Closing Date will not offer or sell any Securities to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 and the Public Offers
of Securities Regulations 1995 with respect to anything done by it in relation
to the Securities in, from or otherwise involving the United Kingdom; and (iii)
it has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
(e) Each Initial Purchaser, severally and not jointly, agrees that,
prior to or simultaneously with the confirmation of sale by such Initial
Purchaser to any purchaser of any of the Securities purchased by such Initial
Purchaser from the Company pursuant hereto, such Initial Purchaser shall furnish
to that purchaser a copy of the Offering Memorandum (and any amendment or
supplement thereto that the Company shall have furnished to such Initial
Purchaser prior to the date of such confirmation of sale). In addition to the
foregoing, each Initial Purchaser acknowledges and agrees that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Section 5(d) and (e), counsel for the Company and for the Initial Purchasers,
respectively, may rely upon the accuracy of the representations and warranties
of the Initial Purchasers and their compliance with their agreements contained
in this Section 2, and each Initial Purchaser hereby consents to such reliance.
(f) The Company acknowledges and agrees that the Initial Purchasers
may sell Securities to any affiliate of an Initial Purchaser and that any such
affiliate may sell Securities purchased by it to an Initial Purchaser.
3 Delivery of and Payment for the Securities. (a) Delivery of and
payment for the Securities shall be made at the offices of Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York, or at such other place as
shall be agreed upon by the Initial Purchasers and the Company, at 10:00 A.M.,
New York City time, on June 30, 1999, or at such other time or date, not later
than seven full business days thereafter, as shall be agreed upon by the Initial
Purchasers and the Company (such date and time of payment and delivery being
referred to herein as the "Closing Date").
<PAGE>
17
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior to
the Closing Date or by such other means as the parties hereto shall agree prior
to the Closing Date against delivery to the Initial Purchasers of the
certificates evidencing the Securities. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of the Initial Purchasers hereunder. Upon delivery,
the Securities shall be in global form, registered in such names and in such
denominations as CSI on behalf of the Initial Purchasers shall have requested in
writing not less than two full business days prior to the Closing Date. The
Company agrees to make global certificates evidencing the Securities available
for inspection by CSI on behalf of the Initial Purchasers in New York, New York
at least 24 hours prior to the Closing Date.
4 Further Agreements of the Company. The Company agrees with each of
the Initial Purchasers:
(a) to advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes
any statement of a material fact made in the Offering Memorandum untrue or
which requires the making of any additions to or changes in the Offering
Memorandum (as amended or supplemented from time to time) in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; to advise the Initial Purchasers promptly of
any order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any jurisdiction
and of the initiation or threatening of any proceeding for any such
purpose; and to use its best efforts to prevent the issuance of any such
order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum or suspending any such qualification
and, if any such suspension is issued, to obtain the lifting thereof at
the earliest possible time;
(b) to furnish promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of the
Offering Memorandum (and any amendments or supplements thereto) as may be
reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers
and counsel for the Initial Purchasers and not to effect any such
amendment or supplement to which the Initial Purchasers shall reasonably
object by notice to the Company after a reasonable period to review;
<PAGE>
18
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel for
the Initial Purchasers or counsel for the Company, to amend or supplement
the Offering Memorandum in order that the Offering Memorandum will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances existing at the time it is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, to promptly prepare such
amendment or supplement as may be necessary to correct such untrue
statement or omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon request of
such holders or such prospective purchasers, the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act, unless
the Company is then subject to and in compliance with Section 13 or 15(d)
of the Exchange Act (the foregoing agreement being for the benefit of the
holders from time to time of the Securities and prospective purchasers of
the Securities designated by such holders);
(f) for so long as the Securities are outstanding, to make available
to the Initial Purchasers copies of any annual reports, quarterly reports
and current reports filed by the Company with the Commission on Forms
10-K, 10-Q and 8-K, or such other similar forms as may be designated by
the Commission, and such other documents, reports and information as shall
be furnished by the Company to the Trustee or to the holders of the
Securities pursuant to the Indenture or the Exchange Act or any rule or
regulation of the Commission thereunder;
(g) to promptly take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Securities for offering
and sale under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchasers may designate and to continue such qualifications
in effect for so long as required for the resale of the Securities; and to
arrange for the determination of the eligibility for investment of the
Securities under the laws of such jurisdictions as the Initial Purchasers
may reasonably request; provided that the Company and its Subsidiaries
shall not be obligated to qualify as foreign corporations in any
jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction;
<PAGE>
19
(h) to assist the Initial Purchasers in arranging for the Securities
to be designated Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers,
Inc. ("NASD") relating to trading in the PORTAL Market and for the
Securities to be eligible for clearance and settlement through The
Depository Trust Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require
registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause its affiliates not to, and not to authorize
or knowingly permit any person acting on their behalf to, solicit any
offer to buy or offer to sell the Securities by means of any form of
general solicitation or general advertising within the meaning of
Regulation D or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and not to offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, contract or
disposition would cause the exemption afforded by Section 4(2) of the
Securities Act to cease to be applicable to the offering and sale of the
Securities as contemplated by this Agreement and the Offering Memorandum;
(k) for a period of 180 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement for,
or announce any offer, sale, contract for sale of or other disposition of
any debt securities issued or guaranteed by the Company or any of its
subsidiaries (other than the Securities, the Exchange Securities or the
Interim VMS ABS Facility) without the prior written consent of CSI;
(l) during the period from the Closing Date until two years after
the Closing Date, without the prior written consent of the Initial
Purchasers, not to, and not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to, resell any of the Securities that
have been reacquired by them, except for Securities purchased by the
Company or any of its affiliates and resold in a transaction registered
under the Securities Act;
(m) not to, for so long as the Securities are outstanding, be or
become, or be or become owned by, an open-end investment company, unit
investment trust or face-
<PAGE>
20
amount certificate company that is or is required to be registered under
Section 8 of the Investment Company Act, and not to be or become, or be or
become owned by, a closed-end investment company required to be
registered, but not registered thereunder;
(n) in connection with the offering of the Securities, until CSI on
behalf of the Initial Purchasers shall have notified the Company of the
completion of the resale of the Securities, not to, and to cause its
affiliated purchasers (as defined in Regulation M under the Exchange Act)
not to, either alone or with one or more other persons, bid for or
purchase, for any account in which it or any of its affiliated purchasers
has a beneficial interest, any Securities, or attempt to induce any person
to purchase any Securities; and not to, and to cause its affiliated
purchasers not to, make bids or purchase for the purpose of creating
actual, or apparent active trading in or of raising the price of the
Securities;
(o) in connection with the offering of the Securities, to make its
officers, employees, independent accountants and legal counsel reasonably
available upon request by the Initial Purchasers;
(p) to furnish to each of the Initial Purchasers on the date hereof
a copy of the independent accountants' reports included in the Offering
Memorandum signed by the accountants rendering such reports;
(q) to do and perform all things required to be done and performed
by it under this Agreement that are within its control prior to or after
the Closing Date, and to use its best efforts to satisfy all conditions
precedent on its part to the delivery of the Securities;
(r) to not take any action prior to the execution and delivery of
the Indenture which, if taken after such execution and delivery, would
have violated any of the covenants contained in the Indenture;
(s) to not take any action prior to the Closing Date which would
require the Offering Memorandum to be amended or supplemented pursuant to
Section 4(d);
(t) prior to the Closing Date, not to issue any press release or
other communication directly or indirectly or hold any press conference
with respect to the Company, its condition, financial or otherwise, or
earnings, business affairs or business prospects (except for routine oral
marketing communications in the ordinary course of business and consistent
with the past practices of the Company and of which the Initial Purchasers
are notified), without the prior written consent of CSI (which consent
shall not be unreasonably withheld), unless in the judgment of the Company
and its counsel, and
<PAGE>
21
after notification to the Initial Purchasers, such press release or
communication is required by law; and
(u) to apply the net proceeds from the sale of the Securities as set
forth in the Offering Memorandum under the heading "Use of Proceeds".
5 Conditions of Initial Purchasers' Obligations. The respective
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company and the Subsidiary Guarantors
contained herein, to the accuracy of the statements of the Company and its
officers made in any certificates delivered pursuant hereto, to the performance
by the Company and the Subsidiary Guarantors of their obligations hereunder, and
to each of the following additional terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial
Purchasers may agree; and no stop order suspending the sale of the
Securities in any jurisdiction shall have been issued and no proceedings
for the purpose shall have been commenced or shall be pending or
threatened.
(b) None of the Initial Purchasers shall have discovered and
disclosed to the Company on or prior to the Closing Date that the Offering
Memorandum or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Initial
Purchasers, is material or omits to state any fact which, in the opinion
of such counsel is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of the Transaction Documents
and the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby, shall be
reasonably satisfactory in all material respects to the Initial
Purchasers, and the Company shall have furnished to the Initial Purchasers
all documents and information that they or their counsel may reasonably
request to enable them to pass upon such matters.
(d) White & Case LLP shall have furnished to the Initial Purchasers
their written opinion, as counsel to the Company, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set
forth in Annex B hereto.
<PAGE>
22
(e) Ms. Karen Sclafani shall have furnished to the Initial
Purchasers her written opinion, as General Counsel to the Company,
addressed to the Initial Purchasers and dated the Closing Date, in form
and substance reasonably satisfactory to the Initial Purchasers,
substantially to the effect set forth in Annex C hereto.
(f) The Company shall have furnished to the Initial Purchasers
written legal opinions regarding the Subsidiary Guarantors addressed to
the Initial Purchasers and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, substantially to the
effect set forth in Annex D hereto.
(g) The Initial Purchasers shall have received from Simpson Thacher
& Bartlett, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Initial
Purchasers may reasonably require, and the Company shall have furnished to
such counsel such documents and information as they reasonably request for
the purpose of enabling them to pass upon such matters.
(h) The Company shall have furnished to the Initial Purchasers a
letter (the "Avis Initial Letter") of Deloitte & Touche LLP, addressed to
the Initial Purchasers and dated the date hereof, in form and substance
satisfactory to the Initial Purchasers.
(i) The Company shall have furnished to the Initial Purchasers a
letter (the "VMS Initial Letter") of Deloitte & Touche LLP, addressed to
the Initial Purchasers and dated the date hereof, in form and substance
satisfactory to the Initial Purchasers.
(j) The Company shall have furnished to the Initial Purchasers a
letter (the "Avis Bring-Down Letter") of Deloitte & Touche LLP, addressed
to the Initial Purchasers and dated the Closing Date confirming that they
are independent public accountants with respect to the Company and its
subsidiaries within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings thereunder,
stating, as of the date of the Avis Bring-Down Letter (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Offering Memorandum,
as of a date not more than three business days prior to the date of the
Avis Bring-Down Letter), that the conclusions and findings of such
accountants with respect to the financial information and other matters
covered by the Avis Initial Letter are accurate and confirming in all
material respects the conclusions and findings set forth in the Avis
Initial Letter.
(k) The Company shall have furnished to the Initial Purchasers a
Letter (the "VMS Bring-Down Letter") of Deloitte & Touche LLP, addressed
to the Initial Purchasers and dated the Closing Date confirming that they
are independent public
<PAGE>
23
accountants with respect to VMS within the meaning of Rule 101 of the Code
of Professional Conduct of the AICPA and its interpretations and rulings
thereunder, stating, as of the date of the VMS Bring-Down Letter (or with
respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Offering
Memorandum, as of a date not more than three business days prior to the
date of the VMS Bring-Down Letter), that the conclusions and findings of
such accountants with respect to the financial information and other
matters covered by the VMS Initial Letter are accurate and confirming in
all material respects the conclusions and findings set forth in the VMS
Initial Letter.
(l) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its chief operating officer and
its chief financial officer stating that (A) such officers have examined
the Offering Memorandum, (B) in their opinion, the Offering Memorandum, as
of its date, did not include any untrue statement of a material fact and
did not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and since the
date of the Offering Memorandum, no event has occurred which should have
been set forth in a supplement or amendment to the Offering Memorandum so
that the Offering Memorandum (as so amended or supplemented) would not
include any untrue statement of a material fact and would not omit to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading and (C) as of the Closing Date, the
representations and warranties of the Company and the Subsidiary
Guarantors in this Agreement are true and correct in all material
respects, the Company and each Subsidiary Guarantor has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder on or prior to the Closing Date, and subsequent to the
date of the most recent financial statements contained in the Offering
Memorandum, there has been no material adverse change in the financial
position or results of operation of the Company or any of its
Subsidiaries, or any change, or any development including a prospective
change, in or affecting the condition (financial or otherwise), results of
operations, business or prospects of the Company and its Subsidiaries
taken as a whole, except as set forth in the Offering Memorandum.
(m) The Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of the Company.
<PAGE>
24
(n) The Indenture shall have been duly executed and delivered by the
Company, the Subsidiary Guarantors and the Trustee, and the Securities
shall have been duly executed and delivered by the Company and duly
authenticated by the Trustee.
(o) The Securities shall have been approved by the NASD for trading
in the PORTAL Market.
(p) If any event shall have occurred that requires the Company under
Section 4(d) to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchasers shall have been given a reasonable opportunity to
comment thereon, and copies thereof shall have been delivered to the
Initial Purchasers reasonably in advance of the Closing Date.
(q) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the
Exchange Act by the Commission or any amendment or proposed amendment
thereof by the Commission (other than included in the "aircraft carrier"
release) which in the judgment of the Initial Purchasers would materially
impair the ability of the Initial Purchasers to purchase, hold or effect
resales of the Securities contemplated hereby.
(r) Subsequent to the execution and delivery of this Agreement or,
if earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change in the capital stock or long-term debt or any
change, or any development involving a prospective change, in or affecting
the condition (financial or otherwise), results of operations, business or
prospects of the Company and its Subsidiaries taken as a whole, the effect
of which, in any such case described above, is, in the judgment of the
Initial Purchasers, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Securities on the
terms and in the manner contemplated by this Agreement and the Offering
Memorandum (exclusive of any amendment or supplement thereto).
(s) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance
or sale of the Securities; and no injunction, restraining order or order
of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Securities.
(t) Subsequent to the execution and delivery of this Agreement no
downgrading shall have occurred in the rating accorded the Securities or
any of the
<PAGE>
25
Company's other debt securities or preferred stock by an "nationally
recognized statistical rating organization", as such term is defined by
the Commission for purposes of Rule 436(g)(2) of the rules and regulations
of the Commission under the Securities Act and no such organization shall
have publicly announced that it has under surveillance or review (other
than an announcement with positive implications of a possible upgrading),
its rating of the Securities or any of the Company's other debt securities
or preferred stock.
(u) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or limited, or
minimum prices shall have been established on any such exchange or market
by the Commission, by any such exchange or by any other regulatory body or
governmental authority having jurisdiction, or trading in any securities
of the Company on any exchange or in the over-the-counter market shall
have been suspended or (ii) any moratorium on commercial banking
activities shall have been declared by federal or New York state
authorities or (iii) an outbreak or escalation of hostilities or a
declaration by the United States of a national emergency or war or a
material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) the effect of which, in the
case of this clause (iv), is, in the judgment of the Initial Purchasers,
so material and adverse as to make it impracticable or inadvisable to
proceed with the sale or the delivery of the Securities on the terms and
in the manner contemplated by this Agreement and in the Offering
Memorandum (exclusive of any amendment or supplement thereto).
(v) The New Credit Facility and all documents to be executed in
connection therewith shall have been duly executed and delivered by the
Company and the requisite lenders and other parties thereto and the
Company shall have satisfied all conditions precedent to effectiveness of
the commitments under the New Credit Facility.
(w) The Interim VMS ABS Facility and all documents to be executed in
connection therewith shall have been duly executed and delivered by the
Company and the other parties thereto and the Company shall have satisfied
all conditions precedent to effectiveness of the Interim VMS ABS Facility.
(x) At the Closing Date, after giving effect to the consummation of
the transactions contemplated by the Transaction Documents, there shall
exist no default or event of default under the Indenture, the New Credit
Facility, the Interim VMS ABS Facility or the Avis ABS Facility.
<PAGE>
26
(y) The Merger and each of the other Transactions (excluding the
issuance of the Securities) shall have been consummated and there shall
not be any pending or threatened legal or governmental proceedings with
respect to the Transactions other than as described in the Offering
Memorandum (exclusive of any amendment or supplement thereto).
(z) The Initial Purchasers shall have received true copies of the
executed Merger Agreement and all other material documentation related
thereto (including any transition services and computer services
agreements).
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
6 Termination. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Securities if, prior to that time, any of the events described in Section
5(q), (r), (s), (t) or (u) shall have occurred and be continuing.
7 Defaulting Initial Purchasers. (a) If, on the Closing Date, any
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchasers may make arrangements for the
purchase of the Securities which such defaulting Initial Purchaser agreed but
failed to purchase by other persons satisfactory to the Company and the
non-defaulting Initial Purchasers, but if no such arrangements are made within
36 hours after such default, the Company may make arrangements for the purchase
of the Securities which the defaulting Initial Purchaser agreed but failed to
purchase by other persons satisfactory to the non-defaulting Initial Purchasers,
but if no such arrangements are made within 72 hours after such default, this
Agreement shall terminate without liability on the part of the non-defaulting
Initial Purchasers, the Company or the Subsidiary Guarantors, except that the
Company and the Subsidiary Guarantors will continue to be liable for the payment
of expenses to the extent set forth in Sections 8 and 12 and except that the
provisions of Sections 9 and 10 shall not terminate and shall remain in effect.
As used in this Agreement, the term "Initial Purchasers" includes, for all
purposes of this Agreement unless the context otherwise requires, any party not
listed in Schedule 4 hereto that, pursuant to this Section 7, purchases
Securities which a defaulting Initial Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company or any non-defaulting
Initial Purchaser for damages caused by its default. If other persons are
obligated or agree to purchase the Securities of a defaulting Initial Purchaser,
either the non-defaulting Initial Purchasers or the Company may postpone the
<PAGE>
27
Closing Date for up to seven full business days in order to effect any changes
that in the opinion of counsel for the Company or counsel for the Initial
Purchasers may be necessary in the Offering Memorandum or in any other document
or arrangement, and the Company agrees to promptly prepare any amendment or
supplement to the Offering Memorandum that effects any such changes.
8 Reimbursement of Initial Purchasers' Expenses. If (a) this
Agreement shall have been terminated pursuant to Section 6 or 7, (b) the Company
shall fail to tender the Securities for delivery to the Initial Purchasers for
any reason permitted under this Agreement or (c) the Initial Purchasers shall
decline to purchase the Securities for any reason permitted under this
Agreement, the Company and the Subsidiary Guarantors shall reimburse the Initial
Purchasers for such out-of-pocket expenses (including reasonable fees and
disbursements of counsel) as shall have been reasonably incurred by the Initial
Purchasers in connection with this Agreement and the proposed purchase and
resale of the Securities. If this Agreement is terminated pursuant to Section 7
by reason of the default of one or more of the Initial Purchasers, the Company
and the Subsidiary Guarantors shall not be obligated to reimburse any defaulting
Initial Purchaser on account of such expenses.
9 Indemnification. (a) The Company and each Subsidiary Guarantor
shall indemnify and hold harmless each Initial Purchaser, its affiliates, their
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls any Initial Purchaser within the meaning of the
Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 9(a) and Section 10 as an Initial Purchaser), from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, without limitation, any loss, claim, damage, liability or
action relating to purchases and sales of the Securities), to which that Initial
Purchaser may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or in any information provided by the Company pursuant to Section 4(e)
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse each Initial Purchaser promptly upon demand for
any legal or other expenses reasonably incurred by that Initial Purchaser in
connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company and the Subsidiary Guarantors shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, an untrue statement or alleged untrue statement
<PAGE>
28
in or omission or alleged omission from any of such documents in reliance upon
and in conformity with any Initial Purchasers' Information; and provided,
further, that with respect to any such untrue statement in or omission from the
Preliminary Offering Memorandum, the indemnity agreement contained in this
Section 9(a) shall not inure to the benefit of any such Initial Purchaser to the
extent that the sale to the person asserting any such loss, claim, damage,
liability or action was an initial resale by such Initial Purchaser and any such
loss, claim, damage, liability or action of or with respect to such Initial
Purchaser results from the fact that both (A) to the extent required by
applicable law, a copy of the Offering Memorandum was not sent or given to such
person at or prior to the written confirmation of the sale of such Securities to
such person and (B) the untrue statement in or omission from the Preliminary
Offering Memorandum was corrected in the Offering Memorandum unless, in either
case, such failure to deliver the Offering Memorandum was a result of
non-compliance by the Company with Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company and each Subsidiary Guarantor, their
respective affiliates and their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Company or
any Subsidiary Guarantor within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 9(b) and
Section 10 as the Company and the Subsidiary Guarantors), from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Company or any Subsidiary Guarantor may become subject,
whether commenced or threatened, under the Securities Act, the Exchange Act, any
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Offering Memorandum or the Offering Memorandum
or in any amendment or supplement thereto or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any Initial
Purchasers' Information, and shall reimburse the Company or any Subsidiary
Guarantor for any legal or other expenses reasonably incurred by the Company or
any Subsidiary Guarantor in connection with investigating or defending or
preparing to defend against or appearing as a third party witness in connection
with any such loss, claim, damage, liability or action as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 9(a) or 9(b), notify the indemnifying
party in writing of the claim or the commencement of that action;
<PAGE>
29
provided, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 9 except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and, provided, further, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 9. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 9 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that an indemnified party shall have the right to employ its own
counsel in any such action, but the fees, expenses and other charges of such
counsel for the indemnified party will be at the expense of such indemnified
party unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based upon advice of counsel to the indemnified party)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (3) a conflict or potential conflict exists (based upon advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 9(a) and 9(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have
<PAGE>
30
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceedings.
The obligations of the Company, each Subsidiary Guarantor and the
Initial Purchasers in this Section 9 and in Section 10 are in addition to any
other liability that the Company, any Subsidiary Guarantor or any Initial
Purchaser, as the case may be, may otherwise have, including in respect of any
breaches of representations, warranties and agreements made herein by any such
party.
10 Contribution. If the indemnification provided for in Section 9 is
unavailable or insufficient to hold harmless an indemnified party under Section
9(a) or 9(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company and the Subsidiary Guarantors on the one hand
and the Initial Purchasers on the other from the offering of the Securities or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Subsidiary Guarantors on the one hand and the Initial
Purchasers on the other with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Subsidiary Guarantors on the one hand and the
Initial Purchasers on the other with respect to such offering shall be deemed to
be in the same proportion as the total net proceeds from the offering of the
Securities purchased under this Agreement (before deducting expenses) received
by or on behalf of the Company and the Subsidiary Guarantors, on the one hand,
and the total discounts and commissions received by the Initial Purchasers with
respect to the Securities purchased under this Agreement, on the other, bear to
the total gross proceeds from the sale of the Securities under this Agreement,
in each case as set forth in the table on the cover page of the Offering
Memorandum. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to the Company or
the Subsidiary Guarantors or information supplied by the Company on the one hand
or to any Initial Purchasers' Information on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omissions. The Company, the
Subsidiary Guarantors and the Initial Purchasers agree that it would not be just
and equitable if contributions pursuant to this Section 10 were to be determined
by pro rata allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation that does not take
into account the equitable considerations referred to herein. The
<PAGE>
31
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 10 shall be deemed to include, for purposes of this Section 10, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 10, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total discounts and commissions received by such Initial Purchaser
with respect to the Securities purchased by it under this Agreement exceeds the
amount of any damages which such Initial Purchaser has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute as provided
in this Section 10 are several in proportion to their respective purchase
obligations and not joint.
11 Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Company,
the Subsidiary Guarantors and their respective successors. This Agreement and
the terms and provisions hereof are for the sole benefit of only those persons,
except as provided in Sections 9 and 10 with respect to affiliates, officers,
directors, employees, representatives, agents and controlling persons of the
Company, the Subsidiary Guarantors and the Initial Purchasers and in Section
4(e) with respect to holders and prospective purchasers of the Securities.
Nothing in this Agreement is intended or shall be construed to give any person,
other than the persons referred to in this Section 11, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
contained herein.
12 Expenses. The Company agrees with the Initial Purchasers to pay
(a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that connection; (b) the
costs incident to the preparation, printing and distribution of the Preliminary
Offering Memorandum, the Offering Memorandum and any amendments or supplements
thereto; (c) the costs of reproducing and distributing each of the Transaction
Documents; (d) the costs incident to the preparation, printing and delivery of
the certificates evidencing the Securities, including stamp duties and transfer
taxes, if any, payable upon issuance of the Securities; (e) the fees and
expenses of the Company's and its Subsidiaries' counsel and independent
accountants; (f) the fees and expenses of qualifying the Securities under the
securities laws of the several jurisdictions as provided in Section 4(g) and of
preparing, printing and distributing Blue Sky Memoranda (including related fees
and expenses of counsel for the Initial Purchasers); (g) any fees charged by
rating agencies for rating the Securities; (h) the fees and expenses of the
Trustee and any paying agent (including related fees and expenses of any counsel
to such parties); (i) all expenses and application fees incurred in connection
with the
<PAGE>
32
application for the inclusion of the Securities on the PORTAL Market and the
approval of the Securities for book-entry transfer by DTC; (j) one-half of the
costs of the "road show" for the Securities; and (k) all other costs and
expenses incident to the performance of the obligations of the Company under
this Agreement which are not otherwise specifically provided for in this Section
12; provided, however, that except as provided in this Section 12 and Section 8,
the Initial Purchasers shall pay their own costs and expenses, including the
costs and expenses of its counsel relating to the issuance of the Securities
except as otherwise set forth in the Commitment Letter dated May 21, 1999 and
the related Fee Letter dated May 21, 1999.
13 Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company, the Subsidiary
Guarantors and the Initial Purchasers contained in this Agreement or made by or
on behalf of the Company, the Subsidiary Guarantors or the Initial Purchasers
pursuant to this Agreement or any certificate delivered pursuant hereto shall
survive the delivery of and payment for the Securities and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any of them or any of
their respective affiliates, officers, directors, employees, representatives,
agents or controlling persons.
14 Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail
or telecopy transmission to Chase Securities Inc., 270 Park Avenue, New
York, New York 10017, Attention: James Casey (telecopier no.: (212)
270-0994); or
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to the address of the Company set forth in the
Offering Memorandum, Attention: Gerard Kennell, Vice President and
Treasurer, Karen Sclafani, Vice President and General Counsel (telecopier
no.: (516) 222-3751), with a copy to Sean Geary, White & Case LLP, 1155
Avenue of the Americas, New York, NY 10011;
provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by CSI.
15 Definition of Terms. For purposes of this Agreement, (a) the term
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405
under the Securities Act and (c)
<PAGE>
33
except where otherwise expressly provided, the term "affiliate" has the meaning
set forth in Rule 405 under the Securities Act.
16 Initial Purchasers' Information. The parties hereto acknowledge
and agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the following information in the Preliminary
Offering Memorandum and the Offering Memorandum: (i) the last paragraph on the
front cover page concerning the terms of the offering by the Initial Purchasers;
(ii) the legend on the inside front cover page concerning over-allotment and
trading activities by the Initial Purchasers; and (iii) the statements
concerning the Initial Purchasers contained in the third, fifth, sixth, ninth,
tenth, eleventh and twelfth paragraphs under the heading "Plan of Distribution".
17 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, but without giving effect
to applicable principles of conflicts of law to the extent that the application
of the laws of another jurisdiction would be required thereby.
18 Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed agreement, counterparts
shall each be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument. Upon execution and delivery of this
Agreement by each of the VMS Subsidiary Guarantors listed on Schedule 1 hereto
on the Closing Date, each of the VMS Subsidiary Guarantors shall be deemed to
have executed and delivered this Agreement on the date hereof.
19 Amendments. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
20 Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and the several
Initial Purchasers in accordance with its terms.
Very truly yours,
AVIS RENT A CAR, INC.
By _____________________________________
Name:
Title:
AVIS RENT A CAR SYSTEM, INC.
By _____________________________________
Name:
Title:
AVIS INTERNATIONAL, LTD.
By _____________________________________
Name:
Title:
AVIS MANAGEMENT SERVICES, LTD.
By _____________________________________
Name:
Title:
AVIS CARIBBEAN, LIMITED
By _____________________________________
<PAGE>
Name:
Title:
AVIS ASIA AND PACIFIC, LIMITED
By _____________________________________
Name:
Title:
AVIS ENTERPRISES, INC.
By _____________________________________
Name:
Title:
AVIS SERVICE, INC.
By _____________________________________
Name:
Title:
AVIS LUBE, INC.
By _____________________________________
Name:
Title:
AVIS LEASING CORPORATION
By _____________________________________
Name:
Title:
<PAGE>
RENT-A-CAR COMPANY, INCORPORATED
By _____________________________________
Name:
Title:
RESERVE CLAIMS MANAGEMENT CO.
By _____________________________________
Name:
Title:
AVIS FLEET LEASING AND MANAGEMENT
CORPORATION
By _____________________________________
Name:
Title:
<PAGE>
PHH VEHICLE MANAGEMENT SERVICES LLC
By _____________________________________
Name:
Title:
DEALERS HOLDINGS, INC.
By _____________________________________
Name:
Title:
WILLIAMSBURG MOTORS, INC.
By _____________________________________
Name:
Title:
EDENTON MOTORS, INC.
By _____________________________________
Name:
Title:
WRIGHT EXPRESS LLC
By _____________________________________
Name:
Title:
PHH CANADIAN HOLDINGS, INC.
By _____________________________________
Name:
Title:
PHH DEUTSCHLAND, INC.
By _____________________________________
Name:
Title:
<PAGE>
Dated:_____________________________
<PAGE>
Accepted:
CHASE SECURITIES INC.
By_________________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
1 Chase Plaza, 25th Floor
New York, New York 10081
Attention: Legal Department
LEHMAN BROTHERS INC.
By_________________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
3 World Financial Center
New York, New York 10285
Attention: Legal Department
<PAGE>
Exhibit 2.01
================================================================================
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
PHH CORPORATION,
PHH HOLDINGS CORPORATION,
AVIS RENT A CAR, INC.
AND
AVIS FLEET LEASING AND MANAGEMENT CORPORATION
DATED AS OF MAY 22, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
THE MERGER
1.1 The Merger ........................................................ 2
1.2 Effective Time .................................................... 2
1.3 Merger Consideration .............................................. 2
1.4 Effects of the Merger ............................................. 3
1.5 Transferred Assets ................................................ 3
1.6 Holdings Retained Assets .......................................... 3
1.7 Transferred Liabilities ........................................... 4
1.8 Holdings Retained Liabilities ..................................... 4
1.9 Acquiror Sub Retained Assets ...................................... 4
1.10 Acquiror Sub Retained Liabilities ................................. 4
1.11 Unallocated or Contingent Assets or Liabilities ................... 4
1.12 Charter and By-Laws ............................................... 5
1.13 Directors; Officers ............................................... 5
1.14 Effect on Capital Stock 6
ARTICLE II
CLOSING; FURTHER ASSURANCES
2.1 Closing Date ...................................................... 7
2.2 Escrowed Funds .................................................... 7
2.3 Deliveries at the Closing ......................................... 8
2.4 Simultaneous Transactions ......................................... 10
2.5 Tax Treatment ..................................................... 10
2.6 Further Assurances ................................................ 10
2.7 Subsequent Closing ................................................ 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT AND HOLDINGS
3.1 Organization ...................................................... 14
3.2 Authorization ..................................................... 14
3.3 Transferred Companies ............................................. 15
3.4 Capitalization; Ownership of Shares ............................... 16
3.5 Consents and Approvals; No Violation .............................. 17
i
<PAGE>
Page
----
3.6 Financial Information; Absence of Undisclosed Liabilities ......... 17
3.7 Absence of Certain Changes or Events .............................. 18
3.8 Tax Matters ....................................................... 18
3.9 Litigation ........................................................ 20
3.10 Permits; Compliance with Laws ..................................... 20
3 11 Material Contracts ................................................ 21
3.12 Labor Relations ................................................... 22
3.13 Employee Benefit Plans; ERISA ..................................... 23
3.14 Intellectual Property ............................................. 25
3.15 Year 2000 Compliance .............................................. 26
3.16 Environmental Matters ............................................. 27
3.17 Real Property ..................................................... 28
3.18 Insurance ......................................................... 28
3.19 Acquisition of Shares for Investment .............................. 29
3.20 Sufficiency of Assets ............................................. 29
3.21 Customers ......................................................... 29
3.22 Brokers; Finders and Fees ......................................... 29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF ACQUIROR AND ACQUIROR SUB
4.1 Organization ...................................................... 30
4.2 Authorization ..................................................... 30
4.3 Capitalization .................................................... 31
4.4 Consents and Approvals; No Violation .............................. 32
4.5 Acquiror SEC Documents ............................................ 33
4.6 Financial Information; Absence of Undisclosed Liabilities ......... 33
4.7 Litigation ........................................................ 34
4.8 Compliance with Laws .............................................. 34
4.9 Availability of Funds ............................................. 34
4.10 Amortization of Goodwill .......................................... 34
4.11 No Registration ................................................... 35
4.12 Investigation by Acquiror; Parent's and Holdings' Liability ....... 35
4.13 Brokers; Finders and Fees ......................................... 35
ARTICLE V
COVENANTS OF THE PARTIES
ii
<PAGE>
Page
----
5.1 Conduct of the Business ........................................... 36
5.2 Conduct of Business by Acquiror ................................... 38
5.3 Conduct of Business by Acquiror Sub ............................... 38
5.4 Access to Information ............................................. 39
5.5 Books and Records; Furnishing Information ......................... 40
5.6 Consents and Approvals ............................................ 41
5.7 Commercially Reasonable Efforts ................................... 42
5.8 Financing ......................................................... 42
5.9 Employees; Employee Benefits ...................................... 42
5.10 No Solicitation ................................................... 46
5.11 Indemnification ................................................... 46
5.12 Trademark License Agreements ...................................... 46
5.13 Stockholders' Agreement and Registration Rights Agreement ......... 47
5.14 Transition Services Agreement and IT Agreement .................... 47
5.15 Escrow Agreement .................................................. 47
5.16 Transitional License Agreement .................................... 47
5.17 Intercompany Obligations; Affiliate Agreements .................... 48
5.18 Supplements to Disclosure Schedules ............................... 49
5.19 Public Announcements .............................................. 49
5.20 Non-Competition ................................................... 50
5.21 Preferred Alliance Agreements ..................................... 50
5.22 License Amendment Agreement ....................................... 50
5.23 No Other Representations .......................................... 50
ARTICLE VI
TAX MATTERS
6.1 Tax Returns ....................................................... 50
6.2 Indemnification ................................................... 52
6.3 Computation of Tax Liabilities .................................... 53
6.4 Contest Provisions ................................................ 54
6.5 Transfer Taxes .................................................... 55
6.6 Refunds ........................................................... 56
6.7 Certain Post-Closing Settlement Payments .......................... 57
6.8 Tax-Free Reorganization Covenants; Other Covenants ................ 61
6.9 Resolution of All Tax-Related Disputes 62
6.10 Post-Closing Actions Which Affect Cendant's Liability for Taxes ... 62
6.11 Termination of Existing Tax Sharing Agreements .................... 63
iii
<PAGE>
6.12 Assistance and Cooperation ........................................ 63
6.13 Adjustment to Merger Consideration ................................ 64
6.14 Certain Definitions ............................................... 64
6.15 Cendant Options; Holdings Plan .................................... 65
ARTICLE VII
CONDITIONS TO ACQUIROR'S AND ACQUIROR SUB'S OBLIGATIONS
7.1 Representations and Warranties .................................... 67
7.2 Performance ....................................................... 67
7.3 No Injunction ..................................................... 67
7.4 H-S-R Act ......................................................... 67
7.5 Required Approvals ................................................ 67
7.6 Opinion of Parent and Holdings' Counsel ........................... 68
7.7 Financing ......................................................... 68
ARTICLE VIII
CONDITIONS TO PARENT'S AND HOLDINGS' OBLIGATIONS
8.1 Representations and Warranties .................................... 68
8.2 Performance ....................................................... 68
8.3 No Injunction ..................................................... 68
8.4 H-S-R Act ......................................................... 69
8.5 Required Approvals ................................................ 69
8.6 Opinion of Acquiror and Acquiror Sub's Counsel .................... 69
ARTICLE IX
SURVIVAL; INDEMNIFICATION
9.1 Survival Periods .................................................. 69
9.2 Parent's and the Holdings Surviving Corporation's Agreement to
Indemnify ......................................................... 70
9.3 Acquiror's and the Acquiror Sub Surviving Corporation's Agreement
to Indemnify ...................................................... 71
9.4 Third-Party Indemnification ....................................... 73
9.5 Insurance ......................................................... 74
9.6 No Duplication; Sole Remedy ....................................... 74
9.7 Indemnification of Certain Litigation ............................. 74
iv
<PAGE>
Page
----
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Termination ....................................................... 75
10.2 Procedure For, and Effect of, Termination ......................... 76
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Fees and Expenses ................................................. 77
11.2 Amendment ......................................................... 77
11.3 Entire Agreement .................................................. 77
11.4 Execution in Counterparts ......................................... 77
11.5 Notices ........................................................... 77
11.6 Waivers ........................................................... 79
11.7 Applicable Law .................................................... 79
11.8 Headings .......................................................... 79
11.9 Assignments ....................................................... 79
11.10 Severability ...................................................... 80
11.11 Specific Performance .............................................. 80
11.12 Interpretation .................................................... 80
11.13 No Third-Party Beneficiaries ...................................... 80
v
<PAGE>
SCHEDULES
Transferred Companies .................................................... I
Transferred Assets ....................................................... II
Holdings Retained Assets ................................................. III
Transferred Liabilities .................................................. IV
Holdings Retained Liabilities ............................................ V
Retained Intellectual Property ........................................... VI
EXHIBITS
Terms of Acquiror Sub Series A Preferred Stock ........................... A
Terms of Acquiror Sub Series C Preferred Stock ........................... B
Articles of Merger ....................................................... C
Instrument of Assumption ................................................. D
Undertaking .............................................................. E
Trademark License Agreement .............................................. F
Stockholders' Agreement .................................................. G
Escrow Agreement ......................................................... H
Transitional License Agreement ........................................... I
Non-Competition Agreement ................................................ J
Opinion of Counsel to Parent and Holdings ................................ K
Opinion of Counsel to Acquiror and Acquiror Sub .......................... L
Alternative Transaction .................................................. M
vi
<PAGE>
Table of Defined Terms
Section
-------
Acquiror .............................................................. Preamble
Acquiror Class B Common Stock ........................................... 4.3(d)
Acquiror Common Stock .................................................. 40.3(d)
Acquiror Damages ........................................................ 9.2(a)
Acquiror Disclosure Schedule ............................................ 4.3(a)
Acquiror Indemnitees .................................................... 9.2(a)
Acquiror Material Adverse Effect ........................................ 4.1(b)
Acquiror SEC Documents ..................................................... 4.5
Acquiror Sub .......................................................... Preamble
Acquiror Sub Preferred Stock ............................................ 1.3(b)
Acquiror Sub Retained Assets ............................................... 1.9
Acquiror Sub Retained Liabilities ......................................... 1.10
Acquiror Sub Series A Preferred Stock ................................... 1.3(a)
Acquiror Sub Series B Preferred Stock ................................... 1.3(b)
Acquiror Sub Surviving Corporation ...................................... 1.4(a)
Acquisition Proposal ...................................................... 5.10
Affected Employee ....................................................... 5.9(c)
Articles of Merger ................................................. 2.3(a)(vii)
Audited Financial Statements ............................................ 3.6(a)
Business .............................................................. Recitals
Business Personnel ........................................................ 3.12
CBA ..................................................................... 3.9(b)
Cendant ............................................................. 5.1(b)(iv)
Cendant Options ..................................................... 5.1(b)(iv)
Certificate of Merger ...................................................... 1.2
Claim ...................................................................... 9.4
Claims ................................................................. 3.16(e)
Closing .................................................................... 2.1
Closing Date ............................................................... 2.1
Code .................................................................. Recitals
Commitment Letters ......................................................... 4.9
Confidentiality Agreement ............................................... 5.4(c)
Contracts .................................................................. 3.5
De Minimis Acquiror Claims ........................................... 9.2(b)(i)
De Minimis Holdings Claims ........................................... 9.3(b)(i)
vii
<PAGE>
Section
-------
Deferred Assets ......................................................... 2.7(a)
Directly Transferred Companies ....................................... 2.3(d)(i)
Disposition ............................................................. 6.2(g)
$ or dollars ............................................................. 11.12
DOJ ..................................................................... 5.6(a)
Due Date .................................................................. 6.14
Effective Time ............................................................. 1.2
Employee Benefit Plans ................................................. 3.13(a)
Employment Taxes ....................................................... 6.15(b)
Environmental Claims ................................................... 3.16(e)
Environmental Laws ..................................................... 3.16(e)
Escrow Agent ............................................................... 2.2
Escrow Agreement .......................................................... 5.15
Escrowed Funds ............................................................. 2.2
ERISA .................................................................. 3.13(a)
ERISA Affiliate ........................................................ 3.13(a)
Excluded Taxes .......................................................... 6.2(a)
Final Determination ..................................................... 6.8(d)
Foreign Plans .......................................................... 3.13(b)
FTC ..................................................................... 5.6(a)
Funding Termination Fund ................................................ 5.8(b)
GAAP .................................................................... 3.6(a)
Governmental Consent ....................................................... 3.5
Governmental Entity ........................................................ 3.5
Guaranties ............................................................. 5.17(c)
Hazardous Substances ................................................... 3.16(e)
Holdings .............................................................. Preamble
Holdings Class A Common Stock .......................................... 1.14(a)
Holdings Class B Common Stock .......................................... 1.14(a)
Holdings Damages ........................................................ 9.3(a)
Holdings Disclosure Schedule ............................................ 3.3(a)
Holdings Indebtedness ................................................... 1.3(c)
Holdings Indemnitees .................................................... 9.3(a)
Holdings' Knowledge ..................................................... 3.9(b)
Holdings Plan ........................................................... 5.9(e)
Holdings Retained Assets ................................................... 1.6
Holdings Retained Liabilities .............................................. 1.8
viii
<PAGE>
Section
-------
Holdings Surviving Corporation .......................................... 1.4(a)
HSC Class A Common Stock ............................................... 1.14(a)
HSC Class B Common Stock ............................................... 1.14(a)
H-S-R Act .................................................................. 3.5
Instrument of Assumption ............................................ 2.3(b)(ii)
Intellectual Property Rights .............................................. 3.14
Intercompany Agreements ................................................ 5.17(a)
Intercompany Indebtedness .............................................. 5.17(b)
IT ........................................................................ 5.14
Laws ....................................................................... 3.5
Lenders .................................................................... 4.9
License Amendment Agreement ............................................... 5.22
Market Event ........................................................... 10.1(d)
Material Adverse Effect on the Business ................................. 3.3(b)
Material Contracts ..................................................... 3.11(a)
Material Customer ......................................................... 3.21
Merger ................................................................ Recitals
Merger Consideration ....................................................... 1.3
Non-Competition Agreement ................................................. 5.20
Parent ................................................................ Preamble
Parent DB Plan .......................................................... 5.9(i)
Parent DC Plan .......................................................... 5.9(i)
Pension Plan ............................................................ 5.9(d)
Permits ................................................................ 3.10(a)
Person .................................................................... 3.14
Pre-Closing Period ...................................................... 3.8(a)
Real Property ............................................................. 3.17
Recipient ............................................................... 6.4(a)
Required Approvals ......................................................... 7.5
Remaining DB Participants ............................................... 5.9(i)
Remaining DC Participants ............................................... 5.9(i)
Retained Escrow Amount .............................................. 2.7(b)(ii)
Retained Intellectual Property ............................................ 5.12
SEC ........................................................................ 4.5
Securities Act ............................................................. 4.5
Shares .................................................................. 3.4(b)
Stockholders' Agreement ................................................... 5.13
ix
<PAGE>
Section
-------
Straddle Period ......................................................... 6.1(c)
Subsequent Closing ...................................................... 2.7(a)
Subsequent Closing Date ................................................. 2.7(a)
Tax or Taxes .............................................................. 6.14
Tax Benefit ............................................................. 6.7(e)
Tax Benefit Accountant .............................................. 6.7(f)(ii)
Tax Benefit Actually Realized ........................................... 6.7(e)
Tax Benefit Dispute Notice ........................................... 6.7(f)(i)
Tax Benefit Report ................................................. 6.7(f)(iii)
Tax Benefit Statement ................................................ 6.7(f)(i)
Tax Claim ............................................................... 6.4(a)
Tax Package ............................................................. 6.1(e)
Tax Report ............................................................. 6.15(a)
Tax Returns ............................................................... 6.14
TBCA .................................................................. Recitals
Trademark License Agreement ............................................... 5.12
Transaction Agreements ..................................................... 3.2
Transfer Taxes ............................................................. 6.5
Transferred Assets ......................................................... 1.5
Transferred Companies ................................................... 3.3(a)
Transferred Liabilities .................................................... 1.7
Transition Services Agreement ............................................. 5.14
Transitional License Agreement ............................................ 5.16
Undertaking ......................................................... 2.3(b)(iv)
UK DB Plan .............................................................. 5.9(i)
UK DC Plan .............................................................. 5.9(i)
UK Plans ................................................................ 5.9(i)
Updated Information ....................................................... 5.18
VMS ..................................................................... 3.9(b)
WEX ..................................................................... 2.7(a)
Withholding Taxes ...................................................... 6.15(a)
Year 2000 Compliant .................................................... 3.15(a)
x
<PAGE>
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of
May 22, 1999, is by and among PHH CORPORATION, a Maryland corporation
("Parent"), PHH HOLDINGS CORPORATION, a Texas corporation and a wholly owned
subsidiary of Parent ("Holdings"), AVIS RENT A CAR, INC., a Delaware corporation
("Acquiror"), and AVIS FLEET LEASING AND MANAGEMENT CORPORATION, a Texas
corporation and a wholly owned subsidiary of Acquiror ("Acquiror Sub").
WHEREAS, Acquiror desires to acquire, and Holdings desires to
transfer to Acquiror Sub, all of the vehicle management and fuel card businesses
of Holdings (collectively, the "Business"), in exchange for the Merger
Consideration (as hereinafter defined);
WHEREAS, the Boards of Directors of Holdings and Acquiror Sub have
each approved this Agreement and the merger (the "Merger") of Holdings and
Acquiror Sub in accordance with the provisions of Article Five of the Texas
Business Corporation Act (the "TBCA"), upon the terms and subject to the
conditions set forth herein;
WHEREAS, Acquiror, as the sole stockholder of Acquiror Sub, and
Parent, as the sole stockholder of Holdings, each have approved this Agreement
and the Merger upon the terms and subject to the conditions set forth herein;
WHEREAS, the Merger will result in, among other things, (i) the
survival of each of Holdings and Acquiror Sub, (ii) the allocation to and
vesting in Acquiror Sub of the Transferred Assets, the Transferred Liabilities,
the Acquiror Sub Retained Assets and the Acquiror Sub Retained Liabilities
(each, as hereinafter defined) and (iii) the allocation to and vesting in
Holdings of the Holdings Retained Assets and Holdings Retained Liabilities
(each, as hereinafter defined); and
WHEREAS, for U.S. Federal income tax purposes, the parties intend
that the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that
this Agreement be adopted as a plan of reorganization under Section 368 of the
Code.
<PAGE>
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions hereof,
at the Effective Time (as hereinafter defined), Holdings and Acquiror Sub shall
be merged in accordance with the provisions of Article Five of the TBCA.
Following the Effective Time, each of Holdings and Acquiror Sub shall survive
the Merger and, subject to Sections 1.4 and 1.14 hereof, shall maintain its
separate corporate existence and shall continue to be governed by the laws of
the State of Texas.
1.2 Effective Time. The Merger shall become effective on the date
and at the time that a certificate of merger (the "Certificate of Merger") is
issued by the Secretary of State of the State of Texas. As used in this
Agreement, the term "Effective Time" shall mean the date and time at which the
Certificate of Merger is issued.
1.3 Merger Consideration. At the Closing, Acquiror shall cause
Acquiror Sub to deliver or cause to be delivered to Parent or Holdings, as the
case may be, the following (collectively, the "Merger Consideration"), in
consideration of the Merger and the allocation to Acquiror Sub of the
Transferred Assets:
(a) Acquiror shall cause Acquiror Sub to deliver to Parent, an
aggregate of 7,200,000 shares of series A cumulative participating redeemable
convertible preferred stock, par value $0.01 per share, of Acquiror Sub (the
"Acquiror Sub Series A Preferred Stock"), having an aggregate liquidation
preference of $360,000,000, the terms of which are set forth in Exhibit A
hereto;
(b) Acquiror shall cause Acquiror Sub to deliver to Parent, an
aggregate of 40,000 shares of series C cumulative redeemable preferred stock,
par value $0.01 per share, of Acquiror Sub (the "Acquiror Sub Series C Preferred
Stock" and, together with the Acquiror Sub Series A Preferred Stock, the
"Acquiror Sub
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Preferred Stock"), having an aggregate liquidation preference of $2,000,000, the
terms of which are set forth in Exhibit B hereto; and
(c) Acquiror shall cause Acquiror Sub to deliver to Parent and
Holdings the Instrument of Assumption and the Undertaking (each, as hereinafter
defined) evidencing the assumption of the Transferred Liabilities allocated to,
assumed by and vested in Acquiror Sub, which includes the outstanding
indebtedness of Holdings to Parent which, on the Closing Date, shall not exceed
an aggregate principal amount of $1,438,000,000 (the "Holdings Indebtedness").
1.4 Effects of the Merger. At the Effective Time, by virtue of the
Merger and without any further act or deed on the part of Parent, Holdings,
Acquiror or Acquiror Sub, the Merger shall have the following effects in
accordance with the applicable provisions of the TBCA:
(a) each of Holdings and Acquiror Sub shall survive the Merger
and shall maintain its separate corporate existence; Holdings shall continue as
a surviving corporation under its same name ("Holdings Surviving Corporation");
and Acquiror Sub shall continue as a surviving corporation under its same name
("Acquiror Sub Surviving Corporation");
(b) the Transferred Assets shall be allocated to and vested in
Acquiror Sub and the Transferred Liabilities shall be allocated to, assumed by
and vested in Acquiror Sub;
(c) the Acquiror Sub Retained Assets and the Acquiror Sub
Retained Liabilities shall be allocated to, retained by and vested in Acquiror
Sub; and
(d) the Holdings Retained Assets and the Holdings Retained
Liabilities shall be allocated to, retained by and vested in Holdings.
1.5 Transferred Assets. The rights, properties and assets of
Holdings to be allocated to and vested in Acquiror Sub in the Merger pursuant to
Section 1.4 hereof (the "Transferred Assets") shall be all of Holdings' right,
title and interest in and to those assets of Holdings set forth on Schedule II
hereto.
1.6 Holdings Retained Assets. The rights, properties and assets of
Holdings to be allocated to, retained by and vested in Holdings in the Merger
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pursuant to Section 1.4 hereof (the "Holdings Retained Assets") shall be all of
Holdings' right, title and interest in and to all of the properties, assets,
rights, claims, contracts and businesses of Holdings immediately prior to the
Effective Time, other than the Transferred Assets, and shall include, without
limitation, those assets set forth on Schedule III hereto, which are not to be
allocated to or vested in Acquiror Sub by virtue of the Merger or otherwise in
connection with this Agreement or the transactions contemplated hereby.
1.7 Transferred Liabilities. The liabilities and obligations of
Holdings to be allocated to, assumed by and vested in Acquiror Sub in the Merger
pursuant to Section 1.4 hereof (the "Transferred Liabilities") shall be those
liabilities and obligations of Holdings set forth on Schedule IV hereto, whether
direct or indirect, known or unknown, absolute or contingent.
1.8 Holdings Retained Liabilities. The liabilities and obligations
of Holdings to be allocated to, retained by and vested in Holdings in the Merger
pursuant to Section 1.4 hereof (the "Holdings Retained Liabilities") shall be
all liabilities and obligations of Holdings and its Affiliates and subsidiaries
immediately prior to the Effective Time, other than the Transferred Liabilities,
and shall include, without limitation, the liabilities and obligations set forth
on Schedule V hereto, which are not to be allocated to, assumed by or vested in
Acquiror Sub by virtue of the Merger or otherwise in connection with this
Agreement or the transactions contemplated hereby.
1.9 Acquiror Sub Retained Assets. The rights, properties and assets
of Acquiror Sub to be allocated to, retained by and vested in Acquiror Sub in
the Merger pursuant to Section 1.4 hereof (the "Acquiror Sub Retained Assets")
shall be all of Acquiror Sub's right, title and interest in and to all of the
properties, assets, rights, claims, contracts and businesses of Acquiror Sub
immediately prior to the Effective Time. No properties, assets, rights, claims,
contracts or businesses of Acquiror Sub shall be allocated to or vested in
Holdings by virtue of the Merger or otherwise in connection with this Agreement
or the transactions contemplated hereby.
1.10 Acquiror Sub Retained Liabilities. The liabilities and
obligations of Acquiror Sub to be allocated to, retained by and vested in
Acquiror Sub in the Merger pursuant to Section 1.4 hereof (the "Acquiror Sub
Retained Liabilities") shall be all liabilities and obligations of Acquiror Sub
immediately prior to the Effective Time. No liabilities or obligations of
Acquiror Sub shall be allocated to,
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assumed by or vested in Holdings by virtue of the Merger or otherwise in
connection with this Agreement or the transactions contemplated hereby.
1.11 Unallocated or Contingent Assets or Liabilities. It is the
intention and agreement of the parties that all assets and liabilities of
Holdings and Acquiror Sub be allocated between them pursuant to Sections 1.4
through 1.10 hereof. Nevertheless, to the extent that there exist any
unallocated or contingent assets or liabilities of Holdings or Acquiror Sub that
are not allocated pursuant to this Agreement, upon consummation of the Merger,
such assets or liabilities shall be allocated as follows:
(a) to the extent such unallocated or contingent assets or
liabilities of Holdings or Acquiror Sub relate to or arise out of the
Transferred Assets, the Transferred Liabilities, the Acquiror Sub Retained
Assets or the Acquiror Sub Retained Liabilities, such unallocated or contingent
assets or liabilities shall be allocated to, assumed by and vested in Acquiror
Sub; and
(b) to the extent such unallocated or contingent assets or
liabilities of Holdings relate to or arise out of the Holdings Retained Assets
or the Holdings Retained Liabilities, such unallocated or contingent assets or
liabilities shall be allocated to, retained by and vested in Holdings.
1.12 Charter and By-Laws.
(a) The Articles of Incorporation and By-Laws of Holdings, as
in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation and By-Laws of the Holdings Surviving Corporation following the
Merger until amended as provided by the TBCA and such Articles of Incorporation
and By-Laws.
(b) The Articles of Incorporation and By-Laws of Acquiror Sub,
as in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation and By-Laws of the Acquiror Sub Surviving Corporation following
the Merger until amended as provided by the TBCA and such Articles of
Incorporation and By-Laws.
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1.13 Directors; Officers.
(a) The directors of Holdings immediately prior to the
Effective Time shall be the initial directors of the Holdings Surviving
Corporation following the Merger and shall hold office from the Effective Time
until their successors are duly elected or appointed and qualified in the manner
provided in the Articles of Incorporation or By-Laws of the Holdings Surviving
Corporation or as otherwise provided by the TBCA.
(b) The directors of Acquiror Sub immediately prior to the
Effective Time shall be the initial directors of the Acquiror Sub Surviving
Corporation following the Merger and shall hold office from the Effective Time
until their successors are duly elected or appointed and qualified in the manner
provided in the Articles of Incorporation or By-Laws of the Acquiror Sub
Surviving Corporation or as otherwise provided by the TBCA.
(c) The officers of Holdings immediately prior to the
Effective Time shall be the initial officers of the Holdings Surviving
Corporation following the Merger and shall hold office from the Effective Time
until their successors are duly elected or appointed and qualified in the manner
provided in the Articles of Incorporation or By-Laws of the Holdings Surviving
Corporation or as otherwise provided by the TBCA.
(d) The officers of Acquiror Sub immediately prior to the
Effective Time shall be the initial officers of the Acquiror Sub Surviving
Corporation following the Merger and shall hold office from the Effective Time
until their successors are duly elected or appointed and qualified in the manner
provided in the Articles of Incorporation or By-Laws of the Acquiror Sub
Surviving Corporation or as otherwise provided by the TBCA.
1.14 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any act or deed on the part of Parent, Holdings,
Acquiror, Acquiror Sub or any holder of any of the following securities:
(a) Each issued and outstanding share of class A common stock,
par value $.01 per share, of Holdings ("Holdings Class A Common Stock") shall
remain issued and outstanding and shall become and thereafter represent one
fully paid and nonassessable share of class A common stock, par value $.01 per
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share, of the Holdings Surviving Corporation ("HSC Class A Common Stock") (which
shall continue to be represented by the certificate representing such share
immediately prior to the Effective Time).
(b) (i) One hundred and thirty (130) issued and outstanding
shares of class B common stock, par value $0.01 per share of Holdings ("Holdings
Class B Common Stock") shall be converted into the right to receive an aggregate
of 7,200,000 fully paid and nonassessable shares of Acquiror Sub Series A
Preferred Stock, (ii) one (1) issued and outstanding share of Holdings Class B
Common Stock shall be converted into the right to receive 40,000 fully paid and
nonassessable shares of Acquiror Sub Series C Preferred Stock and (iii) each of
the remaining issued and outstanding shares of Holdings Class B Common Stock
shall remain issued and outstanding and shall become and thereafter represent
one fully paid and nonassessable share of class B common stock, par value $.01
per share, of the Holdings Surviving Corporation ("HSC Class B Common Stock")
(which shall continue to be represented by the certificate representing such
share immediately prior to the Effective Time).
(c) Each issued and outstanding share of common stock, par
value $0.01 per share, of Acquiror Sub shall remain issued and outstanding and
shall become and thereafter represent one fully paid and nonassessable share of
common stock, par value $0.01 per share, of the Acquiror Sub Surviving
Corporation (which shall continue to be represented by the certificate
representing such share immediately prior to the Effective Time).
ARTICLE II
CLOSING; FURTHER ASSURANCES
2.1 Closing Date. The closing of the transactions contemplated by
this Agreement (the "Closing") and all actions specified in this Agreement to
occur at the Closing shall take place at 10:00 a.m. on June 30, 1999; provided,
however, that if the conditions set forth in Articles VII and VIII hereof shall
not have been satisfied or waived on or prior to such date, then the Closing
shall take place on the third business day following satisfaction or waiver of
the conditions set forth in Articles VII and VIII hereof, at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York
10022, unless the parties shall agree in writing to another time, date or place.
The date on which the Closing occurs is
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referred to here in as the "Closing Date." The filing of the Articles of Merger
(as hereinafter defined) in accordance with the TBCA shall be made on the
Closing Date.
2.2 Escrowed Funds. At the Closing, Acquiror shall cause Acquiror
Sub to deposit immediately available funds into an escrow account with an escrow
agent mutually agreeable to Acquiror Sub and Holdings (the "Escrow Agent") in an
amount equal to $1,438,000,000 (collectively, the "Escrowed Funds") for
repayment in full the Holdings Indebtedness. Once Acquiror Sub deposits the
Escrowed Funds pursuant to this Section 2.2, it shall have no further
obligations in respect of the Holdings Indebtedness.
2.3 Deliveries at the Closing.
(a) At the Closing, the following documents and agreements
shall be duly executed and delivered by Acquiror, Acquiror Sub, Parent and
Holdings, as applicable, and any other parties thereto:
(i) the Stockholders' Agreement (as hereinafter
defined);
(ii) the Trademark License Agreement (as hereinafter
defined);
(iii) the Transition Services Agreement (as hereinafter
defined);
(iv) the Escrow Agreement (as hereinafter defined);
(v) the Transitional License Agreement (as hereinafter
defined);
(vi) the Non-Competition Agreement (as hereinafter
defined);
(vii) IT Agreement (as hereinafter defined);
(viii) the License Amendment Agreement (as hereinafter
defined); and
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(ix) articles of merger and a plan of merger (together,
the "Articles of Merger"), substantially in the form of Exhibit C hereto.
(b) At the Closing, Acquiror and Acquiror Sub shall deliver or
cause to be delivered to Parent and Holdings:
(i) duly executed stock certificates representing the
shares of Acquiror Sub Series A Preferred Stock and Acquiror Sub Series C
Preferred Stock to be issued in the Merger pursuant to Section 1.14(a) hereof;
(ii) an instrument of assumption, substantially in the
form of Exhibit D hereto (the "Instrument of Assumption"), duly executed by
Acquiror Sub, evidencing the assumption by Acquiror Sub of the Holdings
Indebtedness;
(iii) a payment by wire transfer of immediately
available funds in an amount equal to the Intercompany Indebtedness (as
hereinafter defined) to a bank account designated in writing by Parent at least
two (2) business days prior to the Closing Date;
(iv) an undertaking substantially in the form of Exhibit
E hereto (the "Undertaking") and any other documents and agreements with third
parties as may be reasonably necessary to evidence (a) the assumption by
Acquiror Sub of the Transferred Liabilities (other than the Holdings
Indebtedness and the Intercompany Indebtedness) or (b) the guaranties, letters
of credit and/or letters of comfort referred to in Section 5.17(b) hereof;
(v) a certificate of Acquiror executed on its behalf by
a duly authorized executive officer of Acquiror, certifying as to the
satisfaction of the conditions set forth in Sections 8.1 and 8.2 hereof; and
(vi) such other instruments or documents as may
reasonably be requested by Holdings in order to effect the transactions
contemplated by this Agreement.
(c) At the Closing, Acquiror and Acquiror Sub shall deliver or
cause to be delivered to the Escrow Agent the wire transfer referred to in
Section 2.2 hereof.
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(d) At the Closing, Holdings shall deliver or cause to be
delivered to Acquiror and Acquiror Sub:
(i) (x) stock certificates representing all of the
issued and outstanding shares of capital stock of the Transferred Companies (as
hereinafter defined) together with the books and records of each of the
Transferred Companies (other than books and records located on the premises of
any Transferred Company); and (y) stock powers duly executed in blank as to the
issued and outstanding shares of capital stock of each of the Transferred
Companies that is a direct subsidiary of Holdings (collectively, the "Directly
Transferred Companies");
(ii) evidence in writing reasonably satisfactory to
Acquiror that the Intercompany Agreements set forth in Section 5.17(i) of the
Holdings Disclosure Schedule (other than the Intercompany Agreements listed in
Section 5.17(ii) thereof) shall have been terminated and any liabilities of the
Transferred Companies to any Person with respect thereto shall have been
released;
(iii) a certificate of Holdings executed on its behalf
by a duly authorized executive officer of Holdings, certifying as to the
satisfaction of the conditions set forth in Sections 7.1 and 7.2 hereof.
(iv) written resignations, effective as of the Effective
Time, of each of the officers (except as otherwise agreed by Acquiror) and
directors of the Transferred Companies; and
(v) such other instruments or documents as may
reasonably be requested by Acquiror in order to effect the transactions
contemplated by this Agreement.
(e) At the Closing, immediately following the Effective Time,
Parent shall transfer to a third party not affiliated with Parent or Acquiror
the shares of Acquiror Sub Series C Preferred Stock issued to Parent in the
Merger, pursuant to a binding agreement to be entered into between the date
hereof and the Closing Date.
2.4 Simultaneous Transactions. All of the transactions contemplated
hereby and each of the deliveries at the Closing shall be deemed to occur
simultaneously at the Effective Time, and no such transaction shall be deemed to
have been consummated until each and every transaction has been consummated.
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2.5 Tax Treatment. The parties intend that the Merger shall qualify
as a reorganization under Section 368(a) of the Code, and that this Agreement
shall constitute a "plan of reorganization" for purposes of Section 368 of the
Code.
2.6 Further Assurances. After the Effective Time, the parties hereto
shall from time to time, at the reasonable request of the other, execute and
deliver such instruments of conveyance and transfer or instruments of assumption
and take such other actions as the other may reasonably request, in order to
more effectively consummate the transactions contemplated hereby and to carry
out the terms hereof. Without limiting the generality of the foregoing, at any
time and from time to time after the Effective Time, (a) at the request of
Acquiror, Parent (to the extent applicable) and Holdings shall take such action
including, without limitation, executing and delivering all such deeds, bills of
sale, assignments and any documents and agreements with third parties as may be
reasonably necessary to more effectively allocate to and vest in the Acquiror
Sub Surviving Corporation all of Holdings' right, title and interest in and to
the Transferred Assets and (b) at the request of Holdings, Acquiror shall, and
shall cause the Acquiror Sub Surviving Corporation to, take such action to more
effectively assume and vest in the Acquiror Sub Surviving Corporation the
Transferred Liabilities, including, without limitation, executing such
documents, instruments and agreements with third parties as may be reasonably
necessary for the Acquiror Sub Surviving Corporation to assume all of Holdings'
obligations under each of the Transferred Liabilities.
2.7 Subsequent Closing.
(a) In the event that (i) all Required Approvals (as
hereinafter defined) of any Governmental Entity having jurisdiction over Wright
Express Financial Services Corporation, a Utah corporation ("WEX"), have not
been obtained and (ii) all other conditions to Closing set forth in Articles VII
and VIII hereof in respect of the Merger and all of the other Transferred Assets
have been fulfilled or waived in accordance with the terms of this Agreement,
then the parties hereto agree that the Merger shall be consummated and the
Closing shall proceed in respect of all of the Transferred Assets other than the
outstanding shares of capital stock of WEX (the "Deferred Assets"), and that a
subsequent closing ("Subsequent Closing") in respect of the Deferred Assets take
place following the Closing. The Subsequent Closing shall take place at 10:00
a.m., New York City time, on a date (the "Subsequent Closing Date") to be agreed
upon by the parties hereto, which shall be no later than the third business day
following the date on which all Required
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Approvals of Governmental Entities having jurisdiction over WEX shall have been
obtained, any conditions to the Required Approvals shall have been satisfied and
any statutory waiting periods in respect thereof shall have expired, at the
offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York,
New York 10022 or such other date or place as the parties may agree in writing.
(b) Notwithstanding any other provision of this Agreement, if
there is to be a Subsequent Closing, then the following shall apply:
(i) Following the Closing, Holdings (or an Affiliate
thereof) shall retain all right, title and interest in and to the Deferred
Assets and each of Parent, Holdings, Acquiror and Acquiror Sub shall continue to
use their best efforts to obtain the Required Approvals as soon as practicable;
(ii) $15,500,000 of the Escrowed Funds (the "Retained
Escrow Amount") shall remain in escrow with the Escrow Agent following the
Closing and, except as provided in subsection (d) below, shall be released and
delivered to Holdings, together with any interest earned thereon, at the
Subsequent Closing;
(iii) After all Required Approvals are obtained, the
Subsequent Closing shall occur in accordance with Subsection (a) above and, at
the Subsequent Closing, (A) the Escrow Agent shall release and deliver to
Acquiror Sub the Deferred Assets, upon which all of Holdings right, title and
interest in and to the Deferred Assets shall be transferred to Acquiror Sub or,
at the election of Holdings, to Acquiror or such other Affiliate of Acquiror
(other than Acquiror Sub) as may be specified by Acquiror, and (B) the Escrow
Agent shall release and deliver to Holdings the Retained Escrow Amount, together
with all interest earned thereon through the Subsequent Closing Date;
(iv) It is the intention of the parties that, upon the
occurrence of a Subsequent Closing, the acquisition of WEX by Acquiror Sub or
Acquiror, as the case may be, shall be effective as of the Closing Date for
purposes of this Agreement, and the business of WEX shall be run for the benefit
of Acquiror Sub or Acquiror, as the case may be, during the period from the
Closing Date through and including the Subsequent Closing Date; and
(v) During the period from the Closing Date through the
Subsequent Closing, WEX will continue to provide to the Business the
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credit card and other services currently provided to the Business on the terms
set forth in the Transition Services Agreement or such other management
agreement as may be mutually agreed upon by the parties hereto and Acquiror
shall, and shall cause the Transferred Companies to, provide to WEX such
services as are currently provided by Wright Express Corporation, a Delaware
corporation and the parent company of WEX ("Wright Express").
(c) During the period from the Closing Date to the Subsequent
Closing Date, except as consented to by Acquiror in writing, Parent and Holdings
shall cause WEX:
(i) to conduct its business and operations in the
ordinary course in substantially the same manner as presently conducted and to
use reasonable best efforts to preserve its relationships with customers,
suppliers and others having business with WEX;
(ii) provide Wright Express and Wright Express Canada,
Inc. with substantially the same services and on the same terms as it provided
to such entities prior to the Closing;
(iii) to provide Acquiror Sub with information
(financial or otherwise) regarding WEX or its services to the Transferred
Companies as may be reasonably requested by Acquiror Sub;
(iv) to take such or omit to take such actions as may be
reasonably requested by Acquiror Sub; and
(v) not to take any action that, if taken during the
period from the date of this Agreement through the Effective Time without the
consent of Acquiror, would constitute a breach of Section 5.1 hereof, assuming
for this purpose that the threshold for capital expenditures in Section 5.1
(viii) hereof is $100,000 individually and in the aggregate and "material" in
Section 5.1 shall be measured with regard to WEX as a stand-alone entity.
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(d) If the Governmental Entities having jurisdiction over WEX
(i) notify Holdings and/or Acquiror that a final, nonappealable decision has
been made by such Governmental Entities that the Required Approvals will not be
granted or (ii) have failed to provide the Requisite Approval on or prior to
October 31, 1999, then (i) the Subsequent Closing with respect to the Deferred
Assets shall not occur, (ii) Holdings shall retain all right, title and interest
in and to the Deferred Assets and (iii) the Retained Escrow Amount, together
with any interest earned thereon, shall be released and delivered by the Escrow
Agent to Acquiror Sub. All obligations of Parent and Holdings with respect to
delivering the Deferred Assets to Acquiror and Acquiror Sub pursuant to this
Agreement shall thereafter cease and be null and void, and Holdings shall be
free to exercise all rights of ownership over the Deferred Assets, including the
right to freely dispose thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT AND HOLDINGS
Parent and Holdings jointly and severally represent and warrant to
Acquiror and Acquiror Sub as follows (it being understood and agreed that,
notwithstanding anything to the contrary contained in this Article III or in any
other Article of this Agreement, neither Parent nor Holdings makes any
representation or warranty with respect to any direct or indirect subsidiary of
Parent or Holdings that is not a Transferred Company, or with respect to any
properties, assets, liabilities, obligations or businesses of Parent or Holdings
or their respective subsidiaries or Affiliates that are not included in the
Transferred Assets, the Transferred Liabilities or the Business, except as
explicitly set forth herein):
3.1 Organization. Each of Parent and Holdings is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate all of its properties and assets and to
carry on its business as it is presently being conducted.
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3.2 Authorization. Each of Parent and Holdings has all requisite
corporate power and authority to execute and deliver this Agreement, and to
execute and deliver each of the Stockholders' Agreement, the Trademark License
Agreement, the IT Agreement, the License Amendment Agreement, the
Non-Competition Agreement, the Transition Services Agreement, the Escrow
Agreement, the Transitional License Agreement, the Undertaking and the
Instrument of Assumption (collectively, the "Transaction Agreements") to which
it is a party, and to perform its obligations hereunder and thereunder and
consummate the transactions contemplated hereby and thereby. The execution and
delivery by Parent and Holdings of this Agreement and each of the Transaction
Agreements to which it is a party, and the consummation by Parent and Holdings
of the transactions contemplated hereby and thereby, have been duly authorized
by all requisite corporate action on the part of Parent and Holdings. This
Agreement has been, and, at the Closing, each of the Transaction Agreements will
be, duly executed and delivered by each of Parent and Holdings to the extent it
is a party thereto, and (assuming the valid authorization, execution and
delivery thereof by the other parties thereto) this Agreement constitutes, and
each of the Transaction Agreements, when duly executed and delivered, will
constitute, a valid and binding agreement of Parent and Holdings to the extent
it is a party thereto, enforceable against them in accordance with its terms,
except that (a) such enforcement may be subject to bankruptcy, reorganization,
fraudulent conveyance, moratorium, insolvency and other laws now or hereafter in
effect relating to or affecting creditors' rights and (b) enforcement thereof,
including, among other things, the remedy of specific performance and injunctive
and other forms of equitable relief, may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
3.3 Transferred Companies.
(a) Schedule I hereto sets forth a complete list of all of the
Transferred Companies and their respective jurisdictions of organization. Except
as set forth in Section 3.3 of the disclosure schedule being delivered by Parent
and Holdings to Acquiror concurrently herewith (the "Holdings Disclosure
Schedule"), (i) those direct and indirect subsidiaries of Holdings listed on
Schedule I hereto (the "Transferred Companies") are the only subsidiaries or
Affiliates of Parent or Holdings that presently are actively engaged in the
conduct of the Business and (ii) none of the Transferred Companies owns any
equity interest in any corporation or other entity, other than another
Transferred Company. Each Transferred Company is duly organized, validly
existing and (in the case of those Transferred Companies that are incorporated
in a jurisdiction where such expression has legal significance) in good
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standing under the laws of its jurisdiction of organization and has all
requisite corporate or other power and authority to own, lease and operate all
of its properties and assets and to carry on its business as it is presently
being conducted, except where the failure to be so organized, existing or in
good standing or to have such power or authority would not, individually or in
the aggregate, have a Material Adverse Effect on the Business (as hereinafter
defined). Each of the Transferred Companies is duly qualified to do business,
and is in good standing, in each jurisdiction in which the nature of its
business or the ownership, operation or leasing of its properties makes such
qualification necessary, except where the failure to be so qualified and in good
standing would not individually or in the aggregate, have a Material Adverse
Effect on the Business.
(b) As used in this Agreement (i), "Affiliate" shall mean,
with respect to any Person, any other Person that directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such Person; provided however, that the term "Affiliate"
shall not include, with respect to any Person, any public corporation in which
such Person owns securities representing less than 50% of the outstanding voting
power; and (ii) "Material Adverse Effect on the Business" means any material
adverse change in, or effect on, the business, assets, liabilities, results of
operation or condition (financial or otherwise) of the Transferred Companies,
taken as a whole; provided, however, that the effects of changes that are
generally applicable to the industries in which the Transferred Companies
operate or to the economy generally shall be excluded from such determination.
3.4 Capitalization; Ownership of Shares.
(a) Section 3.4(a) of the Holdings Disclosure Schedule sets
forth the authorized capital stock of, and the number of issued and outstanding
shares of capital stock or other equity interests in, Holdings and each of the
Transferred Companies. As of the date of this Agreement, except as set forth in
Section 3.4(a) of the Holdings Disclosure Schedule, there are no issued and
outstanding shares of capital stock or other equity interests in any of the
Transferred Companies, or any subscriptions, options, warrants, calls, rights,
convertible securities or other agreements or commitments of any character
obligating Parent, Holdings or any of the Transferred Companies to issue,
transfer or sell, or cause to be issued, transferred or sold, any capital stock
or other equity interests in any of the Transferred Companies, nor are there any
shares of capital stock or other equity interests reserved for issuance pursuant
thereto. Each outstanding share of capital stock of each Trans-
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ferred Company that is a corporation is duly authorized, validly issued, fully
paid and nonassessable and (except as otherwise required by applicable Law (as
hereinafter defined)) free of preemptive rights. Each equity interest of each
Transferred Company that is not a corporation is duly authorized, validly issued
and (except as otherwise required by applicable Law) free of preemptive rights.
(b) Except as set forth in Section 3.4(b) of the Holdings
Disclosure Schedule, (i) all of the issued and outstanding shares of capital
stock of, or other equity or membership interests in, the Transferred Companies
(collectively, the "Shares") are owned of record and beneficially by Holdings
either directly or indirectly through a Transferred Company, free and clear of
all liens, pledges. charges, claims, security interests or other encumbrances,
except for liens for current Taxes not yet due and payable (collectively,
"Liens"), (ii) there are no restrictions on the payment of dividends by any of
the Transferred Companies (other than by operation of Law) and (iii) no
Transferred Company is subject to any obligation or requirement to provide funds
for or to make any investment (in the form of a loan, capital contribution or
otherwise) in any Person. The consummation of the Merger will convey to Acquiror
Sub good title to the Shares of the Directly Transferred Companies, free and
clear of all Liens, except for those created by Acquiror or the Acquiror Sub
Surviving Corporation or arising out of ownership of the Shares by the Acquiror
Sub Surviving Corporation.
3.5 Consents and Approvals; No Violation. Except for the filing of
the Articles of Merger under the TBCA and the applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "H-S-R
Act"), or as set forth in Section 3.5 of the Holdings Disclosure Schedule,
neither the execution and delivery by Parent or Holdings of this Agreement or
the Transaction Agreements to which it is a party nor the consummation by Parent
or Holdings of the transactions contemplated hereby or thereby will: (i)
conflict with or violate the certificate or articles of incorporation, by-laws
or comparable charter or organizational documents of Parent, Holdings or any of
the Transferred Companies, (ii) violate any statute, law, judgment, decree,
order, regulation or rule (collectively, "Laws") of any Governmental Entity (as
hereinafter defined) applicable to Parent, Holdings or the Transferred Companies
or any of their respective properties or assets, (iii) result in a violation or
breach of, or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or require any consent of another
party to, any indenture, license, lease, contract, instrument, agreement or
commitment (collectively, "Contracts") to which Parent or Holdings
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(each, with respect to the Business) or any of the Transferred Companies is a
party or by which Parent or Holdings (each, with respect to the Business) or any
of the Transferred Companies or any of their respective properties or assets is
bound, (iv) result in the creation of any Lien on any of the assets of Holdings
or any Transferred Company or (v) require any filing with, or the obtaining of
any consent, approval, certificate, license, permit, waiver or authorization of
("Governmental Consent"), any governmental or regulatory authority, court or
agency, whether federal, state, local or foreign (each, a "Governmental
Entity"), other than, in the case of clauses (ii), (iii), (iv) and (v), such
violations, breaches, conflicts, defaults, terminations, accelerations,
third-party consents, Liens and Governmental Consents which, individually or in
the aggregate, would not have a Material Adverse Effect on the Business, would
not adversely affect in any material respect the ability of Parent or Holdings
to consummate the transactions contemplated hereby or would not adversely affect
in any material respect the ability of Acquiror Sub to conduct the Business
after the Closing in substantially the same manner as presently conducted.
3.6 Financial Information; Absence of Undisclosed Liabilities.
(a) Section 3.6(a) of the Holdings Disclosure Schedule sets
forth the audited combined balance sheets of the Transferred Companies as of
December 31, 1998 and the related audited combined statements of income and
changes in cash flows for the year then ended (collectively, the "Audited
Financial Statements"). Except as otherwise noted therein, the Audited Financial
Statements were prepared in conformity with United States generally accepted
accounting principles ("GAAP"), consistently applied, and fairly present in all
material respects the combined financial condition, results of operations and
cash flows of the Transferred Companies as of and for the period indicated
therein.
(b) Except as set forth in Section 3.6(b) of the Holdings
Disclosure Schedule, since December 31, 1998, none of the Transferred Companies
has incurred any liabilities or obligations (whether direct or indirect,
accrued, contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared in accordance with GAAP, except for
(i) liabilities and obligations incurred in the ordinary course of business and
(ii) liabilities and obligations that, individually or in the aggregate, would
not have a Material Adverse Effect on the Business.
3.7 Absence of Certain Changes or Events. Except as disclosed in
Section 3.7 of the Holdings Disclosure Schedule, since December 31, 1998, (a)
there
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has been no action taken by any of the Transferred Companies through the date
hereof that, if taken during the period from the date of this Agreement through
the Effective Time without the consent of Acquiror, would constitute a breach of
Section 5.1 hereof; and (b) there has been no event or development that has had
or would have, individually or in the aggregate, a Material Adverse Effect on
the Business.
3.8 Tax Matters. Except as set forth on Section 3.8 of the Holdings
Disclosure Schedule:
(a) Each of the Transferred Companies (i) has timely filed (or
there has been timely filed on its behalf) with the appropriate taxing
authorities all material Tax Returns (as hereinafter defined) required to be
filed by or with respect to it, and all such Tax Returns are correct in all
material respects, and (ii) has timely paid or accrued and adequately disclosed
and fully provided for on the Audited Financial Statements all material Taxes
(as hereinafter defined) required to be paid;
(b) There are no outstanding waivers in writing or comparable
consents regarding the application of any statute of limitations in respect of
any material Taxes of any of the Transferred Companies nor have any of the
Transferred Companies been requested to enter into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
any material Taxes of the Transferred Companies;
(c) There is no action, suit, investigation, audit, claim or
assessment pending or proposed to any Transferred Company in writing with
respect to Taxes of Holdings or any of the Transferred Companies nor has
Holdings or any of the Transferred Companies received any written notices from
any taxing authority relating to any issue which could affect the Tax liability
of the Transferred Companies;
(d) There are no Liens for Taxes upon any of the Transferred
Assets or any assets of the Transferred Companies, except for Liens relating to
current Taxes not yet due and payable or Liens for Taxes being contested in good
faith which have been fully disclosed and adequately provided for on the Audited
Financial Statements in accordance with GAAP;
(e) (i) Since April 30, 1997 and (ii) prior to April 30, 1997,
to the knowledge of all responsible tax officers of Holdings, none of the
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Transferred Companies has been included in any "consolidated," "unitary" or
"combined" income Tax Return provided for under the law of the United States,
any foreign jurisdiction or any state or locality with respect to Taxes for any
taxable period for which the statute of limitations has not expired;
(f) All material Taxes which Holdings or any of the
Transferred Companies is (or was) required by law to withhold or collect have
been duly withheld or collected, and have been timely paid over to the proper
authorities to the extent due and payable;
(g) (i) Since April 30, 1997 and (ii) prior to April 30, 1997,
to the knowledge of all responsible tax officers of Holdings, no claim has been
made in writing by any taxing authority in a jurisdiction where Holdings or any
of the Transferred Companies does not file Tax Returns that Holdings or any of
the Transferred Companies is or may be subject to taxation by that jurisdiction;
(h) None of the Transferred Companies is a party to any
agreement that, as a result of the consummation of the transactions contemplated
by this Agreement, would require any of the Transferred Companies to make any
payment that would constitute an "excess parachute payment" for purposes of
Sections 280G and 4999 of the Code;
(i) No indebtedness of any of the Transferred Companies
consists of "corporate acquisition indebtedness" within the meaning of Section
279 of the Code; and
(j) There are no Tax sharing, allocation, indemnification or
similar agreements in effect as between any of the Transferred Companies or any
predecessors or Affiliates thereof and any other party (including Holdings or
any predecessor or Affiliate thereof) under which Acquiror or Acquiror Sub or
any of the Transferred Companies could be liable after the Closing Date for any
Taxes or other claims of any party.
3.9 Litigation.
(a) Except as set forth in Section 3.9 of the Holdings
Disclosure Schedule, as of the date of this Agreement, there is no action, suit,
proceeding or investigation by or before any Governmental Entity which is
pending or, to Holdings' Knowledge, threatened, against Parent or Holdings (in
each case, relating
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to the Business) or any Transferred Company, which, if adversely determined,
individually or in the aggregate, would (a) have a Material Adverse Effect on
the Business, (b) adversely affect in any material respect the ability of Parent
or Holdings to consummate the transactions contemplated hereby or (c) adversely
affect, in any material respect, the ability of Acquiror Sub to conduct the
Business after the Closing in substantially the same manner as presently
conducted.
(b) For purposes of this Agreement, "Holdings' Knowledge"
shall mean, with respect to any representation and warranty, the actual
knowledge of each of Messrs. Mark Miller, President and Chief Executive Officer
of PHH Vehicle Management Services, LLC ("VMS"), Neil Cashen, Senior Vice
President, Finance and Planning of VMS, John Cullum, President, Cendant Business
Answers (Europe) PLC ("CBA"), David Bird, Managing Director of CBA, and Joseph
Weikel, Vice President and General Counsel of VMS, and Ms. Mairead McKenna,
Legal Services Director of CBA, after having reviewed the applicable
representation and warranty and any disclosure schedule related thereto.
3.10 Permits; Compliance with Laws.
(a) Holdings (to the extent related to the Business) and each
of the Transferred Companies is in possession of all franchises, authorizations,
licenses, permits, easements, variances, consents, certificates, approvals and
orders of any Governmental Entity necessary for it to own, lease and operate its
properties or to carry on the Business as it is presently being conducted (the
"Permits"), except where the failure to have any of the Permits would not,
individually or in the aggregate, have a Material Adverse Effect on the
Business.
(b) Except (i) as disclosed in Section 3.10(b) of the Holdings
Disclosure Schedule, and (ii) with respect to tax, labor, ERISA and employee
benefit, intellectual property and environmental Laws, which are exclusively
addressed in Sections 3.8, 3.12, 3.13, 3.14 and 3.16 hereof, respectively, the
Business presently is being conducted in compliance in all material respects
with all applicable Laws.
3.11 Material Contracts.
(a) Except for Contracts set forth in Section 3.11(a) of the
Holdings Disclosure Schedule (collectively, the "Material Contracts"), neither
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Holdings (with respect to the Business) nor any Transferred Company is a
party to or bound by:
(i) any Contract that provides for payment to a
Transferred Company for the performance of services in an amount in excess of
$1,000,000 annually;
(ii) any Contract to be performed relating to capital
expenditures (other than those provided for in the Capital Expenditure Plans of
the Business for 1999) in excess of $500,000 in any calendar year, or in the
aggregate require expenditures in excess of $2,000,000;
(iii) any Contract not entered into the ordinary course
of business, requiring payments by or to the Transferred Companies in excess of
$1,000,000;
(iv) any Contract which contains restrictions with
respect to payment of dividends or any other distribution in respect of the
capital stock of a Transferred Company;
(v) any Contract relating to indebtedness for borrowed
money in an amount in excess of $1,000,000 (excluding trade payables in the
ordinary course of business, intercompany indebtedness and leases for
telephones, copy machines, facsimile machines and other office equipment);
(vi) any lease (or sublease) of Real Property requiring
payments by the Transferred Companies in an amount in excess of $1,000,000
annually;
(vii) any loan or advance to (other than advances to
employees in the ordinary course of business in amounts not exceeding $1,000,000
in the aggregate), or investment in (other than investments in any Transferred
Company), any Person, or any Contract relating to the making of any such loan,
advance or investment;
(viii) any guarantee in respect of any indebtedness or
obligation of any Person in an amount in excess of $1,000,000 (other than in the
ordinary course of business and other than with respect to any indebtedness or
obligation of any Transferred Company);
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(ix) any material Contract limiting the ability of any
Transferred Company to engage in any line of business or to compete with any
Person;
(x) any material amendment, modification or supplement
in respect of any of the foregoing.
(b) Except as set forth in Section 3.12(b) of the Holdings
Disclosure Schedule: (i) there is no pending default under or breach of any
Material Contract by Holdings or any Transferred Company party thereto, and no
event has occurred that, with the lapse of time or the giving of notice or both,
would constitute a default thereunder by Holdings or any Transferred Company
party thereto, in any such case in which such default, breach or event,
individually or in the aggregate, would have a Material Adverse Effect on the
Business; and (ii) no party to any such Material Contract has given written
notice to Holdings or any Transferred Company of, or made a written claim
against Holdings or any Transferred Company with respect to, any breach or
default thereunder, in any such case, in which such breach or default,
individually or in the aggregate, would have a Material Adverse Effect on the
Business.
3.12 Labor Relations. Except as set forth in Section 3.12 of the
Holdings Disclosure Schedule, (a) neither Holdings nor any of the Transferred
Companies is a party to any collective bargaining agreement or labor Contract
with respect to any Persons employed by any of the Transferred Companies (the
"Business Personnel"), (b) Holdings is not a party to any employment agreement
with any of the Business Personnel, (c) since January 1, 1998, neither Holdings
nor any of the Transferred Companies has engaged in any unfair labor practice
with respect to the Business Personnel, and there is no unfair labor practice
complaint or grievance against Holdings or any of the Transferred Companies by
the National Labor Relations Board or any comparable state agency pending or, to
Holdings' Knowledge, threatened in writing with respect to the Business
Personnel, except where such unfair labor practice, complaint or grievance would
not, individually or in the aggregate, have a Material Adverse Effect on the
Business, and (d) there is no labor strike, dispute, slowdown or stoppage
pending or, to Holdings' Knowledge, threatened against Holdings (with respect to
the Business) or any of the Transferred Companies which may interfere with the
business activities of the Business, except for such disputes, strikes or work
stoppages which would not, individually or in the aggregate, have a Material
Adverse Effect on the Business.
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3.13 Employee Benefit Plans; ERISA.
(a) Each "employee benefit plan," within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained by Holdings and/or any of its subsidiaries or any
organization which, together with Holdings and/or any such subsidiary (each, an
"ERISA Affiliate"), would be treated as a "single employer" within the meaning
of Section 414 of the Code or to which Holdings or any such ERISA Affiliate
contributes (or has any obligation to contribute) or is a party and in which any
Business Personnel participates or under which any of them has accrued and
remains entitled to any benefit (collectively, the "Employee Benefit Plans") is
listed on Section 3.13(a) of the Holdings Disclosure Schedule. Except as set
forth on Section 3.13(a) of the Holdings Disclosure Schedule: (i) each Employee
Benefit Plan is in compliance with applicable law and has been administered and
operated in accordance with its terms, except to the extent that any such
noncompliance, administration or operation would not result in a material
liability; (ii) each Employee Benefit Plan which is intended to be "qualified"
within the meaning of Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service, dated after December 31,
1993 and, to Holdings' Knowledge, no event has occurred and no condition exists
which could reasonably be expected to result in the revocation of any such
determination; (iii) neither Holdings (with respect to the Business) or any of
the Transferred Companies is a participant in any "multiemployer plan," within
the meaning of Section 4001(a)(3) of ERISA; (iv) the actuarial present value of
the accumulated plan benefits (whether or not vested) under any Employee Benefit
Plan covered by Title IV of ERISA as of the close of the plan year ended April
30, 1998 did not exceed the fair value of the assets allocable thereto; (v) the
execution of this Agreement and consummation of the transactions contemplated
hereby do not constitute a triggering event under any Employee Benefit Plan,
policy, arrangement, statement, commitment or agreement, which (A) (either alone
or upon the occurrence of any additional or subsequent event) will or may result
in any payment, "parachute payment" (as such term is defined in Section 280G of
the Code) or (B) by itself will result in any material payment, severance,
bonus, retirement, or increase any benefits or accelerate the payment or vesting
of any benefits to any employee or former employee or director of Holdings or
any of its subsidiaries (other than that which would be solely a liability of
Parent); (vi) no Employee Benefit Plan provides for post-employment or retiree
welfare benefits, except to the extent required by Part 6 of Subtitle B of Title
I of ERISA or Section 4980B of the Code or such other similar law; (vii) no
Employee Benefit Plan maintained by Holdings or an ERISA Affiliate which is
covered by Title IV of ERISA has been terminated and no proceedings have
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been instituted to terminate or appoint a trustee to administer any such plan;
(viii) no "reportable event" (as defined in Section 4043 of ERISA) has occurred
with respect to any Employee Benefit Plan maintained by Holdings or an ERISA
Affiliate and covered by Title IV of ERISA; (ix) no Employee Benefit Plan
maintained by Holdings or an ERISA Affiliate which is subject to Section 412 of
the Code or Section 302 or ERISA has incurred any "accumulated funding
deficiency," within the meaning of Section 412 of the Code or Section 302 of
ERISA, or obtained a waiver of any minimum funding standard or an extension of
any amortization period under Section 412 of the Code or Section 303 or 304 of
ERISA; (x) neither Holdings nor any ERISA Affiliate has incurred any unsatisfied
withdrawal liability under Part I of Subtitle E of Title IV of ERISA to any
"multiemployer plan," within the meaning of Section 4001(a)(3) of ERISA; (xi)
full payment has been timely made of all amounts which Holdings and/or any of
its subsidiaries is required under applicable law or under any Employee Benefit
Plan or related agreement to have paid as of the last day of the most recent
fiscal year of such Employee Benefit Plan ended prior to the date hereof, and
Holdings and each of its subsidiaries have made adequate provisions, in
accordance with GAAP, in their financial statements for all obligations and
liabilities under all Employee Benefit Plans or any related agreement or
applicable law, and, to Holdings' Knowledge, no event has occurred and no
condition exists that would reasonably be expected to result in a material
increase in the level of such amounts paid or accrued for the most recently
ended fiscal year; (xii) no Employee Benefit Plan provides for the payment of
severance, termination, change in control or similar-type payments or benefits;
(xiii) neither Holdings nor any of its subsidiaries, nor, to Holdings'
Knowledge, any other "disqualified person" or "party in interest" (as defined in
Section 4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has
engaged in any transaction in connection with any Employee Benefit Plan that
could reasonably be expected to result in the imposition of a material penalty
pursuant to Section 502 of ERISA, damages pursuant to Section 409 of ERISA or a
tax pursuant to Section 4975 of the Code; and (xiv) no claim, action or
litigation, has been made or commenced with respect to any Employee Benefit Plan
(other than routine claims for benefits payable in the ordinary course, and
appeals of denied such claims).
(b) Each "employee benefit plan," within the meaning of
Section 3(3) of ERISA, which is maintained outside of the United States by
Holdings and/or any of its subsidiaries primarily for the benefit of Business
Personnel substantially all of whom are residing outside of the United States
(collectively, the "Foreign Plans") is listed on Section 3.13(a) of the Holdings
Disclosure Schedule. Except as set forth on Section 3.13(b) of the Holdings
Disclosure Schedule: (i) no event has
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occurred with respect to any Foreign Plan that would reasonably be expected to
result directly in any material liability under any applicable law; (ii)
Holdings and/or its subsidiaries have complied with, and each Foreign Plan
conforms in form and operation to, all applicable Laws, except to the extent
that any such noncompliance or nonconformance would not result in a material
liability; (iii) all pension and incentive compensation obligations under any
Foreign Plan have been fully funded, accrued on the Audited Financial Statements
or paid by Holdings and/or one of its subsidiaries, as applicable; and (iv) no
liability, claim, action or litigation, has been made, commenced or, to
Holdings' Knowledge, threatened with respect to any Foreign Plan (other than
routine claims for benefits payable in the ordinary course, and appeals of
denied such claims).
3.14 Intellectual Property.
(a) The Transferred Companies own or possess valid and
enforceable and adequate licenses or other legal rights to use all Intellectual
Property Rights (as hereinafter defined) as are necessary to permit the
Transferred Companies to conduct the Business as presently conducted, except
where the failure to have such Intellectual Property Rights would not,
individually or in the aggregate, have a Material Adverse Effect on the
Business. Except as set forth in Section 3.14 of the Holdings Disclosure
Schedule, (i) no claims, or, to Holdings' Knowledge, threat of claims, have been
asserted by any Person related to the use in the conduct of the Business of any
Intellectual Property Rights or challenging or questioning the validity or
effectiveness of any license or agreement relating to Intellectual Property
Rights, except for such claims which, individually or in the aggregate, would
not have a Material Adverse Effect on the Business, (ii) the conduct of the
Business as presently conducted does not infringe on the Intellectual Property
Rights of any Person, except for such infringements which, individually or in
the aggregate, would not have a Material Adverse Effect on the Business, and
(iii) to Holdings' Knowledge, all filings, registrations and issuances
pertaining to the Intellectual Property Rights owned by the Transferred
Companies, including any and all patents, registered trademarks and copyright
registrations, are in full force and effect and the Transferred Companies have
good and marketable title thereto.
(b) For purposes of this Agreement, (i) "Person" shall mean an
individual, partnership, limited partnership, limited liability partnership,
limited liability company, foreign limited liability company, trust, estate,
corporation, custodian, trustee, executor, administrator, nominee or any other
entity and (ii) "Intellectual Property Rights" shall mean rights under patents,
trademarks, trade
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names, service marks, Internet domain names, trade secrets, copyrights,
software, mailing lists and other proprietary intellectual property rights,
whether or not registered, and all registrations thereof and applications for
registration with respect thereto.
3.15 Year 2000 Compliance.
(a) To Holdings Knowledge, the Transferred Companies have
identified substantially all of their internal systems and software that are
subject to Year 2000 Compliance risk and, to Holdings Knowledge, no Material
Adverse Effect on the Business will result from the failure of such systems or
software to be Year 2000 Compliant. As used herein, "Year 2000 Compliant" shall
mean, with respect to all internal computer systems and software, whether
embedded or otherwise, the ability to consistently and accurately handle date
information before, on and after January 1, 2000 without a material loss of
functionality, including, but not limited to, accepting date input, providing
date output, performing calculations on dates or portions of dates and
comparing, sequencing, storing and displaying dates (including all leap year
considerations).
(b) The Transferred Companies have adopted a Year 2000
Compliance program, which consists of four phases: (i) identification of all
mission critical business systems and software subject to Year 2000 Compliance
risks; (ii) assessment of such business systems and software to determine the
method of correcting Year 2000 Compliance problems; (iii) implementing the
corrective measures; and (iv) testing and maintaining Year 2000 Compliance. The
Transferred Companies have completed at least phases (i), (ii) and (iii) above
with respect to all of their mission critical internal systems and software.
(c) Parent and Holdings make no representation or warranty
concerning the Year 2000 Compliance of suppliers of products and services to the
Transferred Companies or of the Transferred Companies' customers, or as to
whether the failure of such suppliers or customers to be Year 2000 Compliant
would have a Material Adverse Effect on the Business. The Transferred Companies
are developing contingency plans intended to minimize the effects of any such
failures by crucial third parties.
(d) The above stated representation is a Year 2000 readiness
disclosure statement pursuant to the Year 2000 Readiness and Disclosure Act.
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3.16 Environmental Matters. Except as set forth in Section 3.16 of
the Holdings Disclosure Schedule:
(a) The Business presently is being conducted in compliance
with all applicable Environmental Laws (as hereinafter defined), including, but
not limited to, the possession of all Permits and other governmental
authorizations required under applicable Environmental Laws, except where the
failure to comply with such Environmental Laws would not have a Material Adverse
Effect on the Business;
(b) There is no pending or, to Holdings' Knowledge, threatened
Environmental Claim against Holdings (relating to the Business or any Real
Property) or any of the Transferred Companies under any Environmental Laws,
which, if adversely determined, individually or in the aggregate, would have a
Material Adverse Effect on the Business; and
(c) There have been no releases, spills or discharges of
Hazardous Substances (as hereinafter defined) by any of the Transferred
Companies during the period of Parent's (or its Affiliates') ownership of such
Transferred Company or, to Holdings' Knowledge, by any of the Transferred
Companies prior to such period, or by any other Person, on or underneath any of
the properties presently owned, leased or operated by any of the Transferred
Companies that would have a Material Adverse Effect on the Business.
(d) There are no presently existing facts, circumstances,
conditions or occurrences regarding any business or operations of the
Transferred Companies or any Real Property that would reasonably be anticipated
(i) to form the basis of an Environmental Claim against the Transferred
Companies or any Real Property or (ii) to cause such Real Property to be subject
to any restrictions on its ownership, occupancy, use or transferability under
any Environmental Law, which, in either case, would have a Material Adverse
Effect on the Business.
(e) For purposes of this Agreement, "Environmental Laws" shall
mean any applicable national, federal, state or local Laws relating to the
environment, pollution or protection of the environment, health, safety or
Hazardous Substances. "Hazardous Substances" means all substances defined as
hazardous, toxic, petroleum or petroleum products, asbestos in any form that is
friable, polychlorinated biphenyls, radon gas and any other restricted pollutant
or a contaminant under the National Oil and Hazardous Substances Pollution
Contingency Plan,
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40 C.F.R. ss. 300.5, or defined, limited or prohibited as such by, or regulated
as such under, any Environmental Law. "Environmental Claims" shall mean any and
all administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued
under any such Environmental Law (for purposes of this definition, "Claims"),
including, without limitation (i) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law and (ii)
any and all Claims, by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Substances or arising from alleged injury or threat of injury to
health or the environment.
3.17 Real Property. With respect to each parcel of real property
owned in fee, leased or subleased by the Transferred Companies (the "Real
Property"), Section 3.17 of the Holdings Disclosure Schedule sets forth a
complete and accurate list setting forth its address and, in the case of owned
Real Property, its legal description. Except as set forth in Section 3.17 of the
Holdings Disclosure Schedule, each of the Transferred Companies has fee simple
title to all Real Property owned by such entity, and has valid leasehold
interests in all Real Property leased by such entity, in each case free and
clear of all Liens except for defects in title or Liens which, individually or
in the aggregate, would not have a Material Adverse Effect on the Business.
3.18 Insurance. Section 3.18 of the Holdings Disclosure Schedule
sets forth an accurate summary of all material insurance policies maintained by
Holdings (with respect to the Business) and the Transferred Companies. Such
insurance policies are in full force and effect on the date hereof and are in
such amounts, on such terms and covering such risks, including fire and other
risks insured against by extended coverage, as are, in the opinion of Holdings'
management, reasonably prudent for the Business.
3.19 Acquisition of Shares for Investment. Holdings is acquiring the
shares of Acquiror Sub Series A Preferred Stock to be issued by Acquiror Sub
upon consummation of the Merger for investment purposes without any present
intention of distributing or selling any such shares in violation of federal or
state securities laws.
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3.20 Sufficiency of Assets. Except as contemplated by the
Intercompany Agreements and the items set forth in Section 3.20 of the Holdings
Disclosure Schedule, the assets of the Transferred Companies constitute all the
assets necessary to conduct the Business in substantially the same manner as
presently conducted.
3.21 Customers. Section 3.21 of the Holdings Disclosure Schedule
sets forth the twenty (20) largest customers (each a "Material Customer") of the
Business for the period from January 1, 1999 through March 31, 1999, based on
gross revenues received from each such customer during such period. No
Transferred Company has received written notice, or to Holding's Knowledge, any
oral notice, from any Material Customer that such Material Customer is canceling
or otherwise substantially reducing its usage or purchase of the products and
services of, the Business.
3.22 Brokers; Finders and Fees. Except for Chase Securities Inc.,
whose fees will be paid by Parent, none of Parent, Holdings, any Transferred
Company or any of their respective Affiliates has employed any investment
banker, broker or finder or incurred any liability for any investment banking
fees, brokerage fees, commissions or finders' fees in connection with this
Agreement or the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF ACQUIROR AND ACQUIROR SUB
Acquiror and Acquiror Sub jointly and severally represent and
warrant to Parent and Holdings as follows:
4.1 Organization.
(a) Each of Acquiror and Acquiror Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate all of its properties and assets and to
carry on its business as it is presently being conducted. Each of Acquiror and
Acquiror Sub is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each
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jurisdiction in which the nature of its business or the ownership, operation or
leasing of its properties makes such qualification necessary, except where the
failure to be so qualified and in good standing would not have an Acquiror
Material Adverse Effect (as hereinafter defined).
(b) As used in this Agreement, "Acquiror Material Adverse
Effect" means any material adverse change in, or effect on, the business,
assets, liabilities, results of operations or condition (financial or otherwise)
of Acquiror, Acquiror Sub or Acquiror's other subsidiaries, taken as a whole;
provided, however, that the effects of changes that are generally applicable to
the industries in which such entities operate or to the economy generally shall
be excluded from such determination.
4.2 Authorization. Each of Acquiror and Acquiror Sub has all
requisite corporate power and authority to execute and deliver this Agreement
and each of the Transaction Agreements to which it is a party and to perform its
obligations hereunder and thereunder and consummate the transactions
contemplated hereby and thereby. The execution and delivery by Acquiror and
Acquiror Sub of this Agreement and each of the Transaction Agreements to which
it is a party and the consummation by Acquiror and Acquiror Sub of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate action on the part of each of Acquiror and Acquiror Sub.
This Agreement has been, and, at the Closing, each of the Transaction Agreements
will be, duly executed and delivered by each of Acquiror and Acquiror Sub to the
extent it is a party thereto and (assuming the valid authorization, execution
and delivery thereof by the other parties thereto) this Agreement constitutes,
and each of the Transaction Agreements, when duly executed and delivered, will
constitute, a valid and binding agreement of Acquiror and Acquiror Sub to the
extent it is a party thereto, enforceable against them in accordance with its
terms, except that (a) such enforcement may be subject to any bankruptcy,
reorganization, fraudulent conveyance, moratorium, insolvency and other Laws,
now or hereafter in effect, relating to or limiting creditors' rights generally
and (b) enforcement thereof, including, among other things, the remedy of
specific performance and injunctive and other forms of equitable relief, may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
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4.3 Capitalization.
(a) Section 4.3 of the disclosure schedule being delivered by
Acquiror to Holdings concurrently herewith (the "Acquiror Disclosure Schedule")
sets forth the authorized capital stock of, and the number of issued and
outstanding shares of capital stock in, Acquiror and Acquiror Sub. As of the
date of this Agreement, except as set forth in Section 4.3 of the Acquiror
Disclosure Schedule there are no issued and outstanding shares of capital stock
or other equity interests in Acquiror or Acquiror Sub or any subscriptions,
options, warrants, calls, rights, convertible securities or other agreements or
commitments of any character obligating Acquiror or Acquiror Sub to issue,
transfer or sell, or cause to be issued, transferred or sold, any capital stock
or other equity interests in Acquiror or Acquiror Sub, nor are there any shares
of capital stock or other equity interests reserved for issuance pursuant
thereto. Each outstanding share of capital stock of Acquiror and Acquiror Sub is
duly authorized, validly issued, fully paid and nonassessable and free of
preemptive rights.
(b) Acquiror Sub is a newly formed company incorporated under
the laws of the State of Texas and has engaged in no activity other than as
provided in, or contemplated by, this Agreement. Acquiror has no present plan or
intention to cause Acquiror Sub to reincorporate out of the State of Texas.
Except as set forth in Section 4.3 of the Acquiror Disclosure Schedule. (i) all
of the issued and outstanding shares of capital stock of Acquiror Sub are, and
immediately prior to the Effective Time, will be, owned of record and
beneficially by Acquiror and are, and immediately prior to the Effective Time,
will be, free and clear of all Liens, (ii) there are no restrictions of any kind
which prevent the payment of dividends by Acquiror Sub and (iii) Acquiror Sub
(except by operation of Law) is not subject to any obligation or requirement to
provide funds for or to make any investment (in the form of a loan, capital
contribution or otherwise) to or in any Person.
(c) The shares of Acquiror Sub Preferred Stock to be issued
upon consummation of the Merger pursuant to the terms of this Agreement have
been duly authorized and reserved for issuance and, at the Effective Time, such
shares of Acquiror Sub Preferred Stock will be validly issued, fully paid and
nonassessable shares of preferred stock of Acquiror Sub, free of preemptive
rights, and will be entitled to the rights, preferences and powers set forth in
the Certificate of Designations with respect thereto. The shares of Series B
cumulative PIK preferred stock of Acquiror Sub ("Acquiror Sub Series B Preferred
Stock") have been duly authorized and when issued as paid-in-kind dividends upon
the Acquiror
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Sub Series A Preferred Stock, such shares will be validly issued, fully paid and
nonassessable shares of Acquiror Sub Series B Preferred Stock, free of
preemptive rights and will be entitled to the rights, preferences and powers set
forth in the Certificate of Designations with respect thereto.
(d) The shares of common stock, par value $0.01 per share, of
Acquiror (the "Acquiror Common Stock"), issuable upon exchange of the non-voting
class B common stock of Acquiror (the "Acquiror Class B Common Stock") which is
issuable upon conversion of the Acquiror Sub Series A Preferred Stock pursuant
to the terms of the Certificate of Designations with respect thereto, have been
duly authorized and reserved for issuance and, upon issuance after such
conversion, such shares of Acquiror Common Stock will be validly issued, fully
paid and nonassessable, and free of preemptive rights. The transactions
contemplated by this Agreement, which includes the issuance of shares of
Acquiror Class B Common Stock upon conversion of the Acquiror Sub Series A
Preferred Stock, have been duly authorized by the board of directors of Acquiror
and, subject to the receipt of the Class B Stockholder Approval (as defined in
the Stockholders' Agreement), when issued upon conversion of the Acquiror Sub
Series A Preferred Stock, such shares of Acquiror Class B Common Stock will be
duly authorized, validly issued, fully paid and nonassessable, and free of
preemptive rights.
4.4 Consents and Approvals; No Violation. Except for the filing of
the Articles of Merger under the TBCA and the applicable requirements of the
H-S-R Act, or as set forth in Section 4.4 of the Acquiror Disclosure Schedule,
neither the execution and delivery by Acquiror or Acquiror Sub of this Agreement
or the Transaction Agreements to which it is a party nor the consummation by
Acquiror and Acquiror Sub of the transactions contemplated hereby or thereby
will (i) conflict with or violate the certificate or articles of incorporation,
by-laws or comparable charter or organizational documents of Acquiror or
Acquiror Sub, (ii) violate any Laws of any Governmental Entity applicable to
Acquiror or Acquiror Sub or any of their respective properties or assets, (iii)
result in a violation or breach of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
require any consent of another party to, any Contract to which Acquiror or
Acquiror Sub is a party or by which Acquiror or Acquiror Sub or any of their
respective properties or assets is bound, (iv) result in the creation of any
Lien on any of the assets of Acquiror Sub or (v) require any Governmental
Consent of any Governmental Entity, other than, in the case of clauses (ii),
(iii), (iv) and (v), such violations, breaches, conflicts, defaults,
terminations, accelerations, third-party
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consents, Liens and Governmental Consents, which would not, individually or in
the aggregate, have an Acquiror Material Adverse Effect and would not adversely
affect in any material respect the ability of Acquiror or Acquiror Sub to
consummate the transactions contemplated hereby.
4.5 Acquiror SEC Documents. Acquiror has filed all reports, forms,
registrations, schedules, statements and other documents required to be filed by
it with the Securities and Exchange Commission ("SEC") since January 1, 1998
(the "Acquiror SEC Documents"). As of their respective dates, the Acquiror SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act") or the Securities
Exchange Act of 1934, as amended, as the case may be, and the applicable rules
and regulations promulgated thereunder. Except to the extent that information
contained in any Acquiror SEC Document has been revised, amended or superseded
by a later Acquiror SEC Document, none of the Acquiror SEC Documents filed prior
to the date hereof, when filed, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
4.6 Financial Information; Absence of Undisclosed Liabilities.
(a) Except as otherwise noted therein, the consolidated
financial statements of Acquiror included in the Acquiror SEC Documents were
prepared in accordance with GAAP, consistently applied (except, in the case of
the unaudited statements, for normal year-end audit adjustments), and fairly
present in all material respects the consolidated financial condition, results
of operations and cash flows of Acquiror and its consolidated subsidiaries as of
and for the periods indicated therein (subject, in the case of the unaudited
statements, to normal year-end audit adjustments and to any other adjustments
described therein).
(b) Except as set forth in the Acquiror SEC Documents filed
prior to the date hereof or in Section 4.6(b) of the Acquiror Disclosure
Schedule since the date of the most recent audited financial statements included
in the Acquiror SEC Documents, Acquiror has not incurred any liabilities or
obligations (whether direct or indirect, accrued, contingent or otherwise) that
would be required to be reflected on a balance sheet or in notes thereto
prepared in accordance with GAAP, except for (i) liabilities and obligations
incurred in the ordinary course of
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business and (ii) liabilities and obligations that, individually or in the
aggregate, would not have a Acquiror Material Adverse Effect.
4.7 Litigation. Except as set forth in the Acquiror SEC Documents
filed prior to the date hereof or in Section 4.7 of the Acquiror Disclosure
Schedule, as of the date of this Agreement, there is no action, suit, proceeding
or investigation by or before any Governmental Entity which is pending, or, to
the knowledge of Acquiror, threatened against Acquiror, Acquiror Sub or any of
Acquiror's other subsidiaries, which, if adversely determined, individually or
in the aggregate, would (a) have a Acquiror Material Adverse Effect or (b)
adversely affect in any material respect the ability of Acquiror or Acquiror Sub
to consummate the transactions contemplated hereby.
4.8 Compliance with Laws. Except as disclosed in the Acquiror SEC
Documents filed prior to the date hereof or as set forth in Section 4.8 of the
Acquiror Disclosure Schedule, the businesses of Acquiror and Acquiror Sub are
presently being conducted in compliance with all applicable Laws, except for
such noncompliance which, individually or in the aggregate, would not have a
Acquiror Material Adverse Effect.
4.9 Availability of Funds. Acquiror has delivered to Holdings, prior
to the date hereof, true, correct and complete copies of commitment letters (the
"Commitment Letters") providing commitments by the financial institutions
issuing such letters ("Lenders") to lend to Acquiror the Financing (as
hereinafter defined). Such Commitment Letters are in full force and effect on
the date hereof. Pursuant to such Commitment Letters, Acquiror has commitments
for, and at the Closing will have available (assuming such Commitment Letters
are honored and the conditions set forth therein are satisfied by the Lenders)
the Financing. As used in this Agreement, "Financing" means immediately
available funds in an amount sufficient to consummate the transactions
contemplated hereby and pay all related fees and expenses.
4.10 Amortization of Goodwill. Acquiror has been advised by Deloitte
& Touche LLP, that as of the date hereof, pursuant to GAAP, the goodwill
generated by the transactions contemplated hereby would be amortized by Acquiror
over forty (40) years.
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4.11 No Registration. Assuming the accuracy of Holdings'
representations in Section 3.19, no registration of the shares of Acquiror Sub
Preferred Stock to be issued by Acquiror Sub upon consummation of the Merger,
pursuant to the provisions of the Securities Act or any state securities or
"blue sky" laws, will be required by the issuance of such shares upon
consummation of the Merger.
4.12 Investigation by Acquiror; Parent's and Holdings' Liability.
Acquiror has conducted its own independent review and analysis of the business,
operations, assets, liabilities, results of operations, financial condition, and
prospects of the Business and acknowledges that Acquiror has been provided
access to the personnel, properties, premises and records of the Business for
such purpose. Except for the specific representations and warranties of Parent
and Holdings set forth in Article Ill of this Agreement (subject to the
limitations and restrictions contained therein) and the indemnities of Parent
and Holdings set forth in Sections 6.2 and 9.2 of this Agreement, in entering
into this Agreement, Acquiror: (a) acknowledges that none of Parent, Holdings,
the Transferred Companies or any of their respective directors, officers,
shareholders, employees, Affiliates, controlling persons, agents, advisors or
representatives makes or has made any representation or warranty, either express
or implied, as to the accuracy or completeness of any of the information
provided or made available to Acquiror or its directors, officers, employees,
Affiliates, controlling persons, agents or representatives; and (b) agrees, to
the fullest extent permitted by Law, that none of Parent, Holdings, the
Transferred Companies or any of their respective directors, officers, employees,
shareholders, Affiliates, controlling persons, agents, advisors or
representatives shall have any liability or responsibility whatsoever to
Acquiror or its directors, officers, employees, Affiliates, controlling persons,
agents or representatives on any basis (including, without limitation, in
contract or tort, under federal or state securities Laws or otherwise) based
upon any information provided or made available, or statements made (including,
without limitation, in materials furnished in the Business' data room, in
presentations by the management of the Business or otherwise), to Acquiror or
Acquiror Sub or their directors, officers, employees, Affiliates, controlling
persons, advisors, agents or representatives (or any omissions therefrom).
4.13 Brokers; Finders and Fees. Except for Lehman Brothers Inc. and
BT Wolfensohn, whose fees will be paid by Acquiror, neither Acquiror nor any of
its Affiliates has employed any investment banker, broker or finder or incurred
any liability for any investment banking, financial advisory or brokerage fees,
commissions or finders' fees in connection with this Agreement or the
transactions contemplated hereby.
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ARTICLE V
COVENANTS OF THE PARTIES
5.1 Conduct of the Business. During the period from the date of this
Agreement to the Effective Time, except for the right of Holdings, at its
option, at any time prior to the Effective Time, to convert Wright Express
Corporation, a Delaware corporation, into a limited liability company, whether
by merger or otherwise, and as otherwise contemplated by this Agreement or the
transactions contemplated hereby or consented to by Acquiror in writing, Parent
and Holdings shall cause each of the Transferred Companies:
(a) to conduct its business and operations in the ordinary
course in substantially the same manner as presently conducted and to use
reasonable best efforts to preserve its relationships with customers, suppliers
and others having business dealings with the Business; and
(b) not to:
(i) sell, license or dispose of any of its material
properties or assets, except (A) to a Transferred Company or (B) in the ordinary
course of business in substantially the same manner as presently conducted;
(ii) make any loans, advances (other than loans or
advances (A) in the ordinary course of business (including to Holdings in
accordance with Holdings' normal cash management policies) in substantially the
same manner as presently conducted and (B) required by the terms of any existing
written agreements), capital contributions to, or investments in, any Person
other than another Transferred Company;
(iii) enter into any new written employment agreement
with any of the Business Personnel providing for annual compensation in excess
of $75,000 (plus customary sales quota payments in the case of sales or similar
personnel) or increase in any manner the compensation of any of the Business
Personnel, except for such renewals of employment agreements and increases as
are granted in the ordinary course of business pursuant to its customary
practices (which shall include normal periodic performance reviews and related
compensation and benefit increases);
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(iv) except for the Holdings Plan, adopt, grant, extend
or increase the rate or term of any Plan or any new bonus, insurance, pension or
other employee benefit plan, payment or arrangement made to, for or with any
such Business Personnel, except (A) increases required by any applicable Law,
(B) increases in the ordinary course of business consistent with past practice,
(C) the adoption of the Holdings Plan (as defined below), (D) grants of options
("Cendant Options") to purchase the common stock of Cendant Corporation, a
Delaware corporation and an Affiliate of Holdings ("Cendant"), to Business
Personnel, and (E) any other benefits payable in any form by Holdings;
(v) make any change in any of its present accounting
methods and practices, except as required by changes in GAAP;
(vi) issue, deliver, sell, pledge or otherwise encumber
any shares of its capital stock, any other voting securities or any securities
convertible into, or any options, warrants or rights to acquire, any such
shares, voting securities or convertible securities;
(vii) split, combine or reclassify, or pay any dividend
in respect of, any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for shares of
its capital stock (other than to another Transferred Company and distributions
to repay intercompany indebtedness or to pay Taxes in the ordinary course of
business);
(viii) make or authorize any capital expenditures (in
addition to those provided for in the Capital Expenditures Plans of the Business
for 1999) in excess of $500,000, individually, or $2,000,000 in the aggregate;
(ix) settle or compromise any material Tax liability,
except in the ordinary course of business;
(x) (A) incur any indebtedness for borrowed money other
than in the ordinary course of business to acquire vehicles and/or for ordinary
course of business working capital, relating to current Taxes or for Tax
allocations to Cendant and its Affiliates (including to Holdings or Affiliates
of Holdings), or (B) issue any debt securities or assume, guarantee or endorse
the obligations of any other Person other than in connection with indebtedness
referred to in clause A above;
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(xi) amend its respective certificate or articles of
incorporation or by-laws or comparable organizational documents; or
(xii) take, or agree to take, any of the foregoing
actions.
5.2 Conduct of Business by Acquiror. During the period from the date
of this Agreement to the Effective Time, except as otherwise contemplated by
this Agreement or the transactions contemplated hereby or consented to by
Holdings in writing:
(a) Acquiror shall not, and shall cause Acquiror Sub and each
of Acquiror's other subsidiaries not to, take any action that would or would be
reasonably likely to result in the disqualification of the Merger as a
"reorganization" for purposes of Section 368 of the Code; and
(b) Acquiror shall cause Acquiror Sub not to:
(i) issue, deliver, sell, pledge or otherwise encumber
any shares of its capital stock, any other voting securities or any securities
convertible into, or any options, warrants or rights to acquire, any such
shares, voting securities or convertible securities;
(ii) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock;
(iii) amend its articles of incorporation or by-laws; or
(iv) take, or agree to take, any of the foregoing
actions.
(c) Acquiror shall not take any action, including, without
limitation, repurchasing any shares of Acquiror Common Stock, that would result
in Cendant owning, directly or indirectly, more than twenty percent (20%) of the
outstanding shares of Acquiror Common Stock.
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5.3 Conduct of Business by Acquiror Sub. From the date of this
Agreement to the Effective Time, Acquiror Sub will not engage in any activities
of any nature, acquire any assets or incur any indebtedness or assume any
liabilities or obligations, in each case, except as expressly provided in or
contemplated by this Agreement and as may be related to Acquiror Sub incurring
indebtedness necessary to refinance indebtedness required to be repaid under the
terms of this Agreement.
5.4 Access to Information.
(a) From the date of this Agreement to the Closing, Parent and
Holdings shall, and shall cause each of the Transferred Companies to, (i) except
as set forth in subparagraph (c), give Acquiror and its authorized
representatives reasonable access to all books, records, personnel, offices and
other facilities and properties of the Business, (ii) permit Acquiror to make
such copies and inspections thereof as Acquiror may reasonably request and (iii)
cause the officers, independent auditors (subject to Acquiror and Acquiror Sub
executing indemnification letters and waiver letters satisfactory to such
independent auditor) of the Transferred Companies to furnish Acquiror with such
financial and operating data and other information with respect to the business
and properties of the Transferred Companies as Acquiror may from time to time
reasonably request; provided, however, that any such access shall be conducted
at Acquiror's expense, at a reasonable time, under the supervision of Holdings
or the Transferred Companies and in such a manner as to maintain the
confidentiality of this Agreement and the transactions contemplated hereby and
not to interfere unreasonably with the operation of the business of Holdings or
any Transferred Company (iv) take such action, including without limitation,
providing the reasonable use of appropriate officers as Acquiror and Acquiror
Sub may reasonably request in connection with obtaining the Financing; provided
that such action does not unreasonably interfere with such officer's duties in
connection with the conduct of the Business.
(b) From the date of this Agreement to the Closing, Acquiror
shall, and shall cause Acquiror Sub to, (i) give Holdings and its authorized
representatives reasonable access to all books, records, personnel, offices and
other facilities and properties of Acquiror Sub, (ii) permit Holdings to make
such copies and inspections thereof as Holdings may reasonably request and (iii)
cause the officers of Acquiror and Acquiror Sub to furnish Holdings with (x)
such financial and operating data and other information with respect to the
business and properties of Acquiror Sub as Holdings may from time to time
reasonably request and (y) such financial data of Acquiror as Holdings may from
time to time reasonably request;
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provided, however, that any such access shall be conducted at Holdings' expense,
at a reasonable time, under the supervision of Acquiror and Acquiror Sub and in
such a manner as to maintain the confidentiality of this Agreement and the
transactions contemplated hereby and not to interfere unreasonably with the
operation of the business of Acquiror or Acquiror Sub.
(c) All information and access provided to Acquiror and its
representatives pursuant to subsection (a) above shall be subject to the terms
and conditions of the letter agreement (the "Confidentiality Agreement"), among
Acquiror, Cendant, Parent and PHH Vehicle Management Services Corporation, dated
March 19, 1999. The Confidentiality Agreement shall survive the execution of
this Agreement and the Closing, without limitation. Notwithstanding anything to
the contrary contained in this Agreement, none of Cendant, Parent, Holdings, any
Transferred Company or any of their respective Affiliates shall have any
obligation to make available or provide to Acquiror or its representatives a
copy of any consolidated, combined or unitary Tax Return filed by Cendant,
Parent, Holdings, or any of their respective Affiliates or predecessors, or any
related materials.
(d) Parent and Holdings shall, and shall cause their
representatives to, keep confidential all information provided by Acquiror and
Acquiror Sub. Such information shall not be used by Parent or Holdings or their
representatives for any purpose other than in connection with analyzing the
transactions contemplated hereby.
5.5 Books and Records; Furnishing Information.
(a) For a period of three years after the Closing Date, the
Holdings Surviving Corporation shall make available to Acquiror and Acquiror Sub
Surviving Corporation for inspection and copying at Acquiror's expense, at
reasonable times after reasonable request therefor, any records and documents
(or portions thereof) retained by the Holdings Surviving Corporation relating
primarily to the Business which, at the time of said request, are in the
Holdings Surviving Corporation's possession or control. Holdings agrees that it
shall preserve and keep all books and records referred to above for a period of
at least three years from the Closing Date; provided, however, that records
relating to Taxes and Tax Returns shall be kept for the applicable statutory
period (including extensions thereof). After such period, before the Holdings
Surviving Corporation shall dispose of any of such books and records, at least
90 calendar days' prior written notice to such effect shall be given by the
Holdings Surviving Corporation to Acquiror, and Acquiror shall be given an
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opportunity, at its cost and expense, to remove and retain all or any part of
such books and records as Acquiror may select.
(b) For a period of three years after the Closing Date,
Acquiror and the Acquiror Sub Surviving Corporation shall make available to the
Holdings Surviving Corporation for inspection and copying at the Holdings
Surviving Corporation's expense, at reasonable times after reasonable request
therefor, any records and documents (or portions thereof) relating primarily to
the Business delivered by Holdings to Acquiror hereunder which, at the time of
said request, are in Acquiror's or the Acquiror Sub Surviving Corporation's
possession or control. Acquiror agrees that it shall preserve and keep all books
and records referred to above for a period of at least three years from the
Closing Date; provided, however, that records relating to Taxes and Tax Returns
shall be kept for the applicable statutory period (including extensions
thereof). After such period, before Acquiror shall dispose of any of such books
and records, at least 90 calendar days' prior written notice to such effect
shall be given by Acquiror to the Holdings Surviving Corporation, and the
Holdings Surviving Corporation shall be given an opportunity, at its cost and
expense, to remove and retain all or any part of such books and records as the
Holdings Surviving Corporation may select.
5.6 Consents and Approvals.
(a) Each of Parent, Holdings, Acquiror and Acquiror Sub shall
cooperate and use best efforts to make all filings and obtain all consents of
Governmental Entities and third parties required to consummate the transactions
contemplated hereby, including, without limitation, under the H-S-R Act and any
mandatory foreign antitrust or competition Laws, and in connection with the
Required Approvals. In furtherance of the foregoing, each of Parent, Holdings,
Acquiror and Acquiror Sub shall file or cause to be filed with the United States
Federal Trade Commission ("FTC") and the United States Department of Justice
("DOJ") a notification and report form under the HSR Act within five (5)
business days following the date hereof.
(b) Each of Parent, Holdings, Acquiror and Acquiror Sub shall
promptly inform the other parties hereto of any material communication from the
FTC, DOJ or any other Governmental Entity regarding any of the transactions
contemplated by this Agreement. If any of Parent, Holdings, Acquiror or Acquiror
Sub, or any Affiliate thereof, receives a request for additional information or
documentary material from any such Governmental Entity with respect to the
transactions
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contemplated by this Agreement, then such party shall use its best efforts to
respond to such request, as promptly as practicable, after consultation and
coordination with the other parties hereto. In addition to the foregoing,
Acquiror agrees to provide, and cause Acquiror Sub to provide, such assurances
as to financial capability, resources and creditworthiness as may be reasonably
requested by any third party whose consent is sought hereunder.
5.7 Commercially Reasonable Efforts. Each of Parent, Holdings,
Acquiror and Acquiror Sub shall cooperate, and use commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable Laws to
consummate the transactions contemplated by this Agreement.
5.8 Financing.
(a) Acquiror and Acquiror Sub shall comply with all terms of
the Commitment Letters and shall take all actions required on their part under
the terms of the Commitment Letters, including without limitation, providing the
Lenders with all information that they may request and entering into appropriate
loan agreements or other agreements in order to obtain the Financing.
(b) In the event that (i) any Lender shall notify Acquiror or
Acquiror Sub that it is withdrawing or terminating the Commitment Letters or
that any of the conditions to the Financing in the Commitment Letters cannot be
satisfied and will not be waived or (ii) Acquiror has agreed to any amendment to
the Commitment Letters that establish additional conditions to the Lenders'
obligations to provide the Financing or otherwise makes it more difficult for
Acquiror to obtain the Financing (unless Holdings has agreed in writing that
Acquiror can effect any such amendment) (each a "Funding Termination Event"),
then Acquiror shall immediately notify Holdings of such Funding Termination
Event. In the event all or any portion of the Financing becomes unavailable for
any reason under the Commitment Letters, Acquiror shall use its commercially
reasonable efforts to secure all or such portion of the Financing on terms no
less favorable in the aggregate to Acquiror than the terms contained in the
Commitment Letters. Acquiror shall immediately notify Holdings if any Lenders
shall notify Acquiror or Acquiror Sub that it is amending the Commitment
Letters.
5.9 Employees; Employee Benefits.
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(a) On and after the Closing, until at least the first
anniversary of the Closing Date, Acquiror shall cause the Transferred Companies
to provide such Business Personnel with salaries and benefit plans, programs and
arrangements substantially equivalent in the aggregate (without consideration
given to defined benefit pension plans) as those provided by Parent and its
Affiliates as of the date hereof.
(b) If any Business Personnel becomes a participant in any
employee benefit plan, practice or policy of Acquiror or any of its Affiliates,
such employee shall be given credit under such plan for all service prior to the
Closing Date with the Transferred Companies or any predecessor employer or other
Affiliate of Holdings (to the extent such credit was given by the Transferred
Companies, such predecessor or other Affiliate of Holdings), and all service
with the Transferred Companies or Acquiror or any of its Affiliates following
the Closing Date but prior to the time such employee becomes such a participant,
for purposes of determining eligibility and vesting and for all other purposes
for which such service is either taken into account or recognized; provided,
however, such service need not be credited to the extent it would result in a
duplication of benefits including, without limitation, benefit accrual under
defined benefit plans. To the extent allowable under applicable Law, Acquiror
shall, and shall cause the Transferred Companies to, (i) waive all limitations
as to preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Business Personnel
under any welfare benefit plans in which such Business Personnel may be eligible
to participate after the Closing Date and (ii) provide the Business Personnel
with credit for any co-payments and deductibles paid prior to the Closing Date
in satisfying any applicable deductible or out-of-pocket requirements under any
welfare plans of Acquiror or any of its Affiliates in which the Business
Personnel are eligible to participate after the Closing Date.
(c) In the event that any of the Business Personnel employed
by the Transferred Companies immediately prior to the Closing (each, an
"Affected Employee") is discharged by the Transferred Companies after the
Effective Time, then Acquiror shall be responsible for any and all severance
costs for such Affected Employee, including, without limitation, payments owing
under those agreements, plans or arrangements listed in Section 5.9 of the
Holdings Disclosure Schedule. Acquiror shall be responsible and assume all
liability for all notices or payments due to any Affected Employees, and all
notices, payments, fines or assessments due to any Governmental Entity, pursuant
to any applicable foreign, federal, state or local Law, with respect to the
employment, discharge or layoff of
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employees by the Transferred Companies after the Closing, including, but not
limited to, the Worker Adjustment and Retraining Notification Act, COBRA and any
rules or regulations as have been issued in connection therewith.
(d) Prior to the Closing, Parent shall take all such action as
it shall deem necessary or appropriate, including, if necessary, adopting any
amendments, so that, effective as of the Effective Time, each of the Transferred
Companies shall cease to be a participating employer in the PHH Corporation
Pension Plan (the "Pension Plan") and that all Business Personnel shall become
fully vested in their accrued benefits under the Pension Plan. Following the
Effective Time, distribution of benefits under the Pension Plan to employees and
former employees of the Transferred Companies shall be made in accordance with
the terms of the Pension Plan.
(e) There shall be established a bonus plan providing for
bonuses to employees of the Transferred Companies substantially in the form of
the bonus plan set forth in Section 5.9(e) of the Holdings Disclosure Schedule
(the "Holdings Plan"). Holdings shall be responsible for all amounts payable
pursuant to the Holdings Plan (other than severance payments due thereunder) and
shall pay all amounts due thereunder (other than severance payments due
thereunder) to the Acquiror Sub Surviving Corporation (which shall immediately
pay or cause to be paid all such amounts to the appropriate employees entitled
thereto) as and when such amounts become due.
(f) Subject to Section 6.15 hereof, Holdings shall remain
fully responsible for, and shall indemnify Acquiror, the Acquiror Sub Surviving
Corporation, the Transferred Companies and their respective Affiliates, and the
officers, directors, employees and agents of Acquiror, the Acquiror Sub
Surviving Corporation, the Transferred Companies and their respective Affiliates
and hold them harmless from and against, any and all claims, losses, damages,
costs and expenses (including, without limitation, reasonable attorneys' fees
and expenses) and other liabilities and obligations relating to under or arising
in connection with the Holdings Plan (other than severance payments due
thereunder).
(g) After the Closing, Acquiror shall be responsible for, and
shall indemnify and hold harmless Parent, Holdings and their respective
Affiliates, and the officers, directors, employees and agents of Parent,
Holdings and their respective Affiliates, and the fiduciaries (including plan
administrators) of the Employee Benefit Plans, from and against any and all
claims, losses, damages, costs
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and expenses (including, without limitation, reasonable attorneys' fees and
expenses) and other liabilities and obligations relating to or arising out of
(i) all salaries, commissions and vacation entitlements accrued but unpaid as of
the Closing and post-Closing bonuses due to any Affected Employee (other than
those arising under the Holdings Plan, except for severance payment obligations)
and (ii) any claims of, or damages or penalties sought by, any Affected
Employee, or any Governmental Entity on behalf of or concerning any Affected
Employee, with respect to any act or failure to act by Acquiror to the extent
arising from the employment, discharge, layoff, termination or constructive
termination after the Closing of any Affected Employee who becomes an employee
of Acquiror or becomes or remains an employee of the Transferred Companies on or
after the Closing.
(h) Effective as of the Closing, the parties hereto shall take
all action necessary and appropriate to cause the applicable Transferred
Companies to (i) remain or become the sole sponsor of (A) the PHH Europe PLC
Employee Benefits Plan (the "UK DB Plan") and (B) the PHH Flexible Pension
Scheme (the "UK DC Plan and, collectively with the UK DB Plan, the "UK Plans")
and (ii) subject to paragraphs (b) and (c) of this Section 5.9, assume and be
solely responsible for all assets, liabilities and obligations whatsoever under
the UK Plans.
(i) As soon as practicable following the Closing, but in no
event later than required by applicable law (i) Parent or one of its affiliates
shall have in effect a defined contribution plan (the "Parent DC Plan") and a
defined benefit plan (the "Parent DB Plan"), each of which shall fully comply
with all applicable laws, (ii) Acquiror shall cause the UK DB Plan to transfer
to the Parent DB Plan all of the assets and liabilities relating to each of the
currently active employees of Parent and its affiliates who are not also
Business Personnel (the "Remaining DB Participants") and (iii) Acquiror shall
cause the UK DC Plan to transfer to the Parent DC Plan all of the assets and
liabilities relating to each of the currently active employees of Parent and its
affiliates who are not also Business Personnel (the "Remaining DC
Participants").
(j) With respect to the transfer described in clause (iii) of
paragraph (b) above, an amount of cash or property reasonably acceptable to the
trustee of the Parent DC Plan shall be transferred which shall equal 100% of the
account balances of the Remaining DC Participants as of the date of such
transfer. With respect to the transfer described in clause (ii) of paragraph (b)
above, an amount of cash or property reasonably acceptable to the trustee of the
Parent DB Plan shall be transferred which shall equal the total fair market
value of assets funded
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in the UK DB Plan as of the date of transfer, multiplied by the Pro Rata
Fraction. The Pro Rata Fraction shall equal the total liabilities applicable to
the Remaining DB Participants, divided by the total liabilities under the UK DB
Plan, in each case as of the date of transfer. Further, the Pro Rata Fraction
shall be determined (i) in a manner consistent with all applicable laws, and
(ii) based upon accrued service and final pensionable pay at the date of
transfer and, subject to the next sentence hereof, the actuarial assumptions and
methods utilized in connection with the most recently completed actuarial
valuation as of the date of transfer. If the actuary for the UK DB Plan and the
actuary for the Parent DB Plan cannot agree on the reasonableness of the
actuarial assumptions and methods to be used in connection with the
determination of the Pro Rata Fraction, such reasonableness shall be determined
by a third enrolled actuary selected by the parties hereto which determination
shall be binding and final. The costs of such third actuary shall be borne
equally by the parties. Nothing contained in the foregoing shall in any way
adversely impact the accrued benefits or legal rights of any participant of the
UK DB Plan. Immediately following the date hereof, the parties hereto shall work
together in good faith to develop a reasonable and equitable method of valuation
and transfer in respect of the foregoing and shall effectuate such transfers as
soon as practicable.
5.10 No Solicitation. From and after the date hereof, neither Parent
nor Holdings shall, and each shall cause each of the Transferred Companies not
to, nor will they permit any of their respective Affiliates to, nor shall they
authorize any officer, director, employee, investment banker, attorney or
representative of Parent, Holdings or any of their Affiliates to, (a) directly
or indirectly, solicit, initiate or encourage the submission of any proposal or
offer from any Person other than Acquiror or its directors, officers, employees,
Affiliates or representatives, (b) enter into or approve any agreement with
respect to, or (c) directly or indirectly participate in any discussions or
negotiations with, or provide any information to, any Person other than Acquiror
or its directors, officers, employees, Affiliates or representatives, relating
to any (i) merger, consolidation or other business combination involving the
Business or any of the Transferred Companies, (ii) restructuring,
recapitalization or liquidation of the Business or any of the Transferred
Companies, or (iii) acquisition or disposition of any substantial portion of the
assets of the Business or any of the Transferred Companies or any of the
securities of the Transferred Companies (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal").
5.11 Indemnification. Following the Closing, Acquiror shall cause
each of the Transferred Companies not to make any changes to its respective
certificate or articles of incorporation or by-laws (or similar document) which
would
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adversely affect the rights of Persons who are current or former officers and
directors of the Transferred Companies, as applicable, to claim indemnification
from such entity under the terms of such certificate or articles of
incorporation or by-laws (or similar document) as in effect on the date hereof
for acts taken prior to the Effective Time. Acquiror shall make, or cause the
Transferred Companies to make, any payments required under such indemnification
provisions relating to facts or circumstances occurring prior to the Effective
Time.
5.12 Trademark License Agreements. It is understood and agreed that
the Transferred Assets do not include, and Acquiror Sub shall not acquire direct
or indirect ownership of, the items of intellectual property used in the
Business and listed on Schedule VI hereto, which intellectual property is owned
by Holdings (the "Retained Intellectual Property"). At the Closing, Holdings, on
the one hand, and Acquiror and Acquiror Sub, on the other hand, shall enter into
a license agreement with respect to the Retained Intellectual Property
substantially in the form of Exhibit F hereto (the "Trademark License
Agreement").
5.13 Stockholders' Agreement and Registration Rights Agreement. At
the Closing, Holdings, Acquiror and Acquiror Sub shall enter into (i) a
stockholders' agreement, substantially in the form of Exhibit G hereto (the
"Stockholders Agreement"), and (ii) a registration rights agreement with respect
to the shares of Acquiror Common Stock to be issued to Parent upon exchange of
the Acquiror Class B Common Stock issuable upon conversion of the Acquiror Sub
Series A Preferred Stock, substantially in the form of the existing registration
rights agreement between Acquiror and Cendant.
5.14 Transition Services Agreement and IT Agreement. Parent,
Holdings, Acquiror and Acquiror Sub shall use their reasonable best efforts to
negotiate, on a good faith basis, the terms and conditions of (i) a transition
services agreement which shall set forth the services to be provided between the
Transferred Companies, on the one hand, and Parent and its Affiliates, on the
other hand, as may reasonably be requested by Parent and/or Acquiror Sub, on a
basis to be mutually agreed upon (the "Transition Services Agreement") and (ii)
an Information Technology Services Agreement, to be mutually agreed upon (the
"IT Agreement").
5.15 Escrow Agreement. At the Closing, Acquiror, Acquiror Sub,
Parent, Holdings and the Escrow Agent shall enter into an escrow agreement,
substantially in the form of Exhibit H hereto (the "Escrow Agreement").
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5.16 Transitional License Agreement. Parent shall cause Cendant to
grant to Acquiror and Acquiror Sub a limited license to use the marks CENDANT,
CENDANT BUSINESS ANSWERS, the "C" logo and the other items of intellectual
property set forth in Section 5.16 of the Holdings Disclosure Schedule for the
sole purpose of selling off or otherwise disposing of any existing inventory of
products or business materials of the Business in the United Kingdom, which
license shall commence at the Effective Time and end as soon as practicable, but
in no event later than the first anniversary of the Effective Time or the
disposal of all such existing inventory. At the Closing, Parent shall cause
Cendant, on the one hand, and Acquiror and Acquiror Sub, on the other hand, to
enter into a transitional license agreement substantially in the form of Exhibit
I hereto (the "Transitional License Agreement").
5.17 Intercompany Obligations; Affiliate Agreements.
(a) Section 5.17(i) of the Holdings Disclosure Schedule lists
all intercompany accounts, obligations (including indebtedness) and agreements
between Holdings or any of its Affiliates (other than the Transferred Companies)
on the one hand, and the Transferred Companies, on the other hand (the
"Intercompany Agreements"). Except as set forth in Section 5.17(ii) of the
Holdings Disclosure Schedule, as of the Effective Time, Holdings and the
Transferred Companies shall cause all Intercompany Agreements to be terminated
in all respects such that there is no cost or liability thereunder on the part
of the Transferred Companies.
(b) Notwithstanding subsection (a) or any other provision of
this Agreement, but subject to the following sentence of this Section 5.17(b),
all intercompany indebtedness between any of the Transferred Companies, on the
one hand, and Parent, on the other hand, outstanding on the date hereof and not
repaid prior to the Effective Time or incurred after the date hereof as
permitted by Section 5.l(b)(x) and not repaid prior to the Effective Time, which
in any event will not exceed, at the Effective Time, without the agreement of
Acquiror, an aggregate of $425,000,000 (such amount collectively, the
"Intercompany Indebtedness"), shall be repaid at the Effective Time pursuant to
Section 2.3(b)(iii) hereof. From the date of this Agreement to the Effective
Time, the amount of the Intercompany Indebtedness may be increased, either as
permitted by Section 5.1(b)(x) or with the written consent of Acquiror, in
connection with the operation of the Business, and any such increase shall be
included in the amount of the Intercompany Indebtedness that is to be paid
pursuant to Section 2.3(b)(iii) hereof to the extent such increased amount has
not been repaid prior to the Effective Time. If Parent or Holdings requests in
writing to
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increase the amount of the Intercompany Indebtedness in connection with
operating the Business between the date of this Agreement and the Effective Time
and Acquiror does not consent to such request within two (2) business days of
receiving such request, neither Acquiror or Acquiror Sub shall have any right
under this Agreement resulting or arising from or related to the failure of any
Transferred Company to engage in, or continue, any transaction as a result of
Acquiror's failure to consent to increase the amount of the Intercompany
Indebtedness in connection with such transaction, including without limitation,
any rights under Articles VII or IX hereof. Upon payment of the Intercompany
Indebtedness as required by Section 2.3(b)(iii), Acquiror Sub and the
Transferred Companies shall have no further obligations with respect to
Intercompany Indebtedness and in any event shall have no obligations with
respect to any other such intercompany indebtedness not included in the
Intercompany Indebtedness.
(c) Acquiror shall use its commercially reasonable efforts to
cause itself, Acquiror Sub or any other Affiliate of Acquiror to be substituted
in all respects for Parent and/or Holdings, effective as of the Effective Time,
in respect of all obligations of Parent and/or Holdings under each of the
guaranties, letters of credit, letters of comfort and other obligations obtained
by Parent and/or Holdings (including, without limitation, leases of real and
personal property) that are listed on Section 5.17(c)(i) of the Disclosure
Schedule for the benefit of the Business or any of the Transferred Companies or
any extensions or modifications thereto in accordance with this Agreement
(collectively, the "Guaranties"). If Acquiror and Acquiror Sub are unable to
effect such a substitution with respect to any Guaranty after using all
commercially reasonable efforts to do so, Acquiror and Acquiror Sub shall (a)
obtain letters of credit for the benefit of Parent and/or Holdings, as
applicable, on terms and from financial institutions reasonably satisfactory to
Parent and Holdings, with respect to the obligations covered by each of those
Guaranties listed on Section 5.17(c)(ii) of the Disclosure Schedule for which
Acquiror and Acquiror Sub do not effect such substitution and (b) indemnify and
hold harmless Parent and/or Holdings, as the case may be, from and against all
obligations, liabilities, losses, claims, actions and causes of action incurred
by or asserted against Parent and/or Holdings arising out of or relating to such
Guaranties from and after the Effective Time.
5.18 Supplements to Disclosure Schedules. Holdings and Acquiror may
supplement or amend the Holdings Disclosure Schedule and Acquiror Disclosure
Schedule, respectively, prior to the Effective Time with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or otherwise disclosed
therein (the
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"Updated Information"). No such supplement or amendment to include the Updated
Information shall (i) affect the ability of Parent, Holdings, Acquiror or
Acquiror Sub to rely on the conditions to Closing set forth in Sections 7.1 and
8.1, respectively, (ii) be deemed to have been set forth or otherwise disclosed
as of the date of this Agreement unless the parties specifically agree thereto
in writing or (iii) affect the ability of Parent, Holdings, Acquiror or Acquiror
Sub to make any claim for indemnification or otherwise as a result of any breach
of any representation or warranty.
5.19 Public Announcements. Prior to the Closing, except as otherwise
agreed to by the parties, the parties and each of their respective Affiliates
shall not issue any report, statement or press release or otherwise make any
public statements with respect to this Agreement and the transactions
contemplated hereby, except as in the reasonable judgment of a party or its
Affiliate may be required by Law or in connection with their obligations as
publicly-held, exchange-listed companies, in which case, the parties and each of
their Affiliates will cooperate to reach mutual agreement as to the language of
any such report, statement or press release. Immediately following the execution
and delivery of this Agreement, Parent, Holdings and Acquiror are each issuing
press releases to be mutually agreed upon with respect to this Agreement and the
transactions contemplated hereby.
5.20 Non-Competition; Non-Solicitation. At the Closing, Parent,
Holdings, Acquiror and Acquiror Sub shall enter into a non-competition and
non-solicitation agreement, substantially in the form of Exhibit J hereto (the
"Non-Competition Agreement").
5.21 Preferred Alliance Agreements. Between the date hereof and the
Closing Date, the parties shall use best efforts to negotiate in good faith and
enter into preferred alliance agreements and such other joint marketing programs
as the parties deem appropriate and desirable.
5.22 License Amendment Agreement. Between the date hereof and the
Closing Date, the parties shall use commercially reasonable efforts to negotiate
in good faith and enter into as of the Effective Time an amendment to the Master
License Agreement, dated July 30, 1997, among Acquiror, Wizard Co., Inc. and
Cendant Car Rental, Inc. (the "License Amendment Agreement") substantially on
the terms set forth in a letter dated May 21, 1999 from Cendant Car Rental, Inc.
to Acquiror.
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5.23 No Other Representations. Acquiror and Acquiror Sub understand
and acknowledge that, except for the representations and warranties contained in
Article III hereof, none of Parent, Holdings or any other Person makes any
representation or warranty, express or implied, on behalf of Parent, Holdings or
any of their respective subsidiaries or Affiliates, including the Transferred
Companies.
ARTICLE VI
TAX MATTERS
6.1 Tax Returns. Subject to Sections 6.1(g) and 6.5.
(a) Parent or an Affiliate of Parent shall file or cause to be
filed when due all Tax Returns that are required to be filed by or with respect
to Holdings and each of the Transferred Companies for taxable years or periods
ending on or before the Closing Date and Parent or an Affiliate of Parent shall
remit (or cause to be remitted), subject to Section 6.2(a) below, any Taxes due
in respect of such Tax Returns and, with respect to recurring items, such
returns shall be prepared in a manner consistent with past practices to the
extent permissible under applicable Laws. Acquiror shall pay to Parent any
Excluded Taxes in respect of such Tax Returns.
(b) Acquiror shall file or cause to be filed when due all Tax
Returns that are required to be filed by or with respect to the Acquiror Sub
Surviving Corporation and each of the Transferred Companies for taxable years or
periods ending after the Closing Date (including Straddle Periods (as
hereinafter defined)) and Acquiror shall remit (or cause to be remitted) any
Taxes due in respect of such Tax Returns.
(c) Any Tax Return required to be filed by Acquiror with
respect to the Transferred Companies relating to any taxable year or period
beginning on or before and ending after the Closing Date (the "Straddle Period")
shall be submitted (with copies of any relevant schedules, work papers and other
documentation then available) to Parent for Parent's approval not less than 30
days prior to the due date for the filing of such Tax Return, which approval
shall not be unreasonably withheld or delayed. Parent shall have the option of
providing to Acquiror, at any time at least 15 days prior to the Due Date (as
hereinafter defined), written instructions as to how Parent wants any, or all,
of the items for which it may be liable
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reflected on such Tax Return. Acquiror shall, in preparing such Tax Return,
cause the items for which Parent is liable hereunder to be reflected in
accordance with Parent's instructions (unless, in the opinion of nationally
recognized tax counsel to Acquiror, complying with the Parent's instructions
would likely subject Acquiror to any criminal penalty or to civil penalties
under sections 6662 through 6664 of the Code or similar provisions of applicable
state, local or foreign Laws) and, in the absence of having received such
instructions, in accordance with past practice, if any, to the extent
permissible under applicable Law.
(d) Subject to Section 6.1(c), Parent shall pay to Acquiror
the Taxes for which Parent is liable pursuant to Section 6.2(a)(ii) but which
are payable with any Tax Return to be filed by Acquiror with respect to any
Straddle Period upon the written request of Acquiror, setting forth in detail
the computation of the amount owed, no later than 5 days prior to the Due Date.
(e) Within 120 days after the Closing Date, Acquiror shall
cause the Acquiror Sub Surviving Corporation to prepare and provide to Parent a
package of Tax information materials, including, without limitation, schedules
and work papers (the "Tax Package") required by Parent or an Affiliate of Parent
to enable Parent or an Affiliate of Parent to prepare and file all Tax Returns
required to be prepared and filed by it pursuant to Section 6.1(a). The Tax
Package shall be prepared in good faith in a manner consistent with past
practice.
(f) Parent or an Affiliate of Parent may, in its sole and
absolute discretion, amend any Tax Return filed or required to be filed for any
taxable years or periods ending on or before the Closing Date; provided,
however, that neither Parent nor any Affiliate of Parent shall amend any such
Tax Return that materially and adversely affects or may materially and adversely
affect the Tax liability of the Acquiror, Acquiror Sub Surviving Corporation or
any of the Transferred Companies or any Affiliate of the foregoing for any
period ending after the Closing Date, including the portion of any Straddle
Period that is after the Closing Date, without the prior consent of the
Acquiror, which consent shall not be unreasonably withheld or delayed.
(g) Notwithstanding anything to the contrary contained in this
Section 6.1, Parent shall file or cause to be filed any Forms 5471 with respect
to any of the Transferred Companies (that are incorporated in a foreign
jurisdiction) that are required to be filed for any taxable period that ends on
or before, or that includes, the Closing Date.
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6.2 Indemnification.
(a) Parent shall indemnify, defend and hold Acquiror and
Acquiror's subsidiaries and Affiliates and the successors to the foregoing (and
their respective shareholders, officers, directors, employees and agents)
harmless on an after-Tax basis (subject to Section 6.13) from and against the
following (net of the amount of any Tax Benefit (as hereinafter defined)
Actually Realized (as hereinafter defined) by Acquiror, the Acquiror Sub
Surviving Corporation or any of the Transferred Companies as a result of the
payment or accrual of any of the following:
(i) any liability for Taxes of or attributable to
Holdings or any of the Transferred Companies as members of the "affiliated
group" (within the meaning of Section 1504(a) of the Code) of which Cendant (or
any predecessor or successor) is the common parent that arises under Treasury
Regulation Section 1.1502-6(a) or comparable provisions of foreign, state or
local Law; and
(ii) any liability for Taxes of or attributable to
Holdings or any of the Transferred Companies for any taxable year or period that
ends on or before the Closing Date ("Pre-Closing Period") and, with respect to
any Straddle Period, the portion of such Straddle Period deemed to end on and
include the Closing Date (in the manner set forth in Section 6.3(a));
provided, however, that Parent shall not be liable for and shall not indemnify
Acquiror (and its subsidiaries and Affiliates) for (A) any liability for Taxes
resulting from transactions or actions taken by Acquiror, Acquiror Sub or any of
the Transferred Companies on the Closing Date that are taken after the Closing,
except for transactions or actions undertaken in the ordinary course of
business; (B) any Taxes that result from an actual or deemed election under
Section 338 of the Code (or any similar provisions of state, local or other Law)
with respect to any of the Transferred Companies in connection with any of the
transactions contemplated by this Agreement; and (C) any Transfer Taxes (as
hereinafter defined) for which Acquiror is liable pursuant to Section 6.5 hereof
(collectively, the Taxes described in (A) through (C) above are referred to
hereinafter as "Excluded Taxes").
(b) Acquiror shall indemnify and hold Parent and Parent's
subsidiaries and Affiliates (including Cendant) harmless from and against (net
of the amount of any Tax Benefit Actually Realized by Parent or its subsidiaries
or Affiliates as a result of the payment or accrual of any of the following):
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(i) Taxes of or attributable to the Acquiror Sub
Surviving Corporation or any of the Transferred Companies for any taxable year
or period that begins after the Closing Date and, with respect to any Straddle
Period, the portion of such Straddle Period beginning after the Closing Date (in
the manner set forth in Section 6.3(a)); and
(ii) Excluded Taxes.
6.3 Computation of Tax Liabilities.
(a) To the extent permitted or required by Law or
administrative practice. (i) the taxable year of Holdings and each of the
Transferred Companies that includes the Closing Date shall be treated as closing
on (and including) the Closing Date and, notwithstanding the foregoing, (ii) all
transactions of or with respect to the Acquiror Sub Surviving Corporation or any
of the Transferred Companies not in the ordinary course of business occurring
after the Closing shall be reported on Acquiror's or the Acquiror Sub Surviving
Corporation's consolidated United States federal income Tax Return to the extent
permitted by Treasury Regulation Section 1.1502-76(b)(l)(ii)(B) and shall be
similarly reported on other Tax Returns of Acquiror or its Affiliates to the
extent permitted by Law. For purposes of Section 6.2(a) and (b), where it is
necessary to apportion between Parent and Acquiror the Tax liability of an
entity for a Straddle Period (which is not treated under the immediately
preceding sentence as closing on the Closing Date), such liability shall be
apportioned between the period deemed to end at the close of the Closing Date,
subject to Sections 6.2(a) and 6.3(a)(ii), and the period deemed to begin at the
beginning of the day following the Closing Date on the basis of an interim
closing of the books, except that Taxes (such as real property Taxes) imposed on
a periodic basis shall be allocated on a daily basis; provided, however, that if
the capital structure of an entity is changed after the Closing Date, the Tax
liability of the entity for a Straddle Period apportioned to the period deemed
to end at the close of the Closing Date shall not exceed the Tax liability which
would have been due if the Tax liability had been calculated as of such date,
based on the income, assets, capital, liability and other attributes of the
entity on the Closing Date.
(b) In determining Parent's liability for Taxes pursuant to
this Agreement, Parent shall be credited with the amount of estimated Taxes paid
by or on behalf of Holdings or any of the Transferred Companies prior to the
Closing. To the extent that Parent's liability for Taxes for a taxable year or
period is less than the amount of estimated income Taxes previously paid by or
on behalf of Holdings
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or any of the Transferred Companies with respect to all or a portion of such
taxable year or period, Acquiror shall pay Parent the difference within two days
of the earlier of (i) the receipt of a refund relating to such overpayment or
(ii) the filing of a Tax Return in which a credit attributable to such
overpayment is utilized.
6.4 Contest Provisions.
(a) Each of Acquiror, on the one hand, and Parent, on the
other hand (the "Recipient"), shall notify the chief tax officer of the other
party in writing within 15 days of receipt by the Recipient of written notice of
any pending or threatened audits, notice of deficiency, proposed adjustment,
assessment, examination or other administrative or court proceeding, suit,
dispute or other claim (a "Tax Claim") which could affect the liability for
Taxes of such other party. If the Recipient fails to give such prompt notice to
the other party it shall not be entitled to indemnification for any Taxes
arising in connection with such Tax Claim if and to the extent that such failure
to give notice materially and adversely affects the other party's right to
participate in the Tax Claim.
(b) Parent shall have the sole right to represent Holdings for
any taxable period, and shall have the sole right to represent any of the
Transferred Companies' interests in any Tax Claim relating to taxable periods
ending on or before the Closing Date and to employ counsel of its choice at its
expense. Parent or any Affiliate of Parent may not settle or otherwise dispose
of any Tax Claim of any of the Transferred Companies relating to such periods if
such settlement or disposition materially and adversely affects or may
materially and adversely affect the Tax liability of the Acquiror, Acquiror Sub
Surviving Corporation or any of the Transferred Companies or any Affiliate of
the foregoing without the prior written consent of Acquiror, which consent may
not be unreasonably withheld or delayed. In the case of a Straddle Period,
Parent shall be entitled to provide comments which shall be considered in good
faith with respect to any Tax Claim relating in any part to Taxes attributable
to the portion of such Straddle Period deemed to end on or before the Closing
Date and, with the written consent of Acquiror, at Parent's sole expense, may
assume the control of such entire Tax Claim. None of Acquiror, any of its
Affiliates, the Acquiror Sub Surviving Corporation or the Transferred Companies
may settle or otherwise dispose of any Tax Claim with respect to any Straddle
Period for which Parent may have a liability under this Agreement without the
prior written consent of Parent, which consent may not be unreasonably withheld
or delayed.
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(c) Acquiror shall have the sole right to control any audit or
examination by any taxing authority, initiate any claim for refund or amend any
Return, and contest, resolve and defend against any assessment for additional
Taxes, notice of Tax deficiency or other adjustment of Taxes of, or relating to,
the income, assets or operations of the Transferred Companies for all taxable
periods beginning after the Closing Date ("Post-Closing Period"); provided,
however, that Acquiror shall not initiate any such claim for refund or amend any
such Tax Return or settle or dispose of any Tax Claim with respect to a
Post-Closing Period if such claim for refund, amendment, settlement, or
disposition materially and adversely affects or may materially and adversely
affect the Tax liability of Cendant, Parent, Holdings or any of its Affiliates,
without the prior written consent of Parent, which consent shall not be
unreasonably withheld or delayed.
6.5 Transfer Taxes. All excise, sales, use, privilege, transfer
(including real property transfer or gains), stamp, documentary, filing,
recordation, value added, bulk sales and other similar taxes, together with any
interest, additions or penalties with respect thereto and any interest in
respect of such additions or penalties, arising out of or in connection with or
attributable to the transactions contemplated by this Agreement (collectively,
"Transfer Taxes"), shall be borne one half Acquiror and one half by Parent.
Notwithstanding Section 6.1 of this Agreement, which shall not apply to Tax
Returns relating to Transfer Taxes, any Tax Returns that must be filed in
connection with Transfer Taxes shall be prepared and filed when due by the party
primarily or customarily responsible under the applicable local Law for filing
such Tax Returns, and such party shall pay the Transfer Taxes shown to be due on
such Tax Return, and notify the other party in writing of the Transfer Taxes
shown to be due on such Tax Return and how such Transfer Taxes were calculated,
and if the other party is Acquiror, Acquiror shall, or shall cause the Acquiror
Sub Surviving Corporation to, reimburse Parent in immediately available funds
within 10 days of the receipt of such notice.
6.6 Refunds.
(a) Any Tax refund (including any interest in respect thereof)
received by Acquiror, the Acquiror Sub Surviving Corporation or any Transferred
Company, and any amounts of overpayments of Tax credited against Tax which
Acquiror, the Acquiror Sub Surviving Corporation or any of the Transferred
Companies otherwise would be or would have been required to pay that relate to
any taxable period, or portion thereof, ending on or before the Closing Date
shall be for the account of Parent, and Acquiror shall pay over to Parent any
such refund or the
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amount of any such credit within 15 days after receipt or entitlement thereto.
Acquiror shall pay Parent interest at the rate prescribed under Section
6621(a)(l) of the Code, compounded daily, on any amount not paid when due under
this Section 6.6. For purposes of this Section 6.6, where it is necessary to
apportion a refund or credit between Acquiror and Parent for a Straddle Period,
such refund or credit shall be apportioned between the period deemed to end at
the close of the Closing Date, and the period deemed to begin at the beginning
of the day following the Closing Date on the basis of an interim closing of the
Company's books, except that refunds or credits of Taxes (e.g., real property
Taxes) imposed on a periodic basis shall be allocated on a daily basis.
(b) Acquiror shall cooperate, and shall cause the Acquiror Sub
Surviving Corporation and any of the Transferred Companies to cooperate, in
obtaining any refund that Parent reasonably believes should be available with
respect to Pre-Closing Periods, including, without limitation, through filing a
Form 1139 or other appropriate form with the applicable taxing authorities;
provided, however, that Acquiror and Acquiror Sub Surviving Corporation and any
of the Transferred Companies shall not be obligated to carry back any Tax
attribute of a Post-Closing Period to a Pre-Closing Period.
6.7 Certain Post-Closing Settlement Payments.
(a) If the examination of any Federal, state, local or other
Tax Return of Cendant, Parent, Holdings, or any of the Transferred Companies for
any taxable period ending on or before the Closing Date, the pre-closing portion
of any Straddle Period or for any taxable year in which the Merger occurs, shall
result (by settlement or otherwise) in any adjustment which permits Acquiror,
the Acquiror Sub Surviving Corporation or any of the Transferred Companies or
any Affiliate thereof to increase deductions, losses or tax credits or decrease
the income, gains or recapture of tax credits which would otherwise (but for
such adjustments) have been reported or taken into account (including by way of
any increase in basis) by Acquiror, the Acquiror Sub Surviving Corporation or
any of the Transferred Companies or any Affiliate thereof for one or more
periods ending after the Closing Date, in each case in respect of the
Transferred Assets, Parent will notify Acquiror and provide it with adequate
information so that Acquiror (or its Affiliates), the Acquiror Sub Surviving
Corporation or any of the Transferred Companies or any Affiliate thereof, as the
case may be, can reflect on its Tax Returns such increases in deductions, losses
or tax credits or decreases in income (including by way of increase in basis),
gains or recapture of tax credits. Upon receipt of such information and upon
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the reasonable request of Parent, Acquiror (or its Affiliates), the Acquiror Sub
Surviving Corporation or any of the Transferred Companies, as the case may be,
shall reflect on its Tax Returns (including amended Tax Returns) the information
provided above. Acquiror shall pay to Holdings the amount of any resulting Tax
Benefits Actually Realized by the Acquiror, the Acquiror Sub Surviving
Corporation or any of the Transferred Companies (or any of their respective
Affiliates).
(b) If the examination of any Federal, state, local or other
Tax Return of Acquiror, the Acquiror Sub Surviving Corporation or any of the
Transferred Companies for any taxable period beginning and ending after the
Closing Date or the post-closing portion of any Straddle Period shall result (by
settlement or otherwise) in any adjustment which permits Parent (or its
Affiliates) to increase deductions, losses or tax credits or decrease the
income, gains or recapture of tax credits which would otherwise (but for such
adjustments) have been reported or taken into account (including by way of any
increase in basis) by Parent (or its Affiliates) for one or more periods ending
on or before the Closing Date, in each case in respect of the Transferred
Assets, Acquiror will notify Parent and provide it with adequate information so
that Parent can reflect on its or its Affiliates' Tax Returns (including amended
Tax Returns) such increases in deductions, losses or tax credits or decreases in
income, gains or recapture of tax credits. Upon receipt of such information, and
upon the reasonable request of Acquiror, Parent (or its Affiliates) shall
reflect on its tax returns the information provided above. Parent shall pay to
Acquiror the amount of any resulting Tax Benefits Actually Realized by Parent
(or any of its Affiliates).
(c) Upon (A) the exercise of a Cendant Option by an employee
or former employee of any of the Transferred Companies and the payment of cash
or other property by Cendant (or its designated agent) to the holder of the
Cendant Option or (B) the payment by Holdings of any amount with respect to the
Holdings Plan, as described in Section 5.9, Acquiror shall pay or cause the
Acquiror Sub Surviving Corporation or any of the Transferred Companies to pay,
as the case may be, to Holdings the amount of any Tax Benefit Actually Realized
by Acquiror, Acquiror Sub Surviving Corporation or any of the Transferred
Companies (or any of their respective Affiliates) attributable to any exercise
or payment described in this Section 6.7(c).
(d) Prior to the Closing Date, Acquiror and Holdings shall
negotiate and draft a schedule (the "Allocation Schedule") allocating the Merger
Consideration among the Transferred Assets. Upon completion of the Allocation
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Schedule, each of the Acquiror and Holdings shall execute a copy thereof and
return such copy to the other party. For all purposes (including tax and
accounting), the parties shall treat the fair market value of the Transferred
Assets as set forth in the Allocation Schedule.
(e) For purposes of this Agreement, "Tax Benefit" shall mean
the sum of the amount by which the actual Tax liability (after giving effect to
any alternative minimum or similar Tax) of a corporation to the appropriate
taxing authority is reduced (including, without limitation, by or as a result of
a deduction, increase in basis, entitlement to refund, credit or otherwise,
whether available in the current taxable year, as an adjustment to the taxable
income in any other taxable year or as a carryforward or carryback, as
applicable) plus any interest (on an after-Tax basis) from such government or
jurisdiction relating to such Tax liability. For purposes of this Agreement, a
Tax Benefit shall be deemed to have been "Actually Realized" at the time any
refund of Taxes is actually received or applied against other Taxes due, or at
the time of the filing of a Tax Return (including any Tax Return relating to
estimated Taxes) on which a loss, deduction or credit or increase in basis is
applied to reduce the amount of Taxes which would otherwise be payable. In
accordance with the provisions of this paragraph (e), Acquiror and Parent agree
that for purposes of this Agreement, where a Tax Benefit may be realized that
may result in the payment to, or reduce a payment by, the other party hereto,
each party will as promptly as practicable take or cause its Affiliates to take
such reasonable or appropriate steps (including, without limitation, the filing
of an amended Tax Return or claim for refund) to obtain at the earliest possible
time any such reasonable available Tax Benefit.
(f) For purposes of any Tax Benefit Actually Realized
determined under Section 6.7(e) and this Agreement:
(i) No later than 45 days after the filing of a Tax
Return for any taxable period that includes a date (x) upon which any Cendant
Option was exercised or any payment was made or accrued with respect to or in
connection with the Holdings Plan, as described in Section 5.9, (y) after the
Closing Date if there has been an examination of any federal, state, local or
other Tax Return of Cendant, Holdings or any of the Transferred Companies (or
any of their respective Affiliates) which results in an adjustment described in
Section 6.7(a) of this Agreement or (z) upon which any amount was paid or
accrued by Acquiror, the Acquiror Sub Surviving Corporation or the Transferred
Companies in respect of a claim for which Parent is required to indemnify
Acquiror pursuant to this Agreement, Acquiror
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shall provide Parent a detailed statement ("Tax Benefit Statement") specifying
the amount, if any, of any Tax Benefit that was Actually Realized by Acquiror,
the Acquiror Sub Surviving Corporation or the Transferred Companies for such Tax
period. To the extent that any deductions or other Tax items (including basis)
that could give rise to a Tax reduction or savings do not result in the actual
realization of such a Tax reduction or savings in the year described in the
previous sentence, this Section 6.7(f)(i) shall apply to each subsequent taxable
period of Acquiror, the Acquiror Sub Surviving Corporation or the Transferred
Companies, as the case may be, until either such Tax savings are Actually
Realized (resulting in a Tax Benefit) or the losses or other carryforwards to
which such deductions or other Tax items (including basis) gave rise expire
unused, if applicable. For each relevant taxable period, Parent shall be
provided with full access to the non-proprietary work papers and other materials
and information of Acquiror's (or the Acquiror Sub Surviving Corporation's or
the Transferred Companies') accountants in connection with the review of the Tax
Benefit Statement. If Parent disagrees in any respect with Acquiror's
computation of the amount of the Tax Benefit Actually Realized, Parent may, on
or prior to 45 days after the receipt of the Tax Benefit Statement from
Acquiror, deliver a notice to Acquiror or the Acquiror Sub Surviving Corporation
setting forth in reasonable detail the basis for Parent's disagreement therewith
("Tax Benefit Dispute Notice"). If no Tax Benefit Dispute Notice is received by
Acquiror or the Acquiror Sub Surviving Corporation on or prior to the 45th day
after Parent's receipt of the Tax Benefit Statement from Acquiror, the Tax
Benefit Statement shall be deemed accepted by Parent.
(ii) Within 15 days after Acquiror's receipt of a Tax
Benefit Dispute Notice, unless the matters in the Tax Benefit Dispute Notice
have otherwise been resolved by mutual agreement of the parties, Acquiror and
Parent shall jointly select a nationally-recognized independent certified public
accountant (the "Tax Benefit Accountant"); provided, however, if Acquiror and
Parent are unable to agree upon the Tax Benefit Accountant within such 15-day
period, then Acquiror and Parent shall each select a nationally-recognized
independent certified public accountant which shall then jointly choose the Tax
Benefit Accountant within 15 days thereafter. The Tax Benefit Accountant shall
conduct such review of the work papers and such other materials and information,
and the Tax Benefit Dispute Notice, and any supporting documentation as the Tax
Benefit Accountant in its sole discretion deems necessary, and the Tax Benefit
Accountant shall conduct such hearings or hear such presentations by the parties
or obtain such other information as the Tax Benefit Accountant in its sole
discretion deems necessary.
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(iii) The Tax Benefit Accountant shall, as promptly as
practicable and in no event later than 45 days following the date of its
retention, deliver to Parent and Acquiror a report (the "Tax Benefit Report") in
which the Tax Benefit Accountant shall, after reviewing disputed items set forth
in the Tax Benefit Dispute Notice, determine what adjustments, if any, should be
made to the amount of the Tax Benefit Actually Realized. The Tax Benefit Report
shall set forth, in reasonable detail, the Tax Benefit Accountant's
determination with respect to the disputed items or amounts specified in the Tax
Benefit Dispute Notice, and the revisions, if any, to be made to the amount of
the Tax Benefit Actually Realized, together with supporting calculations. All
fees and expenses relating to this work of the Tax Benefit Accountant shall be
borne equally by Acquiror and Parent. The Tax Benefit Report shall be final and
binding upon Acquiror and Parent, shall be deemed a final arbitration award that
is binding on each of Acquiror and Parent, and no party shall seek further
recourse to courts, other arbitral tribunals or otherwise. The amount, if any,
of the Tax Benefit Actually Realized set forth in the Tax Benefit Report shall,
in accordance with the provisions of this Section 6.7, be paid to Parent in
immediately available funds no later than five days after delivery of the Tax
Benefit Report to Acquiror.
(g) In the event that, after the Closing Date, there is a
sale, exchange, transfer or other disposition ("Disposition") of (i) the common
stock of Acquiror Sub Surviving Corporation to a Person other than Acquiror or a
subsidiary thereof, (i) any material assets of Acquiror Sub Surviving
Corporation or (ii) any material Transferred Asset, which Disposition would
materially and adversely affect the Tax Benefits Actually Realized that are then
or thereafter payable to Parent by Acquiror pursuant to this Agreement, Acquiror
shall make appropriate arrangements, reasonably satisfactory to Parent, to
ensure that Parent is paid any Tax Benefits Actually Realized that Parent would
have been entitled to be paid, consistent with the principles of this Agreement,
absent such Disposition, it being agreed that projections of income attributable
to the property subject to such Disposition that are reasonably satisfactory to
Parent and Acquiror may be used in making determinations hereunder as to Tax
Benefits Actually Realized that become due.
6.8 Tax-Free Reorganization Covenants; Other Covenants.
(a) Following the Merger, the Acquiror Sub Surviving
Corporation shall, and Acquiror shall cause the Acquiror Sub Surviving
Corporation and the Transferred Companies to, continue the historic business of
the Business or
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use a significant portion of the Business' historic business assets in a
business, in each case, within the meaning of Section 1.368-1(d) of the Treasury
Regulations.
(b) Acquiror and the Acquiror Sub Surviving Corporation do not
have a current plan or intention to sell or otherwise dispose of the Transferred
Assets or the assets of the Transferred Companies, except for dispositions made
in the ordinary course of business or transfers described in Section
368(a)(2)(C) of the Code.
(c) For a two-year period following the date of the Merger,
the Acquiror Sub Surviving Corporation shall, and Acquiror shall cause the
Acquiror Sub Surviving Corporation to, remain incorporated in the state of
Texas.
(d) Absent a Final Determination to the contrary, the Acquiror
Sub Surviving Corporation shall, and Acquiror shall cause the Acquiror Sub
Surviving Corporation and the Transferred Companies to, (A) report the Merger on
its Tax Returns as a tax-free reorganization described in Section 368(a) of the
Code, (B) treat the Merger as being a tax-free reorganization under Section
368(a) of the Code for all other purposes and (C) not take any action that is
inconsistent with the treatment of the Merger as a tax-free reorganization under
Section 368(a) of the Code. Acquiror shall, and shall cause the Acquiror Sub
Surviving Corporation and the Transferred Companies to, provide commercially
reasonable cooperation to Parent, Cendant and their Affiliates and
representatives with respect to all reasonable requests relating to supporting
and defending the qualification of the Merger as a reorganization described in
Section 368(a) of the Code, including, but not limited to, preparing responses
to information requests by a Tax Authority and making available books, records
and other documentation during normal business hours. For purposes of this
Agreement, "Final Determination" shall mean (i) the entry of a decision of a
court of competent jurisdiction at such time as an appeal may no longer be taken
from such decision or (ii) the execution of a closing agreement or its
equivalent between the particular taxpayer and the relevant taxing authority.
(e) Acquiror, Acquiror Sub, Holdings and Parent acknowledge
and agree that, pursuant to Section 381 of the Code, and subject to other
applicable limitations (including, without limitation, Sections 382 and 383 of
the Code and the separate return limitation year rules of the consolidated
return regulations), the Acquiror Sub Surviving Corporation shall succeed to and
take into account the items of Holdings described in Section 381(c) of the Code.
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6.9 Resolution of All Tax-Related Disputes. In the event that Parent
and Acquiror cannot agree on the calculation of any amount relating to Taxes or
the interpretation or application of any provision of this Agreement relating to
Taxes (except as provided in Section 6.7(e)), such dispute shall be resolved by
a nationally recognized accounting firm mutually acceptable to each of Parent
and Acquiror, whose decision shall be final and binding upon all persons
involved and whose expenses shall be shared equally by Parent and Acquiror.
6.10 Post-Closing Actions Which Affect Cendant's Liability for
Taxes.
(a) Acquiror shall not, and shall not permit the Acquiror Sub
Surviving Corporation or any of the Transferred Companies to, engage in any
transaction on the Closing Date or take any action on the Closing Date that are
taken after the Closing, except for transactions or actions undertaken in the
ordinary course of business which could increase Parent's (or any Affiliate of
Parent's) liability for Taxes (including any liability of Parent to indemnify
Acquiror for Taxes pursuant to this Agreement).
(b) None of Acquiror, the Acquiror Sub Surviving Corporation
or any Affiliate of Acquiror shall (or shall cause or permit any of the
Transferred Companies to) amend, refile or otherwise modify any Tax Return
relating in whole or in part to any of the Transferred Companies with respect to
any taxable year or period ending on or before the Closing Date (or with respect
to any Straddle Period) without the prior written consent of Parent, which
consent may not be unreasonably withheld.
6.11 Termination of Existing Tax Sharing Agreements. Any and all
existing Tax sharing allocation, indemnification or similar agreements or
arrangements, written or unwritten, between the Transferred Companies and Parent
or any of its subsidiaries, predecessors or Affiliates (other than any of the
Transferred Companies), shall be terminated as of the Closing and there shall be
no continuing obligation to make any payments thereunder.
6.12 Assistance and Cooperation. After the Closing Date, each of
Parent and Acquiror shall, upon request from the other (and shall cause their
respective Affiliates to):
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(a) subject to Section 6.5, timely sign and deliver such
certificates or forms as may be reasonably necessary or appropriate to establish
an exemption from (or otherwise reduce), or file Tax Returns or other reports
with respect to Transfer Taxes;
(b) assist the other party in preparing any Tax Returns which
such other party is responsible for preparing and filing in accordance with
Section 6.1;
(c) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns of the Transferred
Companies;
(d) make available to the other and to any taxing authority as
reasonably requested in connection with any Tax Return described in Section 6. 1
or any proceeding described in Section 6.4, all information relating to any
Taxes or Tax Returns of the Transferred Companies; and
(e) furnish the other with copies of all correspondence
received from any taxing authority in connection with any Tax audit or
information request with respect to any such taxable period.
Notwithstanding the foregoing or any other provision in this Agreement, neither
Acquiror nor any of its Affiliates shall have the right to receive or obtain any
information relating to Taxes of Parent (or any Affiliate of Parent), or any of
its predecessors other than information relating solely to Holdings or the
Transferred Companies for Pre-Closing Periods.
6.13 Adjustment to Merger Consideration. (a) Subject to 6.13(b), for
all Tax purposes, to the extent permitted by applicable law, any payment by
Acquiror or Parent under this Agreement shall be treated as an adjustment to the
consideration payable upon consummation of the Merger.
(b) If the Internal Revenue Service (the "IRS") (or similar
taxing authority) issues a written notice of proposed adjustment (an "Adjustment
Notice") (or similar notice) with respect to characterization of an indemnity
payment as a Purchase Price adjustment (the "Characterization Issue"), the
Acquiror shall notify Parent as soon as practicable but no later than ten
business days after the Acquiror's (or any of its Affiliates) receipt of such
Adjustment Notice. In the event
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of any IRS or other proceedings related to a Characterization Issue, Acquiror
shall permit Parent to provide comments which shall be considered in good faith
(solely with respect to the Characterization Issue), provided, however, that
Acquiror shall control all such proceedings. At its sole option, Acquiror may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the IRS in respect of a Characterization Issue and shall be
entitled to settle or contest such Characterization Issue, as the case may be;
provided, however, that if Parent elects by written notice to Acquiror to fund
Acquiror's reasonable expenses with respect to any IRS or other proceeding,
Acquiror shall use reasonable commercial efforts to uphold the characterization
of the indemnity payment as an adjustment to the Purchase Price, but shall not
be required to litigate such treatment unless Parent provides Acquiror with a
written opinion of counsel selected by Parent, but reasonably acceptable to
Acquiror, that the characterization of the indemnity payment will more likely
than not be treated as an adjustment to the Purchase Price. If and to the extent
that the treatment of an indemnification payment as an adjustment to the
Purchase Price is finally determined to be erroneous pursuant to this Section
6.13, the indemnifying party shall be required to pay to the indemnified party
the liability for any Taxes incurred by the indemnified party as a result of the
receipt of the indemnity payment.
6.14 Certain Definitions. For purposes of this Agreement, "Due Date"
shall mean, with respect to any Tax Return, the date such return is due to be
filed (taking into account any valid extensions); "Tax" or "Taxes" shall mean
taxes (other than those taxes described in Section 6.5 hereof) of any kind,
levies or other like assessments, customs, duties, imposts, charges or fees, and
shall include any Tax liability for such amounts as a result of either being a
member of a combined, consolidated, unitary or affiliated group or of a
contractual obligation to indemnify any Person for Taxes, including, without
limitation, income, franchise, gross receipts, ad valorem, value added, excise,
real or property, asset, sales, use, license, payroll, transaction, capital, net
worth, withholding, estimated, social security, utility, workers' compensation,
severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes or other governmental taxes imposed or payable
to the United States, or any state, county, local or foreign government or
subdivision or agency thereof, together with any interest, penalties or
additions with respect thereto and any interest in respect of such additions or
penalties; and "Tax Returns" shall mean all returns, reports, statements,
declarations, estimates and forms or other documents (including any related or
supporting information), required to be filed with respect to any Taxes.
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6.15 Cendant Options; Holdings Plan.
(a) Promptly after an exercise of a Cendant Option, Parent (or
an Affiliate of Parent) shall provide the Acquiror Sub Surviving Corporation
with a report detailing such exercise. On a monthly basis, Parent (or an
Affiliate of Parent) shall pay over to the Acquiror Sub Surviving Corporation
the amount of all withholding taxes (the "Withholding Taxes") required to be
collected by Cendant under applicable law and one-half of the amount of all
Employment Taxes (as defined below) required to be paid under applicable law, in
each case, in respect of the exercise of such Cendant Options in the preceding
calendar month and shall provide a report (the "Tax Report") confirming the
exercises occurring during such calendar month. With respect to all Cendant
Options outstanding as of the Closing Date held by Affected Employees holding
Cendant Options as of the Closing Date ("Optionholders"), so long as an
Optionholder continues to be employed by a Transferred Company or other
Affiliate of Acquiror, the Cendant Options held by such Optionholder shall
continue to vest in accordance with their stated terms without regard to the
termination of employment provisions of such Cendant Options, and such Cendant
Options shall remain exercisable until the earliest to occur of(i) the date that
is one year after the date on which such Cendant Option becomes vested in full,
(ii) the date which is one year after the termination of the Optionholder's
employment with a Transferred Company or other Affiliate of Acquiror, or (iii)
the original expiration date of such Cendant Option. Following the Closing,
Acquiror shall deliver, or cause to be delivered to Cendant, (i) on not less
than a quarterly basis updated personnel records of all Optionholders (which
records shall include address and name change information, work location, and
any other information relevant to the withholding of Taxes, and (ii) not less
frequently than each pay period, names and dates of termination of employment of
Optionholders who terminated employment with the Transferred Companies or other
Affiliate of Acquiror during the preceding pay period.
(b) Acquiror shall cause the Acquiror Sub Surviving
Corporation or any of the Transferred Companies, as the case may be, to pay to
the proper Governmental Entity (A) all Withholding Taxes and Employment Taxes
received from Parent (or its Affiliate) pursuant to Section 6.15(a) and (B)
one-half of the amount of any FICA or FUTA Tax (or any similar employment Taxes
required under state or local law) ("Employment Taxes") required to be paid with
respect to the exercise of any Cendant Options and (c) all Employment Taxes
received from Parent (and its Affiliate) pursuant to Section 6.15(d). In
addition, in connection with
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any payment by the Acquiror, the Acquiror Sub Surviving Corporation or any of
the Transferred Companies of any amount with respect to the Holdings Plan, the
Acquiror Sub Surviving Corporation or any of the Transferred Companies, as the
case may be, shall (A) withhold the Withholding Taxes required to be withheld
under applicable Law and pay such Withholding Taxes to the proper Governmental
Entity and (B) pay to the proper Governmental Entity one-half of the amount of
any Employment Taxes that are required to be paid under applicable Law. Acquiror
shall cause the Acquiror Sub Surviving Corporation or any of the Transferred
Companies, as the case may be, to (A) prepare and file any Tax Returns required
to be filed in connection with Withholding Taxes and Employment Taxes within the
time and manner prescribed by applicable Law and (B) prepare and provide to
persons who exercised such Cendant Options or received payments with respect to
the Holdings Plan, any statement, form or other document required to be provided
under applicable Law.
(c) Unless otherwise required by applicable Law, the parties
to this Agreement shall treat, with respect to any payment described in Section
6.15(a) or (b), any amount that is required to be included in the gross income
of the holder of any Cendant Option, or a person who receives a payment pursuant
to the Holdings Plan, as an amount that may be properly deductible by the
Acquiror Sub Surviving Corporation or any of the Transferred Companies, as the
case may be, after the Closing Date.
(d) In connection with any payment by the Acquiror, the
Acquiror Sub Surviving Corporation or any of the Transferred Companies of any
amount with respect to the Holdings Plan, Acquiror shall, within a reasonable
period prior to the time that Employment Taxes with respect to any such payments
are due, provide Parent with sufficient information to enable Parent to
determine the total amount of Employment Taxes required to be paid under
applicable law. As promptly as practicable after receipt of such information,
Parent shall pay over to the Acquiror Sub Surviving Corporation one-half of the
amount of all Employment Taxes in respect of any such payments.
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ARTICLE VII
CONDITIONS TO ACQUIROR'S and ACQUIROR SUB'S OBLIGATIONS
The obligation of Acquiror and Acquiror Sub under this Agreement to
consummate the transactions contemplated hereby shall be subject to the
satisfaction of each of the following conditions, unless waived in writing by
Acquiror:
7.1 Representations and Warranties. The representations and
warranties of Parent and Holdings contained in this Agreement shall be true and
correct as of the date hereof and as of the Closing Date as though such
representations and warranties were made at and as of such date (except that
representations and warranties given as of a specific date need be true and
correct only as of such date), except where the failure of such representations
and warranties to be so true and correct has not had, and is not likely to have,
individually or in the aggregate, a Material Adverse Effect on the Business
(disregarding for this purpose any qualification as to materiality or Material
Adverse Effect on the Business contained in such representations and
warranties).
7.2 Performance. Parent and Holdings shall have performed and
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them on or prior to the
Closing Date.
7.3 No Injunction. No court of competent jurisdiction shall have
issued any order, decree or ruling, and there shall not be any statute, rule or
regulation, enjoining or prohibiting the consummation of the transactions
contemplated hereby or preventing the conduct of any material portion of the
Business after the Effective Time in substantially the same manner as presently
conducted.
7.4 H-S-R Act. Any waiting periods applicable to the transactions
contemplated by this Agreement under the H-S-R Act shall have expired or been
terminated.
7.5 Required Approvals. Subject to Section 2.7 hereof, the consents
of (a) the Federal Deposit Insurance Corp. and (b) the Utah State Department of
Financial Institutions (together, the "Required Approvals") shall have been
obtained and shall remain in full force and effect and any statutory waiting
periods in respect thereof shall have expired.
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7.6 Opinion of Parent and Holdings' Counsel. Parent and Holdings
shall have delivered to Acquiror and Acquiror Sub opinions of counsel
[illegible] Parent and Holdings in the form of Exhibit K hereto.
7.7 Financing. Acquiror shall have received the proceeds [illegible]
Financing.
7.8 Goodwill Amortization. Acquiror shall have received [illegible]
from Deloitte & Touche LLP that under GAAP at the Effective Time, the goodwill
generated by the transactions contemplated hereby shall be amortized over forty
years.
ARTICLE VIII
CONDITIONS TO PARENT'S AND HOLDINGS' OBLIGATIONS
The obligation of Parent and Holdings under this Agreement to
consummate the transactions contemplated hereby shall be subject to the
satisfaction of each of the following conditions, unless waived in writing by
Holdings:
8.1 Representations and Warranties. The representations and
warranties of Acquiror and Acquiror Sub contained in this Agreement shall be
true and correct as of the date hereof and as of the Closing Date as though such
representations and warranties were made at and as of such date (except that
representations and warranties given as of a specific date need be true and
correct only as of such date), except where the failure of such representations
and warranties to be so true and correct has not had, and is not likely to have,
individually or in the aggregate, an Acquiror Material Adverse Effect
(disregarding for this purpose any qualification as to materiality or Acquiror
Material Adverse Effect contained in such representations and warranties).
8.2 Performance. Acquiror and Acquiror Sub shall have each performed
and complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by them on or prior to the
Closing Date.
8.3 No Injunction. No court of competent jurisdiction shall have
issued any order, decree or ruling, and there shall not be any statute, rule or
regula-
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tion, enjoining or prohibiting the consummation of the transactions contemplated
hereby.
8.4 H-S-R Act. Any waiting periods applicable to the transactions
contemplated by this Agreement under the H-S-R Act shall have expired or been
terminated.
8.5 Required Approvals. Subject to Section 2.7 hereof, the Required
Approvals shall have been obtained and shall remain in full force and effect and
any statutory waiting periods in respect thereof shall have expired.
8.6 Opinion of Acquiror and Acquiror Sub's Counsel. Acquiror and
Acquiror Sub shall have delivered to Parent and Holdings opinions of counsel to
Acquiror and Acquiror Sub in the form of Exhibit L hereto.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
9.1 Survival Periods. Each of the representations and warranties
made by the parties in this Agreement shall survive the Closing and the
Effective Time until the first anniversary of the Closing Date; provided,
however, that the representations and warranties contained in Sections 3.2,
3.3(a), 3.4, 3.8, 3.13, 4.2 and 4.3 hereof (the "Surviving Representations")
shall survive the Closing without limitation (subject to any applicable statutes
of limitations). Except with respect to the Surviving Representations, the
parties intend to shorten the statute of limitations and agree that no claims or
causes of action may be brought against Parent, the Holdings Surviving
Corporation, Acquiror or the Acquiror Sub Surviving Corporation based upon,
directly or indirectly, any of the representations, warranties or agreements
contained in Articles III and IV hereof after the applicable survival period or,
except as provided in Section 10.2 hereof, any termination of this Agreement
except, in each case, with respect to claims asserted prior to and pending at
the time of such expiration. This Section 9.1 shall not limit any covenant or
agreement of the parties which contemplates performance after the Effective
Time.
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9.2 Parent's and the Holdings Surviving Corporation's Agreement to
Indemnify.
(a) Subject to the terms and conditions set forth herein, from
and after the Effective Time, each of Parent and the Holdings Surviving
Corporation shall indemnify and hold harmless Acquiror and the Acquiror Sub
Surviving Corporation and their respective directors, officers, employees and
Affiliates and their respective successors and permitted assigns (collectively,
the "Acquiror Indemnitees") from and against all liability, demands, claims,
actions or causes of action, assessments, losses, damages, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
(collectively, the "Acquiror Damages") asserted against or incurred by any
Acquiror Indemnitee as a result of or arising out of (i) a breach of any
representation or warranty of Parent or Holdings contained in this Agreement
(provided that for purposes of indemnification pursuant to this Section 9.2(a),
any breach of any representation or warranty shall be determined without regard
to any qualification related to materiality or Material Adverse Effect on the
Business); (ii) a breach of any covenant or agreement of Parent, Holdings or the
Holdings Surviving Corporation contained in this Agreement; and (iii) the
Holdings Retained Liabilities and the Holdings Retained Assets.
(b) The obligation of Parent and the Holdings Surviving
Corporation to indemnify the Acquiror Indemnitees pursuant to clause 9.2(a)(i)
hereof is subject to the following limitations:
(i) no indemnification shall be made by Parent or the
Holdings Surviving Corporation unless the aggregate amount of Acquiror Damages
exceeds $30,000,000 and, in such event, indemnification shall be made by Parent
or the Holdings Surviving Corporation only to the extent such Acquiror Damages
exceed $18,000,000; provided, however, that the amount of Acquiror Damages for
any individual Claim must exceed $250,000, it being acknowledged and agreed that
Acquiror Indemnitiees shall not have the right to make a Claim for
indemnification under this Agreement in respect of Acquiror Damages in an amount
less than $250,000 ("De Minimis Acquiror Claims") and such De Minimis Acquiror
Claims shall not count toward the threshold amounts referred to above;
(ii) in no event shall the aggregate obligation of
Parent and the Holdings Surviving Corporation to so indemnify the Acquiror
Indemnitees exceed $500,000,000; and
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(iii) Parent and the Holdings Surviving Corporation
shall be obligated to indemnify the Acquiror Indemnitees only for those claims
giving rise to Acquiror Damages as to which the Acquiror Indemnitees have given
Parent and the Holdings Surviving Corporation written notice thereof prior to
the end of the applicable survival period (as provided for in Section 9.1
hereof); any written notice delivered by an Acquiror Indemnitee to Parent and
the Holdings Surviving Corporation with respect to Acquiror Damages shall set
forth with as much specificity as is reasonably practicable the basis of the
claim for Acquiror Damages and, to the extent reasonably practicable, a
reasonable estimate of the amount thereof.
(c) The amount of any Acquiror Damages shall be reduced by (i)
any amount received by a Acquiror Indemnitee with respect thereto under any
insurance coverage or from any other party alleged to be responsible therefor
and (ii) the amount of any Tax Benefit Actually Realized by the Acquiror
Indemnitee (or any of its Affiliates) relating thereto. The Acquiror Indemnitees
shall use reasonable efforts to collect any amounts available under such
insurance coverage and from such other party alleged to have responsibility. If
a Acquiror Indemnitee receives an amount under insurance coverage or from such
other party with respect to Acquiror Damages at any time subsequent to any
indemnification provided by Parent or the Holdings Surviving Corporation
pursuant to this Section 9.2, then such Acquiror Indemnitee shall promptly
reimburse Parent or the Holdings Surviving Corporation, as the case may be, for
any payment made or expense incurred by Parent or the Holdings Surviving
Corporation in connection with providing such indemnification up to such amount
received by the Acquiror Indemnitee.
9.3 Acquiror's and the Acquiror Sub Surviving Corporation's
Agreement to Indemnify.
(a) Subject to the terms and conditions set forth herein, from
and after the Effective Time, Acquiror and the Acquiror Sub Surviving
Corporation shall indemnify and hold harmless Parent, the Holdings Surviving
Corporation and their respective directors, officers, employees and Affiliates
and their respective successors and permitted assigns (collectively, the
"Holdings Indemnitees") from and against all liability, demands, claims, actions
or causes of action, assessments, losses, damages, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
(collectively, "Holdings Damages") asserted against or incurred by any Holdings
Indemnitee as a result of or arising out of (i) a breach of any representation
or warranty of Acquiror or Acquiror Sub contained in this Agreement (provided
that for purposes of indemnification pursuant to this Section 9.3(a), any
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breach of any representation or warranty shall be determined without regard to
any qualification related to materiality or "Acquiror Material Adverse Effect");
(ii) a breach of any covenant or agreement on the part of Acquiror, Acquiror Sub
or the Acquiror Sub Surviving Corporation contained in this Agreement; (iii) the
Transferred Liabilities; (iv) the Acquiror Sub Retained Liabilities and the
Acquiror Sub Retained Assets,
(b) Acquiror's and the Acquiror Sub Surviving Corporation's
obligation to indemnify the Holdings Indemnitees pursuant to clause 9.3(a)(i)
hereof is subject to the following limitations:
(i) no indemnification shall be made by Acquiror or the
Acquiror Sub Surviving Corporation unless the aggregate amount of Holdings
Damages exceeds $30,000,000 and, in such event, indemnification shall be made by
Acquiror or the Acquiror Sub Surviving Corporation only to the extent such
Holdings Damages exceed $18,000,000; provided, however, that the amount of such
Holdings Damages for any individual claim must exceed $250,000; it being
acknowledged and agreed that Seller shall not have the right to make a claim for
indemnification under this Agreement in respect of any Holdings Damages in an
amount less than $250,000 ("De Minimis Holdings Claims"), and such De Minimis
Holdings Claims shall not count toward the threshold amounts referred to above;
(ii) in no event shall the aggregate obligation of
Acquiror and the Acquiror Sub Surviving Corporation to so indemnify the Holdings
Indemnitees exceed $500,000,000; and
(iii) Acquiror and the Acquiror Sub Surviving
Corporation shall be obligated to indemnify the Holdings Indemnitees only for
those claims giving rise to Holdings Damages as to which the Holdings
Indemnitees have given Acquiror and the Acquiror Sub Surviving Corporation
written notice thereof prior to the end of the applicable survival period (as
provided in Section 9.1 hereof); any written notice delivered by a Holdings
Indemnitee to Acquiror and the Acquiror Surviving Corporation with respect to
Holdings Damages shall set forth with as much specificity as is reasonably
practicable the basis of the claim for Acquiror Damages and, to the extent
reasonably practicable, a reasonable estimate of the amount thereof.
(c) The amount of any Holdings Damages shall be reduced by (i)
any amount received by a Holdings Indemnitee with respect thereto under any
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insurance coverage or from any other party alleged to be responsible therefor
and (ii) the amount of any Tax Benefit Actually Realized by the Holdings
Indemnitee (or any of its Affiliates) relating hereto. The Holdings Indemnitees
shall use reasonable efforts to collect any amounts available under such
insurance coverage and from such other party alleged to have responsibility. If
a Holdings Indemnitee receives any amount under insurance coverage or from such
other party with respect to Holdings Damages at any time subsequent to any
indemnification provided by Acquiror or the Acquiror Sub Surviving Corporation
pursuant to this Section 9.3, then such Holdings Indemnitee shall promptly
reimburse Acquiror or the Acquiror Sub Surviving Corporation, as the case may
be, for any payment made or expense incurred by Acquiror or the Acquiror Sub
Surviving Corporation in connection with providing such indemnification up to
such amount received by the Holdings Indemnitee.
9.4 Third-Party Indemnification. The obligations of Parent and the
Holdings Surviving Corporation to indemnify the Acquiror Indemnitees under
Section 9.2 hereof with respect to Acquiror Damages and the obligations of
Acquiror and the Acquiror Sub Surviving Corporation to indemnify the Holdings
Indemnitees under Section 9.3 hereof with respect to Holdings Damages, in either
case, resulting from the assertion of liability by third parties (each, as the
case may be, a "Claim"), will be subject to the following terms and conditions:
(a) Any party against whom any Claim is asserted will give the
indemnifying party written notice of any such Claim promptly after learning of
such Claim, and the indemnifying party may at its option undertake the defense
thereof by representatives of its own choosing. Failure to give prompt notice of
a Claim hereunder shall not affect the indemnifying party obligations under this
Article IX, except to the extent the indemnifying party is materially prejudiced
by such failure to give prompt notice. If the indemnifying party, within 30 days
after notice of any such Claim, or such shorter period as is reasonably
required, fails to assume the defense of such Claim, the Acquiror Indemnitee or
the Holdings Indemnitee, as the case may be, against whom such Claim has been
made will (upon further notice to the indemnifying party) have the right to
undertake the defense, compromise or settlement of such Claim on behalf of, and
for the account and risk, and at the expense, of, the indemnifying party,
subject to the right of the indemnifying party to assume the defense of such
Claim at any time prior to settlement, compromise or final determination
thereof.
(b) Anything in this Section 9.4 to the contrary
notwithstanding, the indemnifying party shall not enter into any settlement or
compromise of
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any action, suit or proceeding or consent to the entry of any judgment (i) which
does not include as an unconditional term thereof the delivery by the claimant
or plaintiff to the Holdings Indemnitee or the Acquiror Indemnitee, as the case
may be, of a written release from all liability in respect of such action, suit
or proceeding or (ii) for other than monetary damages to be borne by the
indemnifying party, without the prior written consent of the Holdings Indemnitee
or the Acquiror Indemnitee, as the case may be, which consent shall not be
unreasonably withheld.
(c) The indemnifying party and the indemnified party shall
cooperate fully in all aspects of any investigation, defense, pre-trial
activities, trial, compromise, settlement or discharge of any claim in respect
of which indemnity is sought pursuant to this Article IX, including, but not
limited to, by providing the other party with reasonable access to employees and
officers (including as witnesses) and other information.
9.5 Insurance. The indemnifying party shall be subrogated to the
rights of the indemnified party in respect of any insurance relating to Acquiror
Damages or Holdings Damages, as the case may be, to the extent of any
indemnification payments made hereunder.
9.6 No Duplication; Sole Remedy.
(a) Any liability for indemnification hereunder shall be
determined without duplication of recovery by reason of the state of facts
giving rise to such liability constituting a breach of more than one
representation, warranty, covenant or agreement.
(b) Subject to Section 11.11 hereof, the respective rights to
indemnification of Parent, the Holdings Surviving Corporation, Acquiror and the
Acquiror Sub Surviving Corporation as provided for in Sections 6.2, 9.2 and 9.3,
as applicable, for a breach of this Agreement, shall constitute such party's
sole remedy for such a breach and the breaching party shall have no other
liability or damages to the other party resulting from the breach, except that
nothing herein shall relieve a party from liability for fraud.
9.7 Indemnification of Certain Litigation. From and after the
Effective Time, each of Parent and the Holdings Surviving Corporation shall
continue the defense of, indemnify and hold harmless the Acquiror Indemnitees
and the Transferred Companies from and against any Acquiror Damages asserted
against
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or incurred by any Acquiror Indemnitee or any Transferred Company as a result of
or arising out of the litigation referred to in item 6 of Section 3.9 of the
Holdings Disclosure Schedule, provided that no indemnification shall be made by
Parent or the Holdings Surviving Corporation unless the aggregate amount of
Acquiror Damages exceeds $500,000 and, in such event, indemnification shall be
made by Parent or Holdings Surviving Corporation only to the extent such
Acquiror Damages exceed $500,000. Notwithstanding anything to the contrary
contained in this Agreement, (i) the indemnification obligations of Parent and
Holdings Surviving Corporation provided under this Section 9.7(a) shall not be
subject to the limitations set forth in Section 9.2(b) and (b) shall not be
subrogated in respect of any insurance and (ii) any amounts paid hereunder shall
not be counted against the amounts set forth in Section 9.2(b).
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time:
(a) by mutual written consent of the parties hereto; or
(b) by Parent or Holdings at any time after June 30, 1999;
(c) by Acquiror or Acquiror Sub at any time after July 31,
1999;
(d) by Parent or Holdings if Acquiror shall notify (or be
required under Section 5.8 to notify) Holdings of a Funding Termination Event
(unless any Lender whose commitment has been withdrawn or terminated has been
replaced with another lending institution of comparable funding resources with
an equal or greater commitment on substantially the same terms and subject to
substantially the same conditions); or
(e) by Parent or Holdings if there shall have occurred any
disruption or adverse change, as determined by Parent or Holdings in its sole
discretion, in the financial or capital markets generally, or in the markets for
bank
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loan or bridge loan syndication, high yield debt, asset-backed securities or
equity securities in particular or affecting the syndication or funding of bank
loans or bridge loans (or the refinancing thereof) (each a "Market Event"),
provided that Parent or Holdings cannot terminate this Agreement if after giving
written notice to the Lenders of its intent to terminate this Agreement, the
Lenders, within three (3) Business Days, confirm in writing that such Market
Event will not result in their refusing to comply with their obligations under
the Commitment Letters.
10.2 Procedure For, and Effect of, Termination. In the event of
termination of this Agreement and abandonment of the transactions contemplated
hereby by the parties hereto pursuant to Section 10.1 hereof, written notice
thereof shall be given by a party so terminating to the other party and this
Agreement shall forthwith terminate and shall become null and void and of no
further effect, and the transactions contemplated hereby shall be abandoned
without further action by any of the parties hereto. If this Agreement is
terminated pursuant to Section 10.1 hereof:
(a) each party shall redeliver all documents, work papers and
other materials of the other parties relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same, and all confidential information received by any party
hereto with respect to the other party shall be treated in accordance with the
Confidentiality Agreement and Section 5.4(b) hereof;
(b) all filings, applications and other submissions made
pursuant hereto shall, at the option of Holdings, and to the extent practicable,
be withdrawn from the agency or other Person to which made; and
(c) there shall be no liability or obligation hereunder on the
part of Parent, Holdings, Acquiror or Acquiror Sub or any of their respective
directors, officers, employees, Affiliates, controlling persons, agents or
representatives, except that such party may have liability to the other party if
the basis of termination is a willful, material breach by such party of one or
more of the provisions of this Agreement, and except that (i) the obligations
provided for in Sections 5.4 and 11.1 hereof shall survive any such termination
and (ii) all of the rights and obligations of each of the parties pursuant to
the Confidentiality Agreement shall survive the termination of this Agreement
without limitation.
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10.3 Alternative Transaction. In the event that a Tax Notification
(as defined in Exhibit M hereto) shall be delivered, then the parties hereto
shall effectuate the transactions set forth in Exhibit M hereto.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Fees and Expenses. Except as otherwise provided in this
Agreement, whether or not the transactions contemplated hereby are consummated,
all fees, costs and expenses incurred in connection with such transactions will
be paid by the party incurring said expenses. Parent, Holdings and the Holdings
Surviving Corporation shall indemnify Acquiror, Acquiror Sub and the Acquiror
Sub Surviving Corporation for the fees of Chase Securities, Inc. and any other
brokerage or similar fees payable in connection with the transactions
contemplated hereby based on agreements made by or on behalf of Parent,
Holdings, any Transferred Company or their respective Affiliates, and Acquiror
and the Acquiror Sub Surviving Corporation shall indemnify Parent, Holdings and
the Holdings Surviving Corporation for the fees of Lehman Brothers Inc. and BT
Wolfensohn and any other brokerage or similar fees payable in connection with
the transactions contemplated hereby based on agreements made by or on behalf of
Acquiror, Acquiror Sub or any of their respective Affiliates.
11.2 Amendment. This Agreement may be modified, supplemented or
amended only by a written instrument executed by each of the parties hereto.
11.3 Entire Agreement. This Agreement (together with the Transaction
Agreements, the Disclosure Schedules, Schedules and Exhibits expressly
identified or referred to in this Agreement) and the Confidentiality Agreement
constitute the entire agreement of the parties with respect to its subject
matter, and supersede all prior agreements and understandings of the parties,
oral and written, with respect to its subject matter.
11.4 Execution in Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document.
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11.5 Notices. Unless otherwise provided herein, all notices and
other communications hereunder shall be in writing and may be given by any of
the following methods: (a) personal delivery; (b) facsimile transmission; (c)
registered or certified mail, postage prepaid, return receipt requested; or (d)
overnight delivery service. Such notices and communications shall be sent to the
appropriate party at its address or facsimile number given below or at such
other address or facsimile number for such party as shall be specified by notice
given hereunder (and shall be deemed given upon receipt by such party or upon
actual delivery to the appropriate address, or, in case of a facsimile
transmission, upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error; in the case of
notices sent by facsimile transmission, the sender shall contemporaneously mail
a copy of the notice to the addressee at the address provided for above,
provided, however, that such mailing shall in no way alter the time at which the
facsimile notice is deemed received):
If to Parent or Holdings: PHH Corporation
6 Sylvan Way
Parsippany, New Jersey 07054
Telecopy: (973) 496-5355
Attention: General Counsel
Copies to: Cendant Corporation
9 West 57th Street
37th Floor
New York, New York 10019
Telecopy: (212) 413-1922
Attention: General Counsel
and
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
Wilmington, Delaware 19801
Telecopy: (302) 651-3001
Attention: Patricia Moran Chuff Esq.
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If to Acquiror or Acquiror Sub: Avis Rent a Car, Inc.
900 Old Country Road
Garden City, New York 11530
Telecopy: (516) 222-6922
Attention: Karen Sclafani. Esq.
Copy to: White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 354-8113
Attention: Sean Geary, Esq.
11.6 Waivers. At any time prior to the Closing, the parties hereto
may (i) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of the other parties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance by the other
parties hereto with any of the agreements or conditions contained herein of the
other party subject to any specific provisions governing the effect of such
extensions or waivers. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party.
11.7 Applicable Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York without giving
effect to any of the conflict of law rules thereof; provided, that the Merger
shall be governed by the TBCA. Each party to this Agreement (a) waives, to the
fullest extent permitted by applicable Law, any right it may have to a trial by
jury in respect of any action, suit or proceeding arising out of or relating to
this Agreement, (b) consents to submit itself to the personal jurisdiction of
any federal court located in the State of New York or any New York state court
in the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (c) agrees that it will not attempt to deny such
personal jurisdiction by motion or other request for leave from any such court
and (d) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
federal or state court sitting in the State of New York.
81
<PAGE>
11.8 Headings. The headings contained in this Agreement are for the
sole purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions of this
Agreement.
11.9 Assignments. This Agreement may not be assigned, directly or
indirectly, by operation of law or otherwise, by any party hereto without the
prior written consent of the other parties; provided, however, that,
notwithstanding the foregoing, each of the parties hereto shall have the right
to assign any or all of its rights and obligations under this Agreement,
collectively or individually, to any of their respective Affiliates; provided,
however, that no such assignment shall relieve such party from its obligations
under this Agreement.
11.10 Severability. If any provision of this Agreement is held to be
invalid or unenforceable, such a provision shall (so far as invalid or
unenforceable) be given no effect and shall be deemed to be excluded from this
Agreement, but without invalidating any of the remaining provisions of this
Agreement. Upon such determination that any term or other provision is invalid
or unenforceable, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that terms of such provision
be effectuated as originally contemplated to the fullest extent possible.
11.11 Specific Performance. Notwithstanding any other provision of
this Agreement, the parties hereto agree that if any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached, irreparable damage would occur, no adequate remedy at law
would exist and damages would be difficult to determine, and that the parties
shall be entitled to specific performance of the terms hereof and immediate
injunctive relief, without the necessity of proving the inadequacy of money
damages as a remedy, in addition to any other remedy at law or equity.
11.12 Interpretation. All references herein to "$" or "dollars"
shall mean United States dollars. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.
11.13 No Third-Party Beneficiaries. This Agreement is solely for the
benefit of Parent, Holdings and their respective successors and permitted
assigns,
82
<PAGE>
with respect to the obligations of Acquiror and Acquiror Sub under this
Agreement, and for the benefit of Acquiror and Acquiror Sub, and their
respective successors and permitted assigns, with respect to the obligations of
Parent and Holdings, under this Agreement, and this Agreement shall not be
deemed to confer upon or give to any other third party any remedy, claim of
liability or reimbursement, cause of action or other right.
[SIGNATURE PAGE FOLLOWS]
83
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by duly
authorized officers of each of the parties all as of the date first above
written.
PHH CORPORATION
By: /s/ Robert D. Kunisch
----------------------------------
Name: Robert D. Kunisch
Title: President & CEO
PHH HOLDINGS CORPORATION
By: /s/ Robert D. Kunisch
----------------------------------
Name: Robert D. Kunisch
Title: President
AVIS RENT A CAR, INC.
By:__________________________________
Name:
Title:
AVIS FLEET LEASING AND MANAGE-
MENT CORPORATION
By:__________________________________
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by duly
authorized officers of each of the parties all as of the date first above
written.
PHH CORPORATION
By:__________________________________
Name:
Title:
PHH HOLDINGS CORPORATION
By:__________________________________
Name:
Title:
AVIS RENT A CAR, INC.
By: /s/ Kevin Sheehan
----------------------------------
Name: Kevin Sheehan
Title: Executive Vice President
AVIS FLEET LEASING AND MANAGE-
MENT CORPORATION
By: /s/ Kevin Sheehan
----------------------------------
Name: Kevin Sheehan
Title: Executive Vice President
<PAGE>
Ex 3.02(a)
CERTIFICATE OF INCORPORATION
OF
AVIS RENT-A-CAR SYSTEM, INC.
----------
We, the undersigned, for the purpose of associating to establish a
corporation for the transaction of the business and the promotion and conduct of
the objects and purposes hereinafter stated, under the provisions and subject to
the requirements of the laws of the State of Delaware (particularly Chapter 1,
Title 8 of the 1953 Delaware Code and the acts amendatory thereof and
supplemental thereto, and known as the "General Corporation Law or the State of
Delaware"), do make and file this Certificate of Incorporation in writing and do
hereby certify as follows, to wit:
FIRST: The name of the corporation (hereinafter called the
corporation) is
AVIS RENT-A-CAR SYSTEM, INC.
SECOND: The respective names of the County and of the City within
the County in which the principal office of the corporation is to be located in
the State of Delaware are the County of Kent and the City of Dover. The name of
the resident agent of the corporation is The Prentice-Hall Corporation System,
Inc. The street and number of said principal office and the address by street
and number of said resident agent is 223 South State Street, Dover, Delaware.
-1-
<PAGE>
THIRD: The nature of the business of the corporation and the objects
or purposes to be transacted, promoted or carried on by it are as follows:
To operate a system or plan for conducting the business of renting
and leasing automobiles, trucks and other vehicles, and in connection
therewith to authorize and aid others to conduct such business under such
name or combinations of name as may be determined, and in connection
therewith to grant or enter into agreements, leases, franchises, or other
arrangements, which need not be uniform, and to conduct all activities in
connection with such business as shall be necessary, desirable or
incidental thereto.
To buy, sell, rent, lease, operate, repair and otherwise deal in
automobiles, trucks and other vehicles; to conduct the business of renting
and leasing automobiles, trucks and other vehicles with or without
drivers, either under any plan or system established by this corporation
or otherwise; to conduct a general garage business; to buy, sell and
otherwise deal in parts, accessories and supplies of and for automobiles,
trucks and other vehicles.
To carry on any other business engaged in rendering any manner of
services of any manufacturing or merchandising business or any importing,
exporting, mining,
-2-
<PAGE>
quarrying, producing, agricultural, forestry, construction, research,
management, advisory, mercantile, financial or investment business or any
business of buying, selling, leasing and dealing in real or personal
properties, tangible or intangible, of any nature or description, whether
any such business is located in the United States of America or any
foreign country, and whether or not related to, conductive to, incidental
to or in any way connected with the first above described business.
To acquire by purchase, exchange, lease, or otherwise and to own,
hold, use, develop, operate, sell, assign, lease, transfer, convey,
exchange, mortgage, pledge or otherwise dispose of or deal in and with,
real and personal property of every class or description and rights and
privileges therein wheresoever situate.
To manufacture, process, purchase, sell and generally to trade and
deal in and with goods, wares and merchandise of every kind, nature and
description, and to engage and participate in any mercantile, industrial
or trading business of any kind or character whatsoever.
To apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise
-3-
<PAGE>
acquire, and to hold, own, use, operate, develop, enjoy, turn to account,
grant licenses and immunities in respect of, manufacture under and to
introduce, sell, assign, mortgage, pledge or otherwise dispose of, and, in
any manner deal with and contract with reference to:
(a) inventions, devices, formulae, processes and any
improvements and modifications thereof;
(b) letters patent, patent rights, patented processes,
copyrights, designs, and similar rights, trade-marks, trade symbols
and other indications of origin and ownership granted by or
recognized under the laws of the United States of America or of any
state or subdivision thereof, or of any foreign country or
subdivision thereof, and all rights connected therewith or
appertaining thereunto;
(c) franchises, licenses, grants and concessions.
To purchase or otherwise acquire, and to hold, mortgage, pledge,
sell, exchange or otherwise dispose of, securities (which term, for the
-4-
<PAGE>
purpose of this Article THIRD, includes, without limitation of the
generality thereof, any shares of stock, bonds, debentures, notes,
mortgages, or other obligations, and any certificates, receipts or other
instruments representing rights to receive, purchase or subscribe for the
same, or representing any other rights or interests therein or in any
property or assets) created or issued by any persons, firms, associations,
corporations, or governments or subdivisions thereof; to make payment
therefor in any lawful manner; and to exercise, as owner or holder of any
securities, any and all rights, powers and privileges in respect thereof.
To make, enter into, perform and carry out contracts of every kind
and description with any person, firm, association, corporation or
government or subdivision thereof.
To acquire by purchase, exchange or otherwise, all, or any part of,
or any interest in, the properties, assets, business and good will of any
one or more persons, firms, associations or corporations heretofore or
hereafter engaged in any business for which a corporation may now or
hereafter be organized under the laws of the
-5-
<PAGE>
State of Delaware; to pay for the same in cash, property or its own or
other securities; to hold, operate, reorganize, liquidate, sell or in any
manner dispose of the whole or any part thereof; and in connection
therewith, to assume or guarantee performance of any liabilities,
obligations or contracts of such persons, firms, associations or
corporations, and to conduct the whole or an part of any business thus
acquired.
To lend its uninvested funds from time to time to such extent, to
such persons, firms, associations, corporations, governments or
subdivisions thereof, and on such terms and on such security, if any, as
the Board of Directors of the corporation may determine.
To endorse or guarantee the payment of principal, interest or
dividends upon, and to guarantee the performance of sinking fund or other
obligations of, any securities, and to guarantee in any way permitted by
law the performance of any of the contracts or other undertakings in which
the corporation may otherwise be or become interested, of any persons,
firm, association, corporation, government or subdivision thereof, or of
any other combination, organization or en-
-6-
<PAGE>
tity whatsoever.
To borrow money for any of the purposes of the corporation, from
time to time, and without limit as to amount; from time to time to issue
and sell its own securities in such amounts, on such terms and conditions,
for such purposes and for such prices, now or hereafter permitted by the
laws of the State of Delaware and by this Certificate of Incorporation, as
the Board of Directors of the corporation may determine; and to secure
such securities by mortgage upon, or the pledge of, or the conveyance or
assignment in trust of, the whole or any part of the properties, assets,
business and good will of the corporation, then owned or thereafter
acquired.
To draw, make, accept, endorse, discount, execute, and issue
promissory notes, drafts, bills of exchange, warrants, bonds, debentures,
and other negotiable or transferable instruments and evidences of
indebtedness whether secured by mortgage or otherwise, as well as to
secure the name by mortgage or otherwise, so far as may be permitted by
the laws of the State of Delaware.
To purchase, hold, cancel, reissue, sell, exchange, transfer or
otherwise deal in its own
-7-
<PAGE>
securities from time to time to such am extent and in such manner and upon
such terms as the Board of Directors of the corporation shall determine;
provided that the corporation shall not use its funds or property for the
purchase of its own shares of capital stock when such use would cause any
impairment of its capital, except to the extent permitted by law; and
provided further that shares of its own capital stock belonging to the
corporation shall not be voted upon directly or indirectly.
To organize or cause to be organized under the laws of the State of
Delaware, or of any other State of the United States of America, or of the
District of Columbia, or of any territory, dependency, colony or
possession of the United States of America, or of any foreign country, a
corporation or corporations for the purpose of transacting, promoting or
carrying on any or all or the objects or purposes for which the
corporation is organized, and to dissolve, wind up, liquidate, merge or
consolidate any such corporation or corporations or to cause the same to
be dissolved, wound up, liquidated, merged or consolidated.
-8-
<PAGE>
To conduct its business in any and all of its branches and maintain
offices both within and without the State of Delaware, in any and all
States of the United States of America, in the District of Columbia, in
any or all territories, dependencies, colonies or possessions of the
United States of America, and in foreign countries.
To such extent as a corporation organized under the General
Corporation Law of the State of Delaware may now or hereafter lawfully do,
to do, either as principal or agent and either alone or in connection with
other corporations, firms or individuals, all and everything necessary,
suitable, convenient or proper for, or in connection with, or incident to,
the accomplishment of any of the purposes or the attainment of any one or
more of the objects herein enumerated, or designed directly or indirectly
to promote the interests of the corporation or to enhance the value of its
properties; and in general to do any and all things and exercise any and
all powers, rights and privileges which a corporation may now or hereafter
be organized to do or to exercise under the General Corporation Law of the
-9-
<PAGE>
State of Delaware or under any act amendatory thereof, supplemental
thereto or substituted therefor.
The foregoing provisions of this Article THIRD shall be construed
both as purposes and powers and each as an independent purpose and power. The
foregoing enumeration of specific purposes and powers shall not be held to limit
or restrict in any manner the purposes and powers of the corporation, and the
purposes and powers herein specified shall, except when otherwise provided in
this Article THIRD, be in no wise limited or restricted by reference to, or
inference from, the terms of any provision of this or any other Article of this
Certificate of Incorporation; provided that nothing herein contained shall be
construed as authorizing the corporation to issue bills, notes or other
evidences of debt for circulation as money, or to carry on the business of
receiving deposits of money or the business of buying gold or silver bullion or
foreign coins or as authorizing the corporation to engage in the business of
banking or insurance or to carry on the business of constructing, maintaining or
operating public utilities in the State of Delaware; and provided, further, that
the corporation shall not carry on any business or exercise any power in any
state, territory, or country which under the laws thereof the corporation may
not lawfully carry on or exercise.
-10-
<PAGE>
FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is Two Hundred Fifty (250), all without nominal or
par value. All such shares are of one class and are designated as Common Stock.
Any and all such shares issued, and for which the full consideration has been
paid or delivered, shall be deemed fully paid stock and the holder of such
shares shall not be liable for any further call or assessment of any other
payment thereon.
FIFTH: The minimum amount of capital with which the corporation will
commence business in One Thousand Dollars.
SIXTH: The names and places of residence of each of the
incorporators are as follows:
NAME PLACE OF RESIDENCE
---- ------------------
L. R. Boland Dover, Delaware
H. C. Dunning Dover, Delaware
Z. A. Pool, III Dover, Delaware
SEVENTH: The corporation is to have perpetual existence.
EIGHTH: The private property of the stockholders of the corporation
shall not be subject to the payment of corporate debts to any extent whatever.
NINTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation and regulation
of the powers of the
-11-
<PAGE>
corporation and of its directors and stockholders, it is further provided:
1. The number of directors of the corporation shall be as specified
in the By-Laws of the corporation but such number may from time to time be
increased or decreased in such manner as may be prescribed by the By-Laws.
In no event shall the number of directors be less than three. The election
of directors need not be by ballot. Directors need not be stockholders.
2. In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the Board of Directors is expressly
authorized and empowered:
(a) To make, alter, amend, and repeal By-Laws, subject to the
power of the stockholders to alter or repeal the By-Laws made by the
Board of Directors.
(b) Subject to the applicable provisions of the By-Laws then
in effect, to determine, from time to time, whether and to what
extent and at what times and places and under what conditions and
regulations the accounts and books of the corporation, or any of
them, shall be
-12-
<PAGE>
open to the inspection of the stockholders, and no stockholder shall
have any right to inspect any account or book or document of the
corporation, except as conferred by the laws of the State of
Delaware, unless and until authorized so to do by resolution of the
Board of Directors or of the stockholders of the corporation.
(c) Without the assent or vote of the stockholders, to
authorize and issue obligations of the corporation, secured or
unsecured, to include therein such provisions as to redeemability,
convertibility or otherwise, as the Board of Directors, in its sole
discretion, may determine, and to authorize the mortgaging or
pledging, as security therefor, of any property of the corporation,
real or personal, including after-acquired property.
(d) To determine whether any, and, if any, what part, of the
net profits of the corporation or of its assets in excess of its
capital shall be declared
-13-
<PAGE>
in dividends and paid to the stockholders, and to direct and
determine the use and disposition of any such net profits or such
net assets in excess of capital.
(e) To fix from time to time the amount of profits of the
corporation to be reserved as working capital or for any other
lawful purpose.
(f) To establish bonus, profit-sharing or other types of
incentive or compensation plans for the employees (including
officers and directors) of the corporation and to fix the amount of
profits to be distributed or shared and to determine the persons to
participate in any such plans and the amounts of their respective
participations.
In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon it, the Board of Directors may exercise all such
powers and do all such acts and things as may be exercised or done by the
corporation, subject, nevertheless, to the provisions of the laws of the
State of Delaware, of the Certificates of Incorporation and of the By-Laws
of the corpora-
-14-
<PAGE>
tion.
3. Any director or any officer elected or appointed by the
stockholders or by the Board of Directors may be removed at any time in
such manner as shall be provided in the By-Laws of the corporation.
4. No contract or other transaction between the corporation and any
other corporation and no other act of the corporation shall, in the
absence or fraud, in any way be affected or invalidated by the fact that
any of the directors of the corporation are pecuniarily or otherwise
interested in, or are directors or officers of, such other corporation.
Any director of the corporation individually or any firm or association of
which any director may be a member, may be a party to, or may be
pecuniarily or otherwise interested in, any contract or transaction of the
corporation, provided that the fact that he individually or such firm or
association is so interested shall be disclosed or shall have been known
to the Board of Directors or a majority of such members thereof as shall
be present at any meeting of the Board of Directors at which action upon
any such contract or transaction shall
-15-
<PAGE>
be taken. Any director of the corporation who is also a director or
officer of such other corporation or who is so interested may be counted
in determining the existence of a quorum at any meeting of the Board of
Directors which shall authorize any such contract or transaction, and may
vote thereat to authorize any such contract or transaction, with like
force and effect as if he were not such director or officer of such other
corporation or not so interested. Any director of the corporation may vote
upon any contract or other transaction between the corporation and any
subsidiary or affiliated corporation without regard to the fact that he is
also a director of such subsidiary or affiliated corporation.
Any contract, transaction or act of the corporation or of the
directors, which shall be ratified by a majority of a quorum of the
stockholders of the corporation at any annual meeting, or at any special
meeting called for such purpose, shall, in so far as permitted by law or
by the Certificate of Incorporation of the corporation, be as valid and as
binding as though ratified by every stockholder of the corporation;
provided, however, that any failure of the stockholders to
-16-
<PAGE>
approve or ratify any such contract, transaction or act, when and if
submitted, shall not be deemed in any way to invalidate the same or
deprive the corporation, its directors, officers or employees, of its or
their right to proceed with such contract, transaction or act.
5. Subject to any limitation in the By-Laws, the members of the
Board of Directors shall be entitled to reasonable fees, salaries or other
compensation for their services and to reimbursement for their expenses as
such members. Nothing contained herein shall preclude any director from
serving the corporation, or any subsidiary or affiliated corporation, in
any other capacity and receiving proper compensation therefor.
6. If the By-Laws so provide, the stockholders and the Board of
Directors of the corporation shall have power to hold their meetings, to
have an office or offices and to keep the books of the corporation,
subject to the provisions of the laws of Delaware, outside of said State
at such place or places as may from time to time be designated by them.
TENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class
-17-
<PAGE>
of them and/or between this corporation and its stockholders or any class of
them, any court of equitable jurisdiction within the State of Delaware may, on
the application in a summary way of this corporation or of any creditor or
stockholder thereof, or on the application of any receiver or receivers
appointed for this corporation under the provisions of Section 291 of Title 8 of
the Delaware Code, or on the application of trustees in dissolution or of any
receiver or receivers appointed for this corporation under the provisions of
Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders
of this corporation, as the case may be, to be summoned in such manner as the
said court directs.
If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders of this corporation, as the case
may be, and also on this corporation.
-18-
<PAGE>
ELEVENTH: Fom time to time any of the provisions of this
Certificate of Incorporation may be amended, altered or repealed, and other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the corporation by
this Certificate of Incorporation are granted subject to the provisions of this
Article ELEVENTH.
IN WITNESS WHEREOF, we, the undersigned, being all of the
incorporators hereinabove named, do hereby further certify that the facts
hereinabove stated are truly set forth and accordingly have hereunto set our
respective hands and seals.
Dated at Dover, Delaware
September 17, 1956
/s/ L. R. Boland (L.S.)
--------------------
/s/ N. C. Dunning (L.S.)
--------------------
/s/ Z. A. Pool, III (L.S.)
--------------------
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<PAGE>
STATE OF DELAWARE )
) SS.:
COUNTY OF KENT )
BE IT REMEMBERED that personally appeared before me, F. K. Tuller, a
Notary Public in and for the County and State aforesaid, L. R. Boland, N. C.
Dunning, and Z. A. Pool, III, all the incorporators who signed the foregoing
Certificate of Incorporation, known to me personally to be such, and I having
made known to them and each of them the contents of said Certificate of
Incorporation, they did severally acknowledge the same to be the act and deed of
the signers, respectively, and that the facts therein stated are truly set
forth.
GIVEN under my hand and seal of office this 17th day of September,
A.D. 1956.
/s/ F. K. Tuller
----------------------------------------
Notary Public
[NOTARY SEAL]
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<PAGE>
EXHIBIT 3.02(b)
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 12:01 PM 10/17/1996
960301844 -- 0504228
RESTATED CERTIFICATE OF INCORPORATION
OF
AVIS RENT A CAR SYSTEM, INC.
----------------------------------------------------------
Pursuant to Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware
----------------------------------------------------------
Avis Rent A Car System, Inc., a Delaware corporation (hereinafter the
"Corporation"), does hereby certify as follows;
FIRST: The name of the Corporation is Avis Rent A Car System, Inc. The
original Certificate of Incorporation of the Corporation was filed with the
Secretary of State of the State of Delaware on September 18, 1956 and the name
under which the Corporation was originally incorporated was Avis Rent-A-Car
System, Inc.
SECOND: Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, this Restated Certificate of Incorporation of the
Corporation restates and integrates and further amends the provisions of the
Corporation's Certificate of Incorporation.
THIRD: The entire text of the Corporation's Certificate of Incorporation
as heretofore amended, is hereby amended and restated in its entirety to read as
follows:
FIRST: The name of the Corporation is Avis Rent A Car System, Inc.
(hereinafter the "Corporation"),
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at that address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the
"GCL").
<PAGE>
contained in the GCL) outside the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors or in the By-laws
of the Corporation.
SEVENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
3
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this certificate to be duly
executed in its name this 17th day of October, 1996.
AVIS RENT A CAR SYSTEM, INC.
By /s/ James E. Buckman
---------------------------
Name: James E. Buckman
Title: Vice President
4
<PAGE>
EXHIBIT 3.02(c)
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 11:00 AM 11/25/1996
960344207 -- 0504228
CORRECTED
RESTATED CERTIFICATE OF INCORPORATION
OF
AVIS RENT A CAR SYSTEM, INC.
-----------------------------------------
Pursuant to Section 103(f) of the General
Corporation Law of the State of Delaware
-----------------------------------------
Avis Rent A Car System, Inc., a Delaware corporation incorporated on
September 18, 1956 under the name Avis Rent-A-Car System, Inc. (the
"Corporation"), filed a Restated Certificate of Incorporation, adopted pursuant
to Sections 228, 242 and 245 of the General Corporation Law of the State of
Delaware, on October 17, 1996 which contained a typographical error in the total
number of shares of authorized stock in Article FOURTH. The Restated Articles
are set forth in their corrected form below:
FIRST: The name of the Corporation is Avis Rent A Car System, Inc.
(hereinafter the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at that address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the
"GCL").
FOURTH: The total number of shares of shares of stock which the
Corporation shall have authority to issue is 10,000 shares of Common Stock, each
having a par value of one penny ($0.01).
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation, and of
its directors and stockholders:
<PAGE>
1. The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
2. The directors shall have concurrent power with the stockholders
to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
3. The number of directors of the Corporation shall be as from time
to time fixed by, or in the manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot unless
the By-Laws so provide.
4. No director shall be personally liable to the Corporation or any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the GCL or (iv)
for any transaction from which the director derived an improper personal
benefit. Any repeal or modification of this Article FIFTH by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such
repeal or modification with respect to acts or omissions occurring prior
to such repeal or modification.
5. If the GCL is hereafter amended to authorize the further
elimination or limitation of the liability of a director, then the
liability of a director of the Corporation shall be eliminated or limited
to the fullest extent permitted by the GCL, as so amended.
6. The provisions of this Article FIFTH shall not be deemed to limit
or preclude indemnification of a director by the Corporation for any
liability of a director that has not been eliminated or limited by the
provisions of subsections (4) and (5) of this Article FIFTH.
7. In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby
2
<PAGE>
empowered to exercise all such powers and do all such acts and things as
may he exercised or done by the Corporation, subject, nevertheless, to the
provisions of the GCL, this Certificate of Incorporation, and any By-Laws
adopted by the stockholders; provided, however, that no By-Laws hereafter
adopted by the stockholders shall invalidate any prior act of the
directors which would have been valid if such By-Laws had not been
adopted.
SIXTH: Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the GCL) outside the State of Delaware at
such place or places as may be designated from time to time by the Board of
Directors or in the By-laws of the Corporation.
SEVENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
3
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Corrected Restated
Certificate of Incorporation to be duly executed in its name this 25th day of
November, 1996.
AVIS RENT A CAR SYSTEM, INC.
By /s/ Karen C. Sclafani
---------------------------
Name: Karen C. Sclafani
Title: Assistant Secretary
4
<PAGE>
EXHIBIT 3.02(d)
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 08:10 AM 07/31/1998
981298421 -- 0504228
Certificate of Ownership and Merger
merging
The First Gray Line Corporation
into
Avis Rent A Car System, Inc.
The undersigned, Avis Rent A Car System, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the constituent
corporations of the merger are as follows:
Name State of Incorporation
---- ----------------------
Avis Rent A Car System, Inc.
("Corporation") Delaware
The First Gray Line Corporation
("FGL") Delaware
SECOND: That the Corporation is the holder of one hundred percent (100%)
of the outstanding shares of capital stock of FGL.
THIRD: That the name of the surviving corporation is Avis Rent A Car
System, Inc.
FOURTH: That the Certificate of Incorporation of the Corporation shall be
its Certificate of Incorporation.
FIFTH: That the following resolutions were duly adopted by the Board of
Directors of the Corporation by unanimous written consent dated July 27, 1998:
NOW, THEREFORE BE IT RESOLVED, that the Corporation, as the sole
stockholder of The First Gray Line Corporation (hereinafter "FGL"),
hereby authorizes the merger of FGL into the Corporation (the
"Merger") with the Corporation being the surviving corporation (the
"Surviving Corporation") and that all of the estate, property,
rights, privileges, powers and franchises of FGL be vested in and
held and enjoyed by the Corporation as fully and entirely and
without change or diminution as the same were before held and
enjoyed by FGL; and be it further
<PAGE>
RESOLVED, that the Corporation shall assume all of the obligations
of FGL; and be it further
RESOLVED, that the form of Certificate of Ownership and Merger
presented to this Board whereby FGL would merge into the Corporation
with the Corporation being the Surviving Corporation, be, and the
same hereby is, approved; and be it further
RESOLVED, that the President of the Corporation be, and he hereby
is, directed to execute such Certificate of Ownership and Merger and
cause the same to be filed with the Secretary of State and to do all
acts and things whatsoever, within or without the State of Delaware,
which may be necessary to effect said Merger; and be it further
RESOLVED, that all shares of FGL common stock outstanding
immediately prior to the effective time of the Merger, shall, by
virtue of the Merger, and without any action on the part of the
holders thereof, be extinguished; and be it further
RESOLVED, that the Corporation intends the Merger to be considered a
complete liquidation of FGL under Section 332 of the Internal
Revenue
SIXTH: That this Certificate of Ownership and Merger shall be effective on
the date of filing with the Secretary of State of Delaware.
Dated: July 29, 1998
Avis Rent A Car System, Inc.
By: /s/ F. Robert Salerno
------------------------------
F. Robert Salerno
President
ATTEST:
/s/ Karen C. Sclafani
- -------------------------------
Karen C. Sclafani
Secretary
<PAGE>
EXHIBIT 3.03(a)
CERTIFICATE OF INCORPORATION
OF
AVIS INTERNATIONAL, LTD.
I, the undersigned, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, do hereby certify as follows:
FIRST: The name of the corporation is AVIS INTERNATIONAL, LTD.
(hereinafter called the "Corporation").
SECOND: The address of the Corporation's registered office in New Castle
County is 100 West Tenth Street, Wilmington, Delaware; and its registered agent
at such address is The Corporation Trust Company.
THIRD: The nature of the business and purposes to be conducted or promoted
by the Corporation are to engage in, carry on and conduct any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware; and in addition to, and without limiting the
generality of, the foregoing, the following:
(a) To deal in, sell, operate, let for hire, and lease automobiles,
trucks, trailers, and other vehicles, motorized and non-motorized, of every kind
and nature and
<PAGE>
description, and boats and other means of transportation, and to apply for, or
purchase, or otherwise acquire, and to grant licenses for the use of, and to
sell, assign, or otherwise deal in patents, patent rights, privileges, licenses,
trademarks, trade names, devices and processes of every sort and description,
necessary and incident to these purposes.
(b) To engage in, carry on, conduct, and participate in research,
experimental, manufacturing, assembling, building, designing, erecting, trading,
buying, selling, collecting, distributing, wholesaling, retailing, importing,
exporting, processing, compounding, producing, refining, synthesizing, mining,
extracting, growing, liquidating, dismantling, demolishing, servicing,
promoting, exhibiting and publishing activities, enterprises, ventures and
businesses; and also any activities, enterprises, ventures, and businesses
similar or incidental to any of the foregoing.
(c) To create, acquire, hold and deal in and with, and dispose of,
in any manner, any legal or equitable interest in real property, chattels real
and tangible and intangible personal property of all kinds (whether situated or
located in the State of Delaware or elsewhere); and, without limiting the
generality of the foregoing, to purchase, receive, take (by grant, gift, devise,
bequest or otherwise), own, hold, employ, use, operate, manage, control, sell,
assign, transfer, convey, exchange, lease, mortgage, encumber, construct, alter,
modify, repair, improve and maintain (i) real property
-2-
<PAGE>
whether improved or unimproved, and structures and improvements on real
property, and also leaseholds, (ii) tangible and intangible personal property of
any and every kind, and (iii) any other legal or equitable interests or rights
in any of the foregoing.
(d) To engage in, carry on, conduct and/or participate in any
general or specific branch or phase of the activities, enterprises, or
businesses authorized in this Certificate in the State of Delaware or in any
other state of the United States and in all foreign countries, and in all
territories, possessions, and other places, and in connection with the same, or
any thereof, to be and act either as principal, agent, contractor or otherwise.
(e) To do everything necessary, suitable, convenient or proper for
the accomplishment, attainment or furtherance of, to do every other act or thing
incidental or appurtenant to, growing out of or connected with, the purposes set
forth in this Certificate, whether alone or in association with others; to
possess all the rights, powers and privileges now or hereafter conferred by the
laws of the State of Delaware upon corporations organized under the General
Corporation Law of the State of Delaware (as the same may be amended from time
to time) or any statute which may be enacted to supplement or replace it, and in
general, to carry on any of the activities and to do any of the things herein
set forth to the same extent and as fully as a natural person or a partnership,
-3-
<PAGE>
association, corporation or other entity, or any of them, might or could do;
provided, that nothing herein set forth shall be construed as authorizing the
Corporation to possess any purpose, object, or power, or to do any act or thing;
forbidden by law to a corporation organized under the General Corporation Law of
the State of Delaware.
The foregoing provisions of this Article shall be construed as purposes, objects
and powers, and each as an independent purpose, object and power, in
furtherance, and not in limitation, of the purposes, objects and powers granted
to the Corporation by the laws of the State of Delaware; and, except as
otherwise specifically provided in any such provision, no purpose, object or
power herein set forth shall be in any way limited or restricted by reference
to, or inference from, any other provision of this Certificate.
FOURTH: The total number of shares of which the corporation shall have
authority to issue is One Thousand (1,000) common shares of the par value of One
Dollar ($1.00) per share.
FIFTH: The name and address of the incorporator are as follows:
Name Address
---- -------
Barry R. Shapiro 900 Old Country Road
Garden City, New York 11530
SIXTH: Members of the Board of Directors may be elected either by written
ballot or by voice vote. The
-4-
<PAGE>
Board of Directors may from time to time make, alter or repeal the By-laws of
the Corporation; provided, that any By-laws made, amended or repealed by the
Board of Directors may be amended or repealed, and any By-laws may be made, by
the stockholders of the Corporation.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware, may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 Title 8 of the Delaware
Code order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in number
representing three-fourths (3/4) in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as
-5-
<PAGE>
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
class of creditors, and/or on all the stockholders or class of stockholders, of
this Corporation, as the case may be, and also on this Corporation.
IN WITNESS WHEREOF I have hereunto signed my name and affirm that the
statements made herein are true under the penalties of perjury, this 14th day of
December, 1976.
/s/ Barry R. Shapiro
----------------------------
Barry R. Shapiro
<PAGE>
Exhibit 3.03(b)
CERTIFICATE OF CHANGE OF LOCATION OF
REGISTERED OFFICE AND REGISTERED AGENT
OF
AVIS INTERNATIONAL, LTD.
The undersigned corporation hereby certifies as follows:
FIRST: The name of the corporation is
AVIS INTERNATIONAL, LTD.
SECOND: (a) The address of the present registered office is 100 West 10th
Street, in the City of Wilmington, County of New Castle, State of Delaware.
(b) The address of the new registered office shall be 410 South
State St., in the city of Dover, County of Kent, State of Delaware.
THIRD: (a) The name of the present registered agent is The Corporation
Trust Company.
(b) The name of the new registered agent is United Corporate
Services, Inc.
FOURTH: The aforesaid changes were duly authorized by appropriate
resolutions adopted by the Board of Directors at a meeting thereof.
IN WITNESS WHEREOF, we have hereunto signed our names and affirm that the
statements made herein are true under the penalties of perjury, this 31st day of
October , 1978.
AVIS INTERNATIONAL, LTD.
/s/ David I. Schaffer
--------------------------------------------
David I. Schaffer
Senior Vice President
Attest:
/s/ Barry Shapiro
--------------------------------------------
Barry R. Shapiro, Assistant Secretary
<PAGE>
Exhibit 3.03(c)
FILED
10AM
JUN 17 1983
[ILLEGIBLE]
SECRETARY OF STATE
CERTIFICATE OF CHANGE
OF
REGISTERED AGENT AND REGISTERED OFFICE
OF
AVIS INTERNATIONAL, LTD.
AVIS INTERNATIONAL, LTD., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
The present registered agent of the corporation is UNITED CORPORATE
SERVICES, INC., and the present registered office of the corporation is in the
County of Kent.
The Board of Directors of AVIS INTERNATIONAL, LTD. adopted the following
resolution on the 1st day of June , 1983.
RESOLVED, that the registered office of AVIS INTERNATIONAL LTD. in
the State of Delaware be and it hereby is changed to No. 100 West Tenth
Street, in the City of Wilmington, County of New Castle, and the
authorization of the present registered agent of this corporation be and
the same is hereby withdrawn, and THE CORPORATION TRUST COMPANY, shall be
and is hereby constituted and appointed the registered agent of this
corporation at the address of its registered office.
<PAGE>
IN WITNESS WHEREOF, AVIS INTERNATIONAL, LTD. has caused this statement to
be signed by BARRY R. SHAPIRO, its Vice President, and attested by KENNETH
GOODKIND, its Asst. Secretary, this / day of June , 1993.
By: /s/ Barry R. Shapiro
-------------------------------------
Barry R. Shapiro
Vice President
ATTEST:
By: /s/ Kenneth Goodkind
-----------------------------------
KENNETH GOODKIND
Asst. Secretary
<PAGE>
Exhibit 3.04(a)
CERTIFICATE OF INCORPORATION
OF
AVIS MANAGEMENT SERVICES, LTD.
FIRST. The name of the corporation is
AVIS MANAGEMENT SERVICES, LTD.
SECOND. Its principal office in the State of Delaware is located at No.
100 West Tenth Street, in the City of Wilmington, County of New Castle. The name
and address of its resident agent is The Corporation Trust Company, No. 100 West
Tenth Street, Wilmington 99, Delaware.
THIRD. The nature of the business, or objects or purposes to be
transacted, promoted or carried on are:
To operate a system or plan for conducting the business of renting and
leasing automobiles, trucks and other vehicles, and in connection therewith to
authorize and aid others to conduct such business under such name or
combinations of name as may be determined, and in connection therewith to grant
or enter into agreements, leases, franchises or other arrangements, which need
not be uniform, and to conduct all activities in connection with such business
as shall be necessary, desirable or incidental thereto.
<PAGE>
To buy, sell, rent, lease, operate, repair and otherwise deal in
automobiles, trucks and other vehicles; to conduct the business of renting and
leasing automobiles, trucks and other vehicles with or without drivers, either
under any plan or system established by this corporation or otherwise; to
conduct a general garage business; to buy, sell and otherwise deal in parts,
accessories and supplies of and for automobiles, trucks and other vehicles.
To manage, operate, supervise and conduct on behalf of others, businesses
engaged in renting and leasing automobiles, trucks and other vehicles, both
within the United States of America and in foreign countries.
To devise, develop, contract for, manage, consult, and advise on
advertising and sales promotion campaigns, programs and activities in connection
with the business of renting and leasing automobiles, trucks and other vehicles.
To do all things necessary to the business of advising, managing,
consulting and operating businesses of renting and leasing automobiles, trucks
and other vehicles on behalf of others whether corporations, associations,
partnerships and individuals.
To act as public relations and research counsellors and promotion,
merchandising and industrial counsellors and business consultants, and in
connection therewith to render management, negotiation, research, technical and
advisory services to persons, firms, corporations and others in connection with
their relations with employees, associates, stockholders, governmental officials
and agencies, and the general public and any person or special group.
<PAGE>
To serve in an advisory, managerial and consultantive capacity to
corporations, associations, partnerships, individuals and others, and to
establish and maintain bureaus, departments and laboratories for industrial,
financial, statistical, inventory and other research work, and to engage
generally in the business of providing, promoting and establishing systems,
methods and controls for industrial and managerial efficiency and operations.
To investigate systems, methods and controls of manufacturing, plant
operations, packing, storing, shipping, marketing, inventories, accounting and
other integral operations to any and all types of businesses and to make
recommendations, revise, adapt, modernize and establish economies to effect
industrial and managerial efficiency and in connection therewith to take over
the entire operation and business of any type of industry or other forms of
endeavor and to do all such things and to perform all such services as may be
necessary to carry out the foregoing purposes.
To devise, develop, create, inaugurate and contract for the establishment,
installation and sale and rental of systems, methods and controls for efficient
operation and management of industrial manufacturing, mercantile, commercial or
other business concerns, firms, partnerships, associations and corporations and
to provide, make available and furnish maintenance and supervision, and to train
and instruct individuals in the operation, installation and maintenance of such
systems, methods and controls.
So far as authorized by the law under which this certificate is drawn; to
examine and inspect the books and accounts of others, to devise and install
financial, checking
<PAGE>
correspondence, filing and other office and business systems; to take
inventories; make appraisals; to compile statistics as an aid to the officers of
the corporation and other persons in the making of reports and statements; to do
all such things and perform or supply all such services as are commonly done,
performed or supplies by business management experts; to warrant the accuracy of
the work done or services performed by it, but not to engage in the practice of
accounting
To manufacture, purchase or otherwise acquire, invest in, own, mortgage,
pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and
deal with goods, wares and merchandise and personal property of every class and
description,
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trade-marks and trade names, relating to
or useful in connection with any business of this corporation.
To acquire by purchase, subscription or otherwise, and to receive, hold,
own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise
dispose of or deal
<PAGE>
in and with any of the shares of the capital stock, or any voting trust
certificates in respect of the shares of capital stock, scrip, warrants, rights,
bonds, debentures, notes, trust receipts, and other securities, obligations,
choses in action and evidences of indebtedness or interest issued or created by
any corporations, joint stock companies, syndicates, associations, firms, trusts
or persons, public or private, or by the government of the United States of
America, or by any foreign government, or by any state, territory, province,
municipality or other political subdivision or by any governmental agency, and
as owner thereof to possess and exercise all the rights, powers and privileges
of ownership, including the right to execute consents and vote thereon, and to
do any and all acts and things necessary or advisable for the preservation,
protection, improvement and enhancement in value thereof.
To enter into, make and perform contracts of every kind and description
with any person, firm, association, corporation, municipality, county, state,
body politic or government or colony or dependency thereof.
To borrow or raise moneys for any of the purposes of the corporation and,
from time to time without limit as to amount, to draw, make, accept, endorse,
execute and issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment of any thereof and of the interest
thereon by mortgage upon or pledge, conveyance or assignment in trust of the
whole or any part of the property of the corporation, whether at the time owned
or thereafter acquired, and to sell,
<PAGE>
pledge or otherwise dispose of such bonds or other obligations of the
corporation for its corporate purposes.
To loan to any person, firm or corporation any of its surplus funds,
either with or without security.
To purchase, hold, sell and transfer the shares of its own capital stock;
provided it shall not use its funds or property for the purchase of its own
shares of capital stock when such use would cause any impairment of its capital
except as otherwise permitted by law, and provided further that shares of its
own capital stock belonging to it shall not be voted upon directly or
indirectly.
To have one or more offices, to carry on all or any of its operations and
business and without restriction or limit as to amount to purchase or otherwise
acquire, hold, own, mortgage, sell, convey or otherwise dispose of, real and
personal property of every class and description in any of the states,
districts, territories or colonies of the United States, and in any and all
foreign countries, subject to the laws of such state, district, territory,
colony or country.
In general, to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by the laws of
Delaware upon corporations formed under the General Corporation Law of the State
of Delaware, and to do any or all of the things hereinbefore set forth to the
same extent as natural persons might or could do.
The objects and purposes specified in the foregoing clauses shall, except
where otherwise expressed, be
<PAGE>
in nowise limited or restricted by reference to, or inference from, the terms of
any other clause in this certificate of incorporation, but the objects and
purposes specified in each of the foregoing clauses of this article shall be
regarded as independent objects and purposes.
FOURTH. The total number of shares of stock which the corporation shall
have authority to issue is two thousand (2,000) all of such shares shall be
without par value.
FIFTH. The minimum amount of capital with which the corporation will
commence business is One Thousand Dollars ($1,000.00).
SIXTH. The names and places of residence of the incorporators are as
follows:
NAMES RESIDENCES
----- ----------
S. H. Livesay Wilmington, Delaware
F. J. Obara, Jr. Wilmington, Delaware
A. D. Grier Wilmington, Delaware
SEVENTH. The corporation is to have perpetual existence.
EIGHTH. The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
<PAGE>
NINTH. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By resolution passed by a majority of the whole board, to designate one or
more committees, each committee to consist of two or more of the directors of
the corporation, which, to the extent provided in the resolution or in the
by-laws of the corporation, shall have and may exercise the powers of the board
of directors in the management of the business and affairs of the corporation,
and may authorize the seal of the corporation to be affixed to all papers which
may require it. Such committee or committees shall have such name or names as
may be stated in the by-laws of the corporation or as may be determined from
time to time by resolution adopted by the board of directors.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called for that purpose, or when authorized by the
written consent of the holders of a majority of the voting stock issued and
outstanding, to sell, lease or exchange all
<PAGE>
of the property and assets of the corporation, including its good will and its
corporate franchises, upon such terms and conditions and for such consideration,
which may be in whole or in part shares of stock in, and/or other securities of,
any other corporation or corporations, as its board of directors shall deem
expedient and for the best interests of the corporation.
TENTH. The corporation shall indemnify any and all of its directors or
officers or former directors or officers or any person who may have served at
its request as a director or officer of another corporation in which it owns
shares of capital stock or of which it is a creditor against expenses actually
and necessarily incurred by them in connection with the defense of any action,
suit or proceeding in which they, or any of them, are made parties, or a party,
by reason of being or having been directors or officers or a director or officer
of the corporation, or of such other corporation, except in relation to matters
as to which any such director or officer or former director or officer or person
shall be adjudged in such action, suit or proceeding to be liable for negligence
or misconduct in the performance of duty. Such indemnification shall not be
deemed exclusive of any other rights to which those indemnified may be entitled,
under any by-law, agreement, vote of stockholders, or otherwise.
ELEVENTH, Meetings of stockholders may be held outside the State of
Delaware, if the by-laws so provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from
<PAGE>
time to time by the board of directors or in the by-laws of the corporation.
Elections of directors need not be by ballot unless the by-laws of the
corporation shall so provide.
TWELFTH. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate, hereby declaring and
certifying that the facts herein stated are true, and accordingly have hereunto
set our hands and seals this
22nd day of July A.D. 1965.
/s/ S. H. Livesay (SEAL)
--------------------------------
/s/ F. J. Obara, Jr. (SEAL)
--------------------------------
/s/ A. D. Grier (SEAL)
--------------------------------
<PAGE>
Ex 3.04(b)
CERTIFICATE OF CHANGE OF LOCATION OF
REGISTERED OFFICE AND REGISTERED AGENT
OF
AVIS MANAGEMENT SERVICES, LTD.
The undersigned corporation hereby certifies as follows:
FIRST: The name of the corporation is
AVIS MANAGEMENT SERVICES, LTD.
SECOND: (a) The address of the present registered office is 100 West
10th Street, in the City of Wilmington, County of New Castle, State of Delaware.
(b) The address of the new registered office shall be 410
South State St., in the City of Dover, County of Kent, State of Delaware.
THIRD: (a) The name of the present registered agent is The
Corporation Trust Company.
(b) The name of the new registered agent is United Corporate
Services, Inc.
FOURTH: The aforesaid changes were duly authorized by appropriate
resolutions adopted by the Board of Directors at a meeting thereof.
IN WITNESS WHEREOF, we have hereunto signed our names and affirm
that the statements made herein are true under the penalties of perjury, this
31st day of October, 1978.
AVIS MANAGEMENT SERVICES, LTD.
/s/ John R. Marshall, Jr.
-----------------------------------------
John R. Marshall, Jr.,
Senior Vice President
Attest: /s/ David I. Schaffer
-----------------------------------------
David I. Schaffer, Secretary
<PAGE>
STATE OF DELAWARE )
) ss:
COUNTY OF NEW CASTLE )
BE IT REMEMBERED that on this 22nd day of July A.D. 1965, personally
came before me, a Notary Public for the State of Delaware, S. H. Livesay, F. J.
Obara, Jr., and A. D. Grier, all of the parties to the foregoing certificate of
incorporation, known to me personally to be such, and severally acknowledged the
said certificate to be the act and deed of the signers respectively and that the
facts therein stated are truly set forth.
GIVEN under my hand and seal of office the day and year aforesaid.
/s/ [ILLEGIBLE]
-----------------------------------------
Notary Public
[SEAL]
<PAGE>
Ex 3.04(c)
FILED
JUN 17 1983 10 AM
/s/ [ILLEGIBLE]
SECRETARY OF STATE
CERTIFICATE OF CHANGE
OF
REGISTERED AGENT AND REGISTERED OFFICE
OF
AVIS MANAGEMENT SERVICES, LTD.
* * * * *
AVIS MANAGEMENT SERVICES, LTD., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
The present registered agent of the corporation is UNITED CORPORATE
SERVICES, INC., and the present registered office of the corporation is in the
County of Kent.
The Board of Directors of AVIS MANAGEMENT SERVICES, LTD. adopted
the following resolution on the 1 day of June 1983.
RESOLVED, that the registered office of AVIS MANAGEMENT SERVICES,
LTD. in the State of Delaware be and it hereby is changed to No. 100 West
Tenth Street, in the City of Wilmington, County of New Castle, and the
authorization of the present registered agent of this corporation be and
the same is hereby withdrawn, and THE CORPORATION TRUST COMPANY, shall be
and is hereby constituted and appointed the registered agent of this
corporation at the address of its registered office.
<PAGE>
IN WITNESS WHEREOF, AVIS MANAGEMENT SERVICES, LTD. has caused this
statement to be signed by BARRY R. SHAPIRO, its Vice President, and attested by
KENNETH GOODKIND its Asst Secretary, this 1 day of JUNE, 1983.
By /s/ Barry R. Shapiro
----------------------------------
Vice President
BARRY R. SHAPIRO
ATTEST:
By /s/ Kenneth Goodkind
---------------------------------
Asst Secretary
KENNETH GOODKIND
<PAGE>
Ex 3.05
FILED
FEB 5 1987 10 AM
/s/ [ILLEGIBLE]
SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
of
AVIS CARIBBEAN, LIMITED
FIRST: The name of the corporation is AVIS CARIBBEAN, LIMITED.
SECOND: The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
is:
To deal in, sell, operate, let for hire, and lease automobiles, trucks,
trailers, and other vehicles, motorized and non-motorized, of every kind and
nature and description, and boats and other means of transportation.
To engage in, carry on, conduct and/or participate in any general or
specific branch or phase of the activities, enterprises, or businesses
authorized in this Certificate in the State of Delaware or in any other state of
the United States and in all foreign countries, and in all territories,
possessions, and other places, and in connection with the same, or any thereof,
to be and act either as principal, agent, contractor or otherwise.
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
To manufacture, purchase or otherwise acquire, invest in, own, mortgage,
pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and
with goods, wares and merchandise and personal property of every class and
description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
<PAGE>
To acquire, hold, use, sell, assign, lease, grant Licenses in respect of,
mortgage or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trademarks and trade names, relating to
or useful in connection with any business of this corporation.
To acquire by purchase, subscription or otherwise, and to receive, hold,
own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise
dispose of or deal in and with any of the shares of the capital stock, or any
voting trust certificates in respect of the shares of capital stock, scrip,
warrants, rights, bonds, debentures, notes, trust receipts, and other
securities, obligations, choses in action and evidences of indebtedness or
interest issued or created by any corporations, joint stock companies,
syndicates, associations, firms, trust or persons, public or private, within or
without the United States of America or by the government of the United States
of America, or by any foreign government, or by any state, territory, province,
municipality or other political subdivision or by any governmental agency, and
as owner thereof to possess and exercise all the rights, powers and privileges
of ownership, including the right to execute consents and vote thereon, and to
do any and all acts and things necessary or advisable for the preservation,
protection, improvement and enhancement in value thereof.
To borrow or raise money for any of the purposes of the corporation and,
from time to time without limit as to amount, to draw, make, accept, endorse,
execute and issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment of any thereof and of the interest
thereon by mortgage upon or pledge, conveyance or assignment in trust of the
whole or any part of the property of the corporation, whether at the time owned
or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds
or other obligations of the corporation for its corporate purposes.
To purchase, receive, take by grant, gift, devise, bequest or otherwise,
lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal
in and with real or personal property, or any interest therein, wherever
situated, and to sell, convey, lease, exchange, transfer or otherwise dispose
of, or mortgage or pledge, all or any of the corporation's property and assets,
or any interest therein, wherever situated.
In general, to possess and exercise all the powers and privileges granted
by the General Corporation Law of Delaware or by any other law of Delaware or by
this Certificate of
-2-
<PAGE>
Incorporation together with any powers incidental thereto, so far as such powers
and privileges are necessary or convenient to the conduct, promotion or
attainment of the business or purposes of the corporation.
The business and purposes specified in the foregoing clauses shall, except
where otherwise expressed, be in no way limited or restricted by reference to,
or inference from, the terms of any other clause in this certificate of
incorporation, but the business and purposes specified in each of the foregoing
clauses of this article shall be regarded as independent business and purposes.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is One Thousand (1,000); all of such shares shall be
without par value.
FIFTH: The name and mailing address of the incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
Dennis Roth 20 Lawrence Court
Syosset, New York 11791
The name and mailing address of each person, who is to serve as a director
until the first annual meeting of the stockholders or until a successor is
elected and qualified, is as follows:
NAME MAILING ADDRESS
---- ---------------
Joseph V. Vittoria 11 Meadow Drive
Greenwich, CT 06830
Jose Sanz 101 Brookside Drive
Greenwich, CT 06830
Michael P. Collins 3 Great Neck Court
Huntington, NY 11743
Marceliano Calvo 1868 San Alvaro Street
San Juan Gardens
Rio Piedras, PR 00936
SIXTH: The corporation is to have perpetual existence.
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
-3-
<PAGE>
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. Any such committee, to the extent provided in the resolution of
the board of directors, or in the by-laws of the corporation, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it;
provided, however, the by-laws may provide that in the absence or
disqualification of any member of such committee or committees, the member or
members thereof, present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of any such
absent or disqualified member.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called upon such notice as is required by statute, or
when authorized by the written consent of the holders of a majority of the
voting stock issued and outstanding, to sell, lease or exchange all or
substantially all of the property and assets of the corporation, including its
good will and its corporate franchises, upon such terms and conditions and for
such consideration, which may consist in whole or in part of money or property
including shares of stock in, and/or other securities of, any other corporate or
corporations, as its board of directors shall deem expedient and for the best
interests of the corporation.
EIGHTH: Elections of directors need not be by written ballot unless the
by-laws of the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in
-4-
<PAGE>
the statutes) outside the State of Delaware at such place or places as may be
designated from time to time by the board of directors or in the by-laws of the
corporation.
NINTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
TENTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 3rd day of February, 1987.
/s/ Dennis Roth
----------------------------------
Dennis Roth
Incorporator
-5-
<PAGE>
Ex 3.06
FILED
MAR 26 1987 10 AM
/s/ [ILLEGIBLE]
SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
of
AVIS ASIA AND PACIFIC, LIMITED
FIRST: The name of the corporation is AVIS ASIA AND PACIFIC, LIMITED.
SECOND: The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
is:
To deal in, sell, operate, let for hire, and lease automobiles, trucks,
trailers, and other vehicles, motorized and non-motorized, of every kind and
nature and description, and boats and other means of transportation.
To engage in, carry on, conduct and/or participate in any general or
specific branch or phase of the activities, enterprises, or businesses
authorized in this Certificte in the State of Delaware or in any other state of
the United States and in all foreign countries, and in all territories,
possessions, and other places, and in connection with the same, or any thereof,
to be and act either as principal, agent, contractor or otherwise.
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
To manufacture, purchase or otherwise acquire, invest in, own, mortgage,
pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and
with goods, wares and merchandise and personal property of every class and
description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
<PAGE>
To acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trademarks and trade names, relating to
or useful in connection with any business of this corporation.
To acquire by purchase, subscription or otherwise, and to receive, hold,
own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise
dispose of or deal in and with any of the shares of the capital stock, or any
voting trust certificates in respect of the shares of capital stock, scrip,
warrants, rights, bonds, debentures, notes, trust receipts, and other
securities, obligations, choses in action and evidences of indebtedness or
interest issued or created by any corporations, joint stock companies,
syndicates, associations, firms, trust or persons, public or private, within or
without the United States of America or by the government of the United States
of America, or by any foreign government, or by any state, territory, province,
municipality or other political subdivision or by any governmental Agency, and
as owner thereof to possess and exercise all the rights, powers and privileges
of ownership, including the right to execute consents and vote thereon, and to
do any and all acts and things necessary or advisable for the preservation,
protection, improvement and enhancement in value thereof.
To borrow or raise money for any of the purposes of the corporation and,
from time to time without limit as to amount, to draw, make, accept, endorse,
execute and issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment of any thereof and of the interest
thereon by mortgage upon or pledge, conveyance or assignment in trust of the
whole or any part of the property of the corporation, whether at the time owned
or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds
or other obligations of the corporation for its corporate purposes.
To purchase, receive, take by grant, gift, devise, bequest or otherwise,
lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal
in and with real or personal property, or any interest therein, wherever
situated, and to sell, convey, lease, exchange, transfer or otherwise dispose
of, or mortgage or pledge, all or any of the corporation's property and assets,
or any interest therein, wherever situated.
In general, to possess and exercise all the powers and privileges granted
by the General Corporation Law of Delaware or by and other law of Delaware or by
this Certificate of
-2-
<PAGE>
Incorporation together with any powers incidental thereto, so far as such powers
and privileges are necessary or convenient to the conduct, promotion or
attainment of the business or purposes of the corporation.
The business and purposes specified in the foregoing clauses shall, except
where otherwise expressed, be in no way limited or restricted by reference to,
or inference from, the terms of any other clause in this certificate of
incorporation, but the business and purposes specified in each of the foregoing
clauses of this article shall be regarded as independent business and purposes.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is One Thousand (1,000); all of such shares shall be
without par value.
FIFTH: The name and nailing address of the incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
Dennis Roth 20 Lawrence Court
Syosset, New York 11791
The name and mailing address of each person, who is to serve as a director
until the first annual meeting of the stockholders or until a successor is
elected and qualified, is as follows:
NAME MAILING ADDRESS
---- ---------------
Joseph V. Vittoria 11 Meadow Drive
Greenwich, CT 06830
Jose Sanz 101 Brookside Drive
Greenwich, CT 06830
Michael P. Collins 3 Great Neck Court
Huntington, NY 11743
Gordon Bowlett 6, Alican Street
Roseville, N.S.W.
Australia
SIXTH: The corporation is to have perpetual existence.
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
-3-
<PAGE>
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors at the corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. Any such committee, to the extent provided in the resolution of
the board of directors, or in the by-laws of the corporation, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it;
provided, however, the by-laws may provide that in the absence or
disqualification of any member of such committee or committees, the member or
members thereof, present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of any such
absent or disqualified member.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called upon such notice as is required by statute, or
when authorized by the written consent of the holders of a majority of the
voting stock issued and outstanding, to sell, lease or exchange all or
substantially all of the property and assets of the corporation, including its
good will and its corporate franchises, upon such terms and conditions and for
such consideration, which may consist in whole or in part of money or property
including shares of stock in, and/or other securities of, any other corporate or
corporations, as its board of directors shall deem expedient and for the best
interests of the corporation.
EIGHTH: Elections of directors need not be by written ballot unless the
by-laws of the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in
-4-
<PAGE>
the Statutes) outside the State of Delaware at such place or places as may be
designated from time to time by the board of directors or in the by-laws of the
corporation.
NINTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
TENTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or herafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 25th day of March, 1987.
/s/ Dennis Roth
-----------------------------
Dennis Roth
Incorporator
-5-
<PAGE>
Ex 3.07(a)
FILED
OCT 15 1982 10 AM
/s/ [ILLEGIBLE]
SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
OF
ALC TRUCK CORPORATION
1. The name of the corporation is:
ALC TRUCK CORPORATION
2. The address of its registered office in the State of Delaware is
100 West Tenth Street in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall
have authority to issue is One Thousand (1,000) and the par value of each of
such shares is One Dollar ($1.00) amounting in the aggregate to One Thousand
Dollars ($1,000.00).
5. The board of directors is authorized to make, alter or repeal the
by-laws of the corporation. Election of directors need not be by ballot.
6. The name and mailing address of the incorporator is:
L. M. Custis
100 West Tenth Street
Wilmington, Delaware 19801
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
Delaware, do make this certificate, hereby declaring and certifying that this is
my act and deed and the facts herein stated are true, and accordingly have
hereunto set my hand this 15th day of October, 1982.
/s/ L. M. Custis
----------------------------
L. M. Custis
<PAGE>
Ex 3.07(b)
12:30 PM
FILED
DEC 21 1982
/s/ [ILLEGIBLE]
SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ALC TRUCK CORPORATION
ALC TRUCK CORPORATION [ILLEGIBLE] and existing under and by virtue
[ILLEGIBLE] Law of the State of Delaware, DOES [ILLEGIBLE]
FIRST: That the Board of Directors of said corporation, by the
unanimous written consent of its members, filed with the minutes of the board,
adopted a resolution proposing and declaring advisable the following amendment
to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of ALC TRUCK
CORPORATION be amended by changing the first Article thereof so that, as
amended, said Article shall be and read as follows:
"1. The name of the corporation is
AVIS LEASING CORPORATION"
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given unanimous written consent to said amendment in
accordance with the provisions of Section 228 of the General Corporation Law of
the State of Delaware.
<PAGE>
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Sections 242 and 228 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said ALC TRUCK CORPORATION has caused this
Certificate to be signed by Robert P. Stelben its Vice President, and attested
by Arlene Marovitz its Asst. Secretary, this 21st day of December, 1982.
ALC TRUCK CORPORATION
By /s/ Robert P. Stelben
---------------------------------
Vice President
[SEAL]
ATTEST:
By /s/ Arlene Marovitz
-------------------------------
Assistant Secretary
<PAGE>
Ex 3.07(c)
FILED
OCT 6 1986 12:45 PM
/s/ [ILLEGIBLE]
SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AVIS LEASING CORPORATION
* * *
Avis Leasing Corporation, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: That the members of the Board of Directors of the Corporation, by
telephone conference, filed with the minutes of the Board of Directors, adopted
a resolution proposing and declaring advisable the following amendment to the
Certificate of Incorporation of the Corporation.
RESOLVED, that the Certificate of Incorporation of the Corporation be
amended by changing the first Article thereof so that, as amended, said Article
shall be and read as follows:
"1. The name of the Corporation is Avis
Enterprises, Inc."
SECOND: That the sole stockholder of the Corporation, by written consent,
has consented to said amendment in accordance with the provisions of Section 228
of the General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 141, 228 and 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Avis Leasing Corporation has caused its corporate
seal to be affixed and this Certificate to be signed by the officers whose
respective names and offices appear below, this 30th day of September, 1986.
AVIS LEASING CORPORATION
By: /s/ [ILLEGIBLE]
-------------------------------
Title: Vice President
[SEAL]
By: /s/ Karen C. Sclafani
-----------------------------
Title: Assistant Secretary
<PAGE>
Exhibit 3.08
CERTIFICATE OF INCORPORATION
FILED
of MAY 15 1986
10AM
/s/ [ILLEGIBLE]
AVIS SERVICE, INC. SECRETARY OF STATE
FIRST: The name of the corporation is AVIS SERVICE, INC.
SECOND: The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
is:
To operate, and to sell franchises for the operation of, Avis Lube service
centers specializing in providing the public with quick-service motor vehicle
maintenance services including, among other things, lubrication, oil changes,
oil and air filter replacements, a maintenance check and replacement of
steering, brake, transmission, battery and windshield washer fluids.
To engage in any other business which will provide automotive maintenance
services to the public.
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
To manufacture, purchase or otherwise acquire, invest in, own, mortgage,
pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and
deal with goods, wares and merchandise and personal property of every class and
description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trademarks and trade names, relating to
or useful in connection with any business of this corporation.
<PAGE>
To acquire by purchase, subscription or otherwise, and to receive, hold,
own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise
dispose of or deal in and with any of the shares of the capital stock, or any
voting trust certificates in respect of the shares of capital stock, scrip,
warrants, rights, bonds, debentures, notes, trust receipts, and other
securities, obligations, choses in action and evidences of indebtedness or
interest issued or created by any corporations, joint stock companies,
syndicates, associations, firms, trust or persons, public or private, or by the
government of the United States of America, or by any foreign government, or by
any state, territory, province, municipality or other political subdivision or
by any governmental agency, and as owner thereof to possess and exercise all the
rights, powers and privileges of ownership, including the right to execute
consents and vote thereon, and to do any and all acts and things necessary or
advisable for the preservation, protection, improvement and enhancement in value
thereof.
To borrow or raise money for any of the purposes of the corporation and,
from time to time without limit as to amount, to draw, make, accept, endorse,
execute and issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment of any thereof and of the interest
thereon by mortgage upon or pledge, conveyance or assignment in trust of the
whole or any part of the property of the corporation, whether at the time owned
or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds
or other obligations of the corporation for its corporate purposes.
To purchase, receive, take by grant, gift, devise, bequest or otherwise,
lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal
in and with real or personal property, or any interest therein, wherever
situated, and to sell, convey, lease, exchange, transfer or otherwise dispose
of, or mortgage or pledge, all or any of the corporation's property and assets,
or any interest therein, wherever situated.
In general, to possess and exercise all the powers and privileges granted
by the General Corporation Law of Delaware or by any other law of Delaware or by
this Certificate of Incorporation together with any powers incidental thereto,
so far as such powers and privileges are necessary or convenient to the conduct,
promotion or attainment of the business or purposes of the corporation.
<PAGE>
The business and purposes specified in the foregoing clauses shall, except
where otherwise expressed, be in no way limited or restricted by reference to,
or inference from, the terms of any other clause in this certificate of
incorporation, but the business and purposes specified in each of the foregoing
clauses of this article shall be regarded as independent business and purposes.
FOURTH: The total number of shares of stock which the corporation shall
have the authority to issue is One Thousand (1,000); all of such shares shall be
without par value.
FIFTH: The name and mailing address of the incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
Karen C. Sclafani 14 Oak Point Drive North
Bayville, New York 11709
The name and mailing address of each person, who is to serve as a director
until the first annual meeting of the stockholders or until a successor is
elected and qualified, is as follows:
NAME MAILING ADDRESS
---- ---------------
Joseph V. Vittoria 11 Meadow Drive
Greenwich, Connecticut 06803
Charles A. Bovino 102 Castle Ridge Road
Manhasset, New York 11030
Vincent A. Russo 104 Hillcrest Road
New Canaan, Connecticut 06840
SIXTH: The corporation is to have perpetual existence.
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.
<PAGE>
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. Any such committee, to the extent provided in the resolution of
the board of directors, or in the by-laws of the corporation, shall have and
may exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it;
provided, however, the by-laws may provide that in the absence or
disqualification of any member of such committee or committees, the member or
members thereof, present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of any such
absent or disqualified member.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called upon such notice as is required by statute, or
when authorized by the written consent of the holders of a majority of the
voting stock issued and outstanding, to sell, lease or exchange all or
substantially all of the property and assets of the corporation, including its
good will and its corporate franchises, upon such terms and conditions and for
such consideration, which may consist in whole or in part of money or property
including shares of stock in, and/or other securities of, any other corporate
or corporations, as its board of directors shall deem expedient and for the best
interests of the corporation.
EIGHTH: Elections of directors need not be by written ballot unless the
by-laws of the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation.
<PAGE>
NINTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
TENTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 9th day of May, 1986.
/s/ Karen C. Sclafani
----------------------------------------
Karen C. Sclafani
Incorporator
<PAGE>
Exhibit 3.09
FILED
CERTIFICATE OF INCORPORATION JUN 12 1966
10 AM
of /s/ [ILLEGIBLE]
SECRETARY OF STATE
AVIS LUBE, INC.
FIRST: The name of the corporation is AVIS LUBE, INC.
SECOND: The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
is:
To operate Avis Lube fast oil change centers specializing in providing the
public with quick-service motor vehicle maintenance services including, among
other things, lubrication, oil changes, oil and air filter replacements, a
maintenance check and replacement of steering, brake, transmission, battery and
windshield washer fluids.
To engage in any other business which will provide automotive maintenance
services to the public.
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
To manufacture, purchase or otherwise acquire, invest in, own, mortgage,
pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and
with goods, wares and merchandise and personal property of every class and
description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses or liabilities
of any person, firm, association or in respect of, mortgage or otherwise dispose
of letters patent of the United States or any foreign country, patent rights,
licenses and privileges, inventions, improvements and processes,
<PAGE>
copyrights, trademarks and trade names, relating to or useful in connection with
any business of this corporation.
To acquire by purchase, subscription or otherwise, and to receive, hold,
own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise
dispose of or deal in and with any of the shares of the capital stock, or any
voting trust certificates in respect of the shares of capital stock, scrip,
warrants, rights, bonds, debentures, notes, trust receipts, and other
securities, obligations, choses in action and evidences of indebtedness or
interest issued or created by any corporations, joint stock companies,
syndicates, associations, firms, trust or persons, public or private, or by the
government of the United States of America, or by any foreign government, or by
any state, territory, province, municipality or other political subdivision or
by any governmental agency, and as owner thereof to possess and exercise all the
rights, powers and privileges of ownership, including the right to execute
consents and vote thereon, and to do any and all acts and things necessary or
advisable for the preservation, protection, improvement and enhancement in value
thereof.
To borrow or raise money for any of the purposes of the corporation and,
from time to time without limit as to amount, to draw, make, accept, endorse,
execute and issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment of any thereof and of the interest
thereon by mortgage upon or pledge, conveyance or assignment in trust of the
whole or any part of the property of the corporation, whether at the time owned
or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds
or other obligations of the corporation for its corporate purposes.
To purchase, receive, take by grant, gift, devise, bequest or otherwise,
lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal
in and with real or personal property, or any interest therein, wherever
situated, and to sell, convey, lease, exchange, transfer or otherwise dispose
of, or mortgage or pledge, all or any of the corporation's property and assets,
or any interest therein, wherever situated.
In general, to possess and exercise all the powers and privileges granted
by the General Corporation Law of Delaware or by any other law of Delaware or by
this Certificate of Incorporation together with any powers incidental thereto,
so far as such powers and privileges are necessary or convenient to the conduct,
promotion or attainment of the business or purposes of the corporation.
-2-
<PAGE>
The business and purposes specified in the foregoing clauses shall, except
where otherwise expressed, be in no way limited or restricted by reference to,
or inference from, the terms of any other clause in this certificate of
incorporation, but the business and purposes specified in each of the foregoing
clauses of this article shall be regarded as independent business and purposes.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is One Thousand (1,000); all of such shares shall be
without par value.
FIFTH: The name and mailing address of the incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
Karen C. Sclafani 14 Oak Point Drive North
Bayville, New York 11709
The name and mailing address of each person, who is to serve as a director
until the first annual meeting of the stockholders or until a successor is
elected and qualified, is as follows:
NAME MAILING ADDRESS
---- ---------------
Joseph V. Vittoria 11 Meadow Drive
Greenwich, Connecticut 06803
Charles A. Bovino 102 Castle Ridge Road
Manhasset, New York 11030
Vincent A. Russo 104 Hillcrest Road
New Canaan, Connecticut 06840
SIXTH: The corporation is to have perpetual existence.
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
-3-
<PAGE>
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. Any such committee, to the extent provided in the resolution of
the board of directors, or in the by-laws of the corporation, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it;
provided, however, the by-laws may provide that in the absence or
disqualification of any member of such committee or committees, the member or
members thereof, present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of any such
absent or disqualified member.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called upon such notice as is required by statute, or
when authorized by the written consent of the holders of a majority of the
voting stock issued and outstanding, to sell, lease or exchange all or
substantially all of the property and assets of the corporation, including its
good will and its corporate franchises, upon such terms and conditions and for
such consideration, which may consist in whole or in part of money or property
including shares of stock in, and/or other securities of, any other corporate or
corporations, as its board of directors shall deem expedient and for the best
interests of the corporation.
EIGHTH: Elections of directors need not be by written ballot unless the
by-laws of the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation.
NINTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this
-4-
<PAGE>
corporation under the provisions of Section 291 of Title 8 of the Delaware Code
or on the application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of Section 279 of Title 8 of
the Delaware Code order a meeting of the creditors or class of creditors, and/or
of the stockholders or class of stockholders of this corporation, as the case
may be, to be summoned in such manner as the said court directs. If a majority
in number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
TENTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the Incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 10th day of June, 1986.
/s/ Karen C. Sclafani
----------------------------------------
Karen C. Sclafani
Incorporator
-5-
<PAGE>
Exhibit 3.10
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 12:11 PM 11/15/1991
913195124 - 2279136
CERTIFICATE OF INCORPORATION
of
AVIS LEASING CORPORATION
FIRST: The name of the corporation is AVIS LEASING CORPORATION.
SECOND: The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
is:
To purchase, sell, own, rent, lease, service and repair any and all types
of equipment.
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
To manufacture, purchase or otherwise acquire, invest in, own, mortgage,
pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and
with goods, wares and merchandise and personal property of every class and
description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trademarks and trade names, relating to
or useful in connection with any business of this corporation.
To acquire by purchase, subscription or otherwise, and to receive, hold,
own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise
dispose of or deal in and with any of the shares of the capital stock, or any
voting trust certificates in respect of the shares of capital stock, scrip,
<PAGE>
warrants, rights, bonds, debentures, notes, trust receipts, and other
securities, obligations, choses in action and evidences of indebtedness or
interest issued or created by any corporations, joint stock companies,
syndicates, associations, firms, trust or persons, public or private, or by the
government of the United States of America, or by any foreign government, or by
any state, territory, province, municipality or other political subdivision or
by any governmental agency, and as owner thereof to possess and exercise all the
rights, powers and privileges of ownership, including the right to execute
consents and vote thereon, and to do any and all acts and things necessary or
advisable for the preservation, protection, improvement and enhancement in value
thereof.
To borrow or raise money for any of the purposes of the corporation and,
from time to time without limit as to amount, to draw, make, accept, endorse,
execute and issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment of any thereof and of the interest
thereon by mortgage upon or pledge, conveyance or assignment in trust of the
whole or any part of the property of the corporation, whether at the time owned
or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds
or other obligations of the corporation for its corporate purposes.
To purchase, receive, take by grant, gift, devise, bequest or otherwise,
lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal
in and with real or personal property, or any interest therein, wherever
situated, and to sell, convey, lease, exchange, transfer or otherwise dispose
of, or mortgage or pledge, all or any of the corporation's property and assets,
or any interest therein, wherever situated.
In general, to possess and exercise all the powers and privileges granted
by the General Corporation Law of Delaware or by any other law of Delaware or by
this Certificate of Incorporation together with any powers incidental thereto,
so far as such powers and privileges are necessary or convenient to the conduct,
promotion or attainment of the business or purposes of the corporation.
The business and purposes specified in the foregoing clauses shall, except
where otherwise expressed, be in no way limited or restricted by reference to,
or inference from, the terms of any other clause in this Certificate of
Incorporation, but the business and purposes specified in each of the foregoing
clauses of this article shall be regarded as independent business and purposes.
-2-
<PAGE>
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is One Thousand (1,000); all of such shares shall be
without par value.
FIFTH: The name and mailing address of the incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
John J. Lynch 1096 Grant Avenue
Pelham Manor, New York 10803
The name and mailing address of each person, who is to serve as a director
until the first annual meeting of the stockholders or until a successor is
elected and qualified, is as follows:
NAME MAILING ADDRESS
---- ---------------
Charles A. Bovino 2 High Meadow Court
Old Brookville, NY 11545
Lawrence Ferezy 64 Chestnut Lane
Woodbury, NY 11797
Gerard J. Kennell 51 Garden Circle
Syosset, NY 11791
SIXTH: The corporation is to have perpetual existence.
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. Any such committee, to the extent provided in the resolution of
the board of directors, or in the by-laws of the corporation, shall have and may
exercise all the powers and
-3-
<PAGE>
authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; provided, however, the by-laws may
provide that in the absence or disqualification of any member of such committee
or committees, the member or members thereof, present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called upon such notice as is required by statute, or
when authorized by the written consent of the holders of a majority of the
voting stock issued and outstanding, to sell, lease or exchange all or
substantially all of the property and assets of the corporation, including its
good will and its corporate franchises, upon such terms and conditions and for
such consideration, which may consist in whole or in part of money or property
including shares of stock in, and/or other securities of, any other corporate or
corporations, as its board of directors shall deem expedient and for the best
interests of the corporation.
EIGHTH: Elections of directors need not be by written ballot unless the
by-laws of the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation.
NINTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in
-4-
<PAGE>
value of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of this corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this corporation as
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
class of creditors, and/or on all the stockholders or class of stockholders, of
this corporation, as the case may be, and also on this corporation.
TENTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 12th day of November, 1991.
/s/ John J. Lynch
----------------------------------------
John J. Lynch
Incorporator
-5-
<PAGE>
Exhibit 3.11(a)
CERTIFICATE OF INCORPORATION
OF
RENT-A-CAR COMPANY, INCORPORATED
THIS IS TO CERTIFY That we do hereby associate ourselves to establish a
corporation under and by virtue of the provisions of the Laws of the State of
Virginia, for the purposes and under the corporate name hereinafter mentioned,
and to that end we execute, file and record this certificate, setting forth as
follows:
ARTICLE A
The name of the corporation is to be RENT-A-CAR COMPANY, INCORPORATED.
ARTICLE B
The principal office of the corporation is to be in the City of Richmond,
Virginia.
ARTICLE C.
The purposes and objects for which said corporation is formed are:
1. To buy, sell, lease, own and deal in any and all types of automotive
vehicles and in this connection to conduct a "for hire" automobile
business in the City of Richmond and other points and places within and
without the State of Virginia.
2. To own, operate and maintain garages, service stations and other places
of business offering "for hire" automobile or vehicle service, and to sell
life and accident insurance, as agent for insurance companies, to the
general public.
3. To buy, sell, deal in and deal with automobile tires, tubes, batteries
and any and all other equipment and accessories used in connection with
automobiles and motor vehicles generally.
<PAGE>
4. To buy, sell, deal in and deal with gasoline, benzine, motor fuel of
any and all kinds, motor oils, greases and lubricants, and any and all
other petroleum products and similar products used in and for, or about
automobiles, motor vehicles and motor engines generally.
5. To acquire by purchase, lease or otherwise, and to own, hold, occupy,
maintain and operate, or to lease to others to operate, retail and
wholesale stores and repair shops, and to engage in the business of
buying, selling, distributing, delivering, dispensing and generally
dealing in at wholesale and retail all of the above supplies, and in
addition thereto any and all supplies usual or incidental to any of the
above-mentioned businesses.
6. To purchase, lease on royalty, or otherwise, acquire by license,
concession, grant, or in any other manner, real and/or personal property,
and any rights or interest therein, wherever situate, and to own, hold,
develop, sell, encumber or lease same, or in any other manner turn same to
account.
7. To buy, hold, own, produce, sell or otherwise, dispose of, either as
principal or agent, and upon commission or otherwise, all kinds of
personal property whatsoever; and any or all articles of lawful trade,
commerce or barter; to purchase, lease or otherwise acquire real estate,
improved or unimproved; and to grant, sell, lease, encumber or otherwise
dispose of the same in whole or in part; to purchase, manufacture, lease
or otherwise acquire all necessary furniture, fixtures and equipment for
the carrying on of the aforesaid objects or any or either of them, and to
sell, encumber or otherwise dispose of the same in whole or in part.
8. To purchase, acquire and take over the business and property, name,
good will and assets of every kind and description, either as an entirety
or any part or parts thereof of any corporation, partnership or individual
conducting any of the aforesaid businesses.
9. To acquire by purchase or other legal means and to dispose of by sale,
lease, or otherwise, patents, patented machines, inventions, trade-marks
and trade names, brands and formulae, which may be useful in the conduct
of its business; and to apply for and obtain a copyright for any trade
mark or trade name and a patent for any invention, which may be useful in
its business, and to dispose of the same by sale or otherwise.
10. To purchase or otherwise acquire or to guarantee or to become surety
in respect to the stocks, bonds or securities and obligations of other
similar corporations.
-2-
<PAGE>
11. The business or purpose of the corporation is from time to time to do
any one or more of the acts and things hereinbefore set forth, and it
shall have power to conduct and carry on its said business or any part
thereof, and to have one or more offices, and to exercise all or any of
its corporate powers and rights in the State of Virginia, and in the
various States, territories, colonies and dependencies of the United
States, other than this State, and in the District of Columbia, and in any
or all foreign countries.
12. And, in general, may do all and everything necessary, incidental or
proper for the accomplishment of any of the purposes, or the attainment of
any of the objects, or the exercise of any of the rights and powers
hereinbefore enumerated, either alone, or in association with any other
corporation, firm or individual, and as principal, agent or contractor,
and by or through agents or otherwise, and in general may engage in any or
all lawful business whatever necessary or incidental to the business of
the corporation, it being the intention and being hereby expressly
provided that the objects, purposes and powers specified and clauses
contained in this ARTICLE C shall, except where otherwise expressed, be no
wise limited or restricted by reference to or inference from the terms of
any other clause of this or any other article in this certificate of
incorporation, but that the enumeration herein of specified objects,
purposes and powers shall be construed to be in furtherance of, and not to
limit or restrict in any manner, the general powers of said corporation
bestowed hereby or now or hereafter conferred by law.
13. There shall be no individual or personal liability on any stockholder
beyond the obligation to pay for his stock in accordance with his contract
of subscription.
ARTICLE D
The maximum amount of the capital stock of the corporation is to be FIFTY
THOUSAND DOLLARS ($50,000.00), all of one class of common stock, divided into
shares of the par value of ONE HUNDRED DOLLARS ($100.00) each. The minimum
amount of the capital stock of the corporation is to be THREE HUNDRED DOLLARS
($300.00).
ARTICLE E
The period for the duration of the corporation is unlimited.
-3-
<PAGE>
ARTICLE F
The names and residences of the officers and directors, who, unless sooner
changed by the stockholders, are for the first year to manage the affairs of the
corporation, are as follows:
O F F I C E R S
C. K. WRIGHT PRESIDENT & TREASURER RICHMOND, VA.
HORACE BARNARD SECRETARY RICHMOND, VA.
D I R E C T O R S
C. K. WRIGHT RICHMOND, VA.
HORACE BARNARD RICHMOND, VA.
ROBERT D. BARNARD RICHMOND, VA.
The stockholders of the corporation shall have authority to increase or
decrease the number of the Board of Directors at any time or times hereafter,
provided that there shall not be fewer than three (3) Directors of the
corporation.
ARTICLE G.
The amount of real estate to which the holdings of the corporation are at
any time to be limited is one thousand (1,000) acres.
ARTICLE H.
The following provisions are inserted for the regulation and conduct of
the business and affairs of the corporation, and are intended to be in
furtherance and not in limitation of, the powers conferred by the laws of the
State of Virginia:
1. The Board of Directors of the corporation shall have the power to
adopt, and, from time to time, amend by-laws for the regulation and the
conduct of the business of the corporation, by any by-laws so made,
altered or amended, may be altered or repealed by the stockholders of the
corporation.
-4-
<PAGE>
2. Any officer elected or appointed by the Board of Directors, or by the
stockholders, or any director of the corporation may be removed at any
time with or without cause in such manner as may be provided by the
by-laws of the corporation.
3. The Board of Directors of the corporation shall have the power to hold
meetings outside of the State of Virginia. They may keep the books,
documents and papers of the corporation outside of the State of Virginia
at such place as may be from time to time designated by the officers of
the corporation, except as otherwise required by the laws of the State of
Virginia, and at all times the principal office of the corporation shall
be located within the State of Virginia.
I N W I T N E S S W H E R E O F , We have hereunto set our hands and
seals this 21st day of February, 1956:
/s/ Thomas N. Parker, Jr. (SEAL)
----------------------------------------
Thomas N. Parker, Jr.
/s/ Alex W. Neal, Jr. (SEAL)
----------------------------------------
Alex W. Neal, Jr.
/s/ Irene D. Lucier (SEAL)
----------------------------------------
Irene D. Lucier
STATE OF VIRGINIA:
CITY OF RICHMOND, To-wit:
I, Catharine C. Bullock, a Notary Public in an for the City of Richmond,
State of Virginia, do hereby certify that THOMAS N. PARKER, JR., ALEX W. NEAL,
JR. AND IRENE D. LUCIER, whose names are signed to the foregoing writing bearing
date on the 21st day of February, 1956, have each this day personally appeared
before me in my City and State aforesaid and acknowledged the same to me.
Given under my hand this 21st day of February, 1956.
My commission expires: January 31, 1959.
/s/ Catharine C. Bullock
----------------------------------------
Notary Public.
<PAGE>
Exhibit 3.11(b)
ARTICLES OF REDUCTION
OF
RENT-A-CAR COMPANY, INCORPORATED
1. The name of the corporation is
RENT-A-CAR COMPANY, INCORPORATED
2. On January 21, 1975, the Board of Directors adopted the following resolution:
RESOLVED, that the ninety-eight (98) shares of capital stock,
$100 par value, heretofore reacquired by the Company be cancelled;
stated capital of the Company shall thereupon be reduced by
$9,800.00 and the stated capital of the Company after such
cancellation and reduction shall be $10,200.00
3. The aggregate number of issued shares after giving effect to such
cancellation is to be 102 shares of capital stock of the par value of $100 each.
Dated: January 21, 1975
RENT-A-CAR COMPANY, INCORPORATED
By /s/ C. K. Wright
-----------------------------
Its President
And by /s/ [ILLEGIBLE]
-------------------------
Its Secretary
<PAGE>
Exhibit 3.11(c)
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
These Articles of Amendment are hereby adopted pursuant to the consent of
the Board of Directors of the Corporation on September 9, 1983.
1. The name of the Corporation is RENT-A-CAR COMPANY, INCORPORATED.
2. The Amendment so adopted is as follows:
Article D of the Articles of Incorporation of Rent-A-Car Company,
Incorporated shall be amended to read in its entirety as follows:
ARTICLE D
The maximum amount of capital stock of the Corporation is to be
Fifty Thousand Dollars ($50,000) all of one class of common stock, divided
into 500,000 shares of par value of $.l0 per share.
3. The date of the consent of the Board of Directors of the Corporation by
which the amendment was found to be in the best interest of the Corporation and
by which that amendment was directed to be submitted to a vote of the
stockholders of the Corporation was September 9, 1983. Such amendment was
consented to by the stockholders of the Corporation after receipt and review of
a copy of said amendment, by consent in writing on September 9, 1983.
<PAGE>
4. The number of shares issued and outstanding and entitled to both was
One Hundred and Two (102), all of which were voted in favor of the proposed
amendment.
Executed in the name of the Corporation by its President and its Secretary
who declare under penalty of perjury that the facts stated here are true,
correct, and complete.
RENT-A-CAR COMPANY, INCORPORATED
By /s/ C. K. Wright
----------------------------------------
President
ATTEST:
/s/ [ILLEGIBLE]
- -------------------------------
Secretary
-2-
<PAGE>
Exhibit 3.11(d)
RENT-A-CAR COMPANY, INCORPORATED
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
Pursuant to ss.13.1-710 of the Code of Virginia, the following Articles of
Amendment are hereby adopted pursuant to the consent of the Board of Directors
on January 28, 1987.
1. Name of Corporation: Rent-A-Car Company, Incorporated
2. Text of Amendment: Article D of the Articles of Incorporation of
Rent-A-Car Company, Incorporated shall be amended to
read in its entirety as follows:
ARTICLE D
A. Authorized Capital Stock. The Corporation's
total authorized capital stock shall consist of
250,000 shares of Class A voting common stock having
a par value of $.l0 per share; and 250,000 shares of
Class B non-voting common stock having a par value of
$.l0 per share. Class A and Class B common stock are
identical in all respects except as to voting rights
as discussed below. The whole or any part of the
capital stock may be issued from time to time for
such consideration as may be fixed by the Board of
Directors.
B. Voting Rights. Each outstanding Class A
common share shall be entitled to one vote on each
matter submitted to a vote. Outstanding Class B
non-voting common shares shall not be entitled to
vote except upon the following matters in which event
each share will receive one vote:
1. Merger of the Corporation;
2. Liquidation or dissolution of the
Corporation;
<PAGE>
3. Sale of substantially all corporate
assets other than in the ordinary course
of business.
3. The date of adoption is January 28, 1987.
4. The Amendment was adopted by unanimous written consent of the Directors
and Shareholders on January 28, 1987.
The undersigned being all Directors of Rent-A-Car Company, Incorporated
hereby execute in the name of the corporation these Articles of Amendment and
Exhibit A attached.
RENT-A-CAR COMPANY, INCORPORATED
By: /s/ C. K. Wright
------------------------------------
C. Kenneth Wright,
Chairman of the Board
By: /s/ Marc D. Hallberg
------------------------------------
Marc D. Hallberg, President
ATTEST By: /s/ F. Elmore Butler
------------------------------------
F. Elmore Butler,
Secretary
2
<PAGE>
Exhibit 3.11(e)
ARTICLES OF AMENDMENT
of the Articles of Incorporation of
RENT-A-CAR COMPANY, INCORPORATED
1. Name of Corporation. The name of the Corporation is Rent-A-Car Company,
Incorporated.
2. Text of Amendment. The text of the amendment adopted is as follows:
Article D of the Articles of Incorporation of Rent-A-Car Company,
Incorporated shall be amended and restated to read in its entirety
as follows:
ARTICLE D
A. Authorized Capital Stock. The Corporation's total
authorized capital stock shall consist of 500,000 shares of Class A
voting common stock having a par value of $.10 per share. The whole
or any part of the capital stock may be issued from time to time for
such consideration as may be fixed by the Board of Directors.
B. Voting Rights. Each outstanding Class A common share shall
be entitled to one vote on each matter submitted to a vote.
3. Provisions for Implementing Amendment. All Shareholders of Rent-A-Car
Company, Incorporated will transfer to the Corporation by December 31, 1995 all
(100%) of their present shares of Class B non-voting common stock. In exchange
for each share transferred, the Shareholders will receive one (1) share of
Class A voting common stock.
4. Date of Adoption. The amendment was adopted effective October 30, 1995,
and the effective date of the Amendment to the Articles of Incorporation shall
be the date on which this Amendment is filed with the State Corporation
Commission.
5. Adoption by Shareholders. The amendment was adopted by unanimous
written consent of the shareholders of the corporation.
Dated: December 27, 1995
RENT-A-CAR COMPANY, INCORPORATED
By: /s/ C. K. Wright & by
/s/ Richard L. [ILLEGIBLE]
by Power of Attorney
------------------------------------
C. K. Wright
Chairman of the Board
<PAGE>
Exhibit 3.11(f)
ARTICLES OF AMENDMENT
OF
RENT-A-CAR COMPANY, INCORPORATED
The following Articles for Amendment are hereby filed on behalf of
Rent-A-Car Company, Incorporated:
1. The name of the Corporation is Rent-A-Car Company,
Incorporated.
2. The text of the amendment is as follows:
Paragraph 2 of Article C of the Articles of Incorporation is
amended and restated to read in its entirety as follows:
2. To own, operate and maintain garages, service stations and
other places of business offering "for hire" automobile or vehicle
service; to sell life and accident insurance, as agent for insurance
companies, to the general public; and, in general to engage in the
insurance business as an insurance agency.
3. The amendment does not provide for exchange, reclassification or
cancellation of the existing shares.
4. The date of the amendment's adoption is July 1, 1998.
5. The amendment was adopted by the Board of Directors by unanimous
consent and by the Shareholders by unanimous consent.
Witness the following signature and seal
/s/ Marc D. Hallberg
----------------------------------------
Marc D. Hallberg
President
<PAGE>
Exhibit 3.12(a)
CERTIFICATE OF INCORPORATION
OF
AVIS LEASING INTERNATIONAL, LTD.
I, the undersigned, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, do hereby certify as follows:
FIRST: The name of the corporation is
AVIS LEASING INTERNATIONAL, LTD.
SECOND: The registered office of the corporation is to be located at c/o
United Corporate Services, Inc., 410 South State Street, in the City of Dover,
County of Kent, State of Delaware. The name of its registered agent at that
address is United Corporate Services, Inc.
THIRD: The purpose of the corporation as to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
FOURTH: The corporation shall be authorized to issue one thousand (1,000)
shares all of which are without par value.
FIFTH: The name and address of the incorporator are as follows:
Name Address
---- -------
Ray A. Barr 9 East 40th Street
New York, New York 10016
SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and for further
definition, limitation and regulation of the powers of the corporation and of
its directors and stockholders:
(1) The number of directors of the corporation shall be such as from time
to time shall be fixed by, or in the manner provided in the
<PAGE>
by-laws. Election of directors need not be by ballot unless the by-laws so
provide.
(2) The Board of Directors shall have power without the assent or vote of
the stockholders:
(a) To make, alter, amend, change add to or repeal the By-Laws of
the corporation; to fix and vary the amount to be reserved for any proper
purpose; to authorize and cause to be executed mortgages and liens upon
all or any part of the property of the corporation; to determine the use
and disposition of any surplus or net profits; and to fix the times for
the declaration and payment of dividends.
(b) To determine from time to time whether, and to what extent, and
at what times and places, and under what conditions the accounts and books
of the corporation (other than the stock ledger) or any of them, shall be
open to the inspection of the stockholders.
(3) The directors in their discretion may submit any contract or act for
approval or ratification at any annual meeting of the stockholders or at any
meeting of the stockholders called for the purpose of considering any such act
or contract, and any contract or act that shall be approved or be ratified by
the vote of the holders of a majority of the stock of the corporation which is
represented in person or by proxy at such meeting and entitled to vote thereat
(provided that a lawful quorum of stockholders be there represented in person or
by proxy) shall be a valid and as binding upon the corporation and upon all the
stockholders as though it had been approved or ratified by every stockholder of
the corporation, whether or not the contract or act would otherwise be open to
legal attack because of directors' interest, or for any other reason.
(4) In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the corporation; subject, nevertheless, to the provisions of the statutes of
Delaware, of this certificate, and to any by-laws from time to time made by the
stockholders; provided, however, that no by-laws so made shall invalidate any
prior act of the directors which would have been valid if such by-law had not
been made.
SEVENTH: The corporation shall, to the full extent permitted by Section
145 of the Delaware General Corporation Law, as amended, from
<PAGE>
time to time, indemnify all persons whom it may indemnify pursuant thereto.
EIGHTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware, may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 Title 8 of the Delaware
Code order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in number
representing three-fourths (3/4) in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also of this corporation.
NINTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors and officers are subject to this reserved
power.
IN WITNESS WHEREOF, I have hereunto signed my name and affirm that the
statements made herein are true under the penalties of perjury, this 17th day of
January, 1980.
RAY A. BARR /s/ Ray A. Barr
----------------------------------------
Ray A. Barr, Incorporator
<PAGE>
Exhibit 3.12(b)
FILED
10AM
JUN 17 1983
/s/ [ILLEGIBLE]
SECRETARY OF STATE
CERTIFICATE OF CHANGE
OF
REGISTERED AGENT AND REGISTERED OFFICE
OF
AVIS LEASING INTERNATIONAL, LTD.
* * * * *
AVIS LEASING INTERNATIONAL, LTD., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
The present registered agent of the corporation is UNITED CORPORATE
SERVICES, INC., and the present registered office of the corporation is in the
County of Kent.
The Board of Directors of AVIS LEASING INTERNATIONAL, LTD. adopted the
following resolution on the 1 day of June, 1983.
RESOLVED, that the registered office of AVIS LEASING INTERNATIONAL,
LTD. in the State of Delaware be and it hereby is changed to No. 100 West
Tenth Street, in the City of Wilmington, County of New Castle, and the
authorization of the present registered agent of this corporation be and
the same is hereby withdrawn, and THE CORPORATION TRUST COMPANY, shall be
and is hereby constituted and appointed the registered agent of this
corporation at the address of its registered office.
<PAGE>
IN WITNESS WHEREOF, AVIS LEASING INTERNATIONAL, LTD. has caused this
statement to be signed by BARRY R. SHAPIRO, its Vice President, and attested by
KENNETH GOODKIND, its Asst. Secretary, this 1 day of June, 1983.
By /s/ Barry R. Shapiro
-------------------------------------
Vice President
ATTEST: BARRY R. SHAPIRO
By /s/ Kenneth Goodkind
----------------------------------
Asst. Secretary
KENNETH GOODKIND
<PAGE>
Exhibit 3.12(c)
RESTATED CERTIFICATE OF INCORPORATION
OF
AVIS LEASING INTERNATIONAL, LTD.
----------------------------------------------------------------
Pursuant to Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware
----------------------------------------------------------------
Avis Leasing International, Ltd., a Delaware corporation
(hereinafter the "Corporation"), does hereby certify as follows:
FIRST: The name of the Corporation is Avis Leasing International,
Ltd. The original Certificate of Incorporation of the Corporation was filed with
the Secretary of State of the State of Delaware on January 18, 1980.
SECOND: Pursuant to Sections 242 and 245 of the General Corporation
Law of the State of Delaware, this Restated Certificate of Incorporation of the
Corporation restates and integrates and further amends the provisions of the
Corporation's Certificate of Incorporation.
THIRD: The entire text of the Corporation's Certificate of
Incorporation as heretofore amended, is hereby amended and restated in its
entirety to read as follows:
FIRST: The name of the Corporation is Reserve Claims Management Co.
(hereinafter the "Corporation").
SECOND: The address of the registered office of the Corporation in
the State of Delaware is 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware
Code (the "GCL").
<PAGE>
FOURTH: The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is 10,000 shares of capital
stock ("Capital Stock"), consisting of 9,000 shares of Class A Common Stock, par
value $0.01 per share ("Class A Common Stock") and 1,000 shares of Class B
Common Stock, par value $0.01 per share ("Class B Common Stock").
(1) Terms of the Class A Common Stock and Class B Common Stock. The
powers, preferences and rights of the Class A Common Stock and Class B Common
Stock, and the qualifications, limitations or restrictions thereof, shall be in
all respects identical, except as otherwise required by law or as provided in
this Certificate of Incorporation. No shares of Class A Common Stock or Class B
Common Stock shall be subdivided, split, combined, reclassified or recapitalized
unless at the same time all outstanding shares of Class A Common Stock and Class
B Common Stock are subdivided, split, combined, reclassified or recapitalized,
as the case may be, on identical terms.
(a) Voting. At each annual or special meeting of stockholders, each
holder of Class A Common Stock and Class B Common Stock shall be entitled to one
(1) vote in person or by proxy for each share of Class A Common Stock and Class
B Common Stock, respectively, standing in such person's name on the stock
transfer records of the Corporation in connection with the election of directors
and all other actions submitted to a vote of stockholders.
(b) Dividends and Other Distributions. The record holders of the
Class A Common Stock and the Class B Common Stock shall be entitled to receive
such dividends and other distributions in cash, stock, evidences of indebtedness
or property of the Corporation as may be declared thereon by the Board of
Directors out of funds legally available therefor. Each share of Class A Common
Stock and Class B Common Stock shall have identical rights with respect to
dividends and distributions (including dividends and distributions payable in
cash, stock, evidences of indebtedness or property and distributions in
connection with any recapitalization), except as provided for in paragraph (c),
and provided that if dividends are declared which are payable in shares of
Capital Stock, the Corporation shall make available to each holder of Capital
Stock, a dividend of Capital Stock in the same class of shares as currently held
by such record holder of such class of Capital Stock.
(c) Liquidation, Dissolution, etc. The recordholders of the Class A
Common Stock and the Class B Common Stock shall have identical rights with
respect to distributions of the first $2 million of net assets of the
Corporation upon a liquidation, dissolution or winding up of the Corporation.
The recordholders of the Class A Common Stock shall, and the recordholders of
the Class B Common Stock shall not, be entitled to receive distributions of net
assets of the Corporation above $2 million upon liquidation, distribution or
winding up of the Corporation.
FIFTH: The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation, and of
its directors and stockholders:
(1) The business and affairs of the Corporation stall be managed by
or under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the stockholders
to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
2
<PAGE>
(3) The number of directors of the Corporation shall be as from time
to time fixed by, or in the manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot unless
the By-Laws so provide.
(4) No director shall be personally liable to the Corporation or any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the GCL or (iv)
for any transaction from which the director derived an improper personal
benefit. Any repeal or modification of this Article FIFTH by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such
repeal or modification with respect to acts or omissions occurring prior
to such repeal or modification.
(5) If the GCL is hereafter amended to authorize the further
elimination or limitation of the liability of a director, then the
liability of a director of the Corporation shall be eliminated or limited
to the fullest extent permitted by the GCL, as so amended.
(6) The provisions of this Article FIFTH shall not be deemed to
limit or preclude indemnification of a director by the Corporation for any
liability of a director that has not been eliminated or limited by the
provisions of subsections (4) and (5) of this Article FIFTH.
(7) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the GCL, this Certificate of Incorporation, and any By-Laws
adopted by the stockholders; provided, however, that no By-Laws hereafter
adopted by the stockholders shall invalidate any prior act of the
directors which would have been valid if such By-Laws had not been
adopted.
SIXTH: Meetings of stockholders may be held within or without the
State of Delaware, as the Bylaws may provide. The books of the Corporation may
be kept (subject to any provision contained in the GCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-laws of the Corporation.
SEVENTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
3
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate to
be duly executed in its name this 11th day of October, 1996.
AVIS LEASING INTERNATIONAL, LTD.
By: /s/ Charles A. Bovine
------------------------------------
Name: CHARLES A. BOVINE
Title: PRESIDENT
4
<PAGE>
Exhibit 3.13(a)
ARTICLES OF INCORPORATION
OF
Avis Fleet Leasing and Management Corporation
I, the undersigned natural person of the age of eighteen years or more,
acting as incorporator of a corporation under the Texas Business Corporation
Act, do hereby adopt the following Articles of Incorporation for such
corporation:
ARTICLE ONE
The name of the corporation is Avis Fleet Leasing and Management Corporation.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose or purposes for which the corporation is organized are:
"To engage in the transaction of any or all lawful business for which
corporations may be incorporated under the Texas Business Corporation
Act."
ARTICLE FOUR
The aggregate number of shares which the corporation shall have authority to
issue is Two Million (2,000,000) of the par value of Zero Dollars and One Cent
(0.01) each.
ARTICLE FIVE
The corporation will not commence business until it has received for the
issuance of its shares consideration of the value of One Thousand Dollars
($1,000), consisting of money, labor done or property actually received, which
sum is not less than One Thousand Dollars ($1,000).
ARTICLE SIX
The street address of its initial registered office is c/o C T CORPORATION
SYSTEM, 350 N. St. Paul Street, Dallas, Texas 75201, and the name of its initial
registered agent at such address is C T CORPORATION
Page 1
<PAGE>
SYSTEM.
ARTICLE SEVEN
The number of directors of the corporation may be fixed by the by-laws.
The number of directors constituting the initial board of directors is One
(1), and the name and address of each person who is to serve as director until
the first annual meeting of the shareholders or until a successor is elected and
qualified are:
NAME ADDRESS
Karen Scalfani c/o Avis Rent A Car, Inc., 900
Old Country Road, Garden City,
New York 11530
ARTICLE EIGHT
The name and address of the incorporator is:
NAME ADDRESS
Justin T. Reed 1633 Broadway, New York, New York
10019
IN WITNESS WHEREOF, I have hereunto set my hand this 5/19/99.
/s/ Justin T. Reed
- -------------------------------
Justin T. Reed
Page 2
<PAGE>
Exhibit 3.13(b)
Office of the [STATE Corporations Section
Secretary of State SEAL]
P.O. Box 13697
Austin, Texas 78711-3697
ARTICLES/CERTIFICATE OF CORRECTION
This correction is submitted pursuant to article 1302-7.01, Texas Miscellaneous
Corporation Laws Act for a corporation or limited liability company, or pursuant
section 2.13, Texas Revised Limited Partnership Act for a limited partnership,
to correct a document which is an inaccurate record of the entity action,
contains an inaccurate or erroneous statement, or was defectively or erroneously
executed, sealed, acknowledged or verified.
ARTICLE ONE
The name of the entity is Avis Fleet Leasing and Management Corporation.
ARTICLE TWO
The document to be correct is the Articles of Incorporation, which was filed in
the Office of the Secretary of State on the Twentieth day of May, 1999.
ARTICLE THREE
The inaccuracy, error, or defect to be corrected is:
Article Four stated as follows:
The aggregate number of shares which the corporation shall have authority
to issue is Two Million (2,000,000) of the par value of Zero Dollars and
One Cent (0.01) each.
ARTICLE FOUR
As corrected, the inaccurate, erroneous, or defective portion of the document
reads as follows:
See 1 in Addendum
By: /s/ Karen Sclafani
------------------------------------
Karen Sclafani
Its Director
------------------------------------
An Authorized Corporate Officer or
Director or Limited Liability
Company Member or Manager or Limited
Partnership General Partner
<PAGE>
Addendum
1. The aggregate number of shares which the corporation shall have authority
to issue is (2,000,000).
|_| The aggregate number of shares which the corporation is authorized to
issue is, divided into (2) classes.
The number of shares of each class, and the par value of the shares
of each class, are as follows:
No. of Shares Class Par Value
1,000,000 Common Stock $0.01|_|
1,000,000 Preferred Stock $0.01
1 OF 1
<PAGE>
Exhibit 3.14(a)
ARTICLES OF INCORPORATION
OF
DEALERS HOLDING, INC.
THIS IS TO CERTIFY:
FIRST: I, THE UNDERSIGNED EDWIN F. MILLER, whose post office address is
11333 McCormick Road, Hunt Valley, Maryland 21031, being at least twenty-one
years of age, do hereby declare myself as an incorporator with the intention of
forming a corporation under and by virtue of the General Laws of the State of
Maryland.
SECOND: The name of the corporation (which is hereinafter called the
"Corporation") is Dealers Holding, Inc.
THIRD: The purposes for which the Corporation is formed are as follows:
1. To engage in and carry on the business of owning, financing and
managing automobile and truck dealerships; to engage in and carry on the
business either directly or indirectly of leasing, renting, financing, managing,
buying, selling, distributing, trading or otherwise dealing in new and used
automobiles, trucks, trailer-trucks, tractors, trailers, buses and motor
vehicles and conveyances of every kind and description and any and all kinds and
description of air, water and land transport by motor, jet propulsion or
otherwise for itself, or for account of others, or in their behalf, or through
others for its own account; to engage in and carry on the business of leasing,
renting, financing, managing, buying, selling, producing, manufacturing,
<PAGE>
distribution, trading, or otherwise dealing in any and all kinds of machinery,
equipment, implements, materials, products, supplies, accessories, substances,
furniture, goods, wares, merchandise and other personal property of any and
every kind and description for itself, or for account of others and in their
behalf or through others for its own account; to engage in and carry on the
business of leasing, renting, financing, managing, buying, selling,
distribution, trading or otherwise dealing in plant, office, industrial and
commercial equipment and machinery and other equipment and machinery of any and
every kind and description, including, but not limited to, machinery and
equipment used in road and bridge building or any other kind of construction,
demolition, excavations, ditching, well digging, logging and any other type of
activity, operations or business, and also railway and railroad machine and
equipment of every kind and description and boats, barges and vessels of every
kind and description and any equipment and machinery used in connection
therewith and airplanes and aircrafts and aircraft machinery and equipment of
any kind and description and office, commercial, industrial and manufacturing
buildings of every kind and description and any equipment and machinery in, a
part of or used in connection therewith; and in connection with the businesses
aforesaid, to act for itself, or for account of others and in their behalf or
through others for its own account and to act as agent, broker, distributor,
commission merchant, representative, manager and consultant of any person,
partnership, firm, corporation or association.
-2-
<PAGE>
2. To manufacture, purchase or otherwise acquire, hold, mortgage,
pledge, sell, transfer or in any manner encumber or dispose of goods, wares,
merchandise, implements and other personal property or equipment of every kind.
3. To purchase, lease, hire or in any manner to acquire, hold, own,
develop, improve, operate, manage, build upon, mortgage, encumber, sell,
exchange or otherwise dispose of, and otherwise deal in and with any land or
interests therein and improvements thereon, and to engage in and carry on any
business which may be considered necessary or advisable for the purpose of
promoting the general development of any such land or enhancing its value or
furnishing useful or desirable conveniences and advantages to the owners thereof
or dwellers and occupants thereon.
4. To purchase, lease, hire of otherwise acquire, hold, own, build,
construct, erect, improve, manage, operate, mortgage, sell or otherwise dispose
of houses, buildings, apartments, stores, warehouses, plants, gasoline filling
stations, factories, works and structures of all kinds and character for
residential, commercial, industrial or other purposes, and facilities,
appliances and conveniences which may appertain to or be useful in the conduct
of any of the business of the Corporation or which the Corporation may think
directly or indirectly conducive to these objects.
5. To carry on and transact, for itself or for account of others,
the business of general merchants, general brokers, general agents,
manufacturers, buyers and sellers of,
-3-
<PAGE>
dealers in, importers and exporters of natural products, raw materials,
manufacturer products and marketable goods, wares and merchandise of every
description.
6. To purchase or otherwise acquire, hold, sell, and/or reissue
shares of its capital stock of any class; and to purchase, lease or otherwise
acquire, all or any part of the property, rights, businesses, contract,
good-will franchises and assets of every kind, of any corporation,
co-partnership or individual (including the estate of a decedent), carrying on
or having carried on in whole or in part any of the aforesaid businesses or any
other businesses that the Corporation may be authorized to carry on and to
undertake, guarantee, assume and pay the indebtedness and liabilities thereof,
and to pay for any such property, rights, business contracts, goodwill
franchises or assets by the issue, in accordance with the laws of Maryland, of
stock, bonds or other securities of the Corporation or otherwise.
7. To apply for, obtain, purchase or otherwise acquire any patents,
copyrights, licenses, trademarks, tradenames, rights, processes, formulas and
the like, which might be used for any of the purposes of the Corporation; and to
use, exercise, develop, grant licenses in respect of, and sell and otherwise
turn to account, the same.
8. To guarantee the payment of dividends upon any shares of stock
of, or the performance of any contract by any other corporation or association
in which the Corporation has an interest, and to endorse or otherwise guarantee
the payment
-4-
<PAGE>
of the principal and interest, or either, of any bonds, debentures, notes,
securities or other evidences of indebtedness created or issued by any such
other corporation or association.
9. To loan or advance money with or without security, without limit
as to amount; and to borrow or raise money for any of the purposes of the
Corporation and to issue bonds, debentures, notes or other obligations of any
nature, and in any manner permitted by law, for money so borrowed or in payment
for property purchased, or for any other lawful consideration, and to secure the
payment thereof and of the interest thereon, by loan and trust agreement, by
mortgage upon, or pledge or conveyance or assignment in trust of, the whole or
any part of the property of the Corporation, real or personal, including, but
not limited to contract rights and leases of any kind, character or nature,
whether at the time owned or thereafter acquired; and to sell, pledge, discount
or otherwise dispose of such bonds, notes or other obligations of the
Corporation for its corporate purposes.
10. To carry on any of the businesses hereinbefore enumerated for
itself, or for account of others, or through others for its own account, and to
carry on any other business which may be deemed by it to be calculated, directly
or indirectly, to effectuate or facilitate the transaction of the aforesaid
objects or businesses, or any of them, or any part thereof or to enhance the
value of its property, business or rights.
-5-
<PAGE>
The aforegoing enumeration of the purposes, objects and businesses
of the Corporation is made in furtherance, and not in limitation of the powers
conferred upon the Corporation by law, and is not intended, by the mention of
any particular purpose, object or business, in any manner to limit or restrict
the generality of any other purpose, object or business mentioned, or to limit
or restrict any of the powers of the Corporation. The Corporation is formed upon
the articles, conditions and provisions herein expressed, and subject in all
particulars to the limitation relative to corporations which are contained in
the general laws of this State.
FOURTH: The post office address of the principal office of the Corporation
in this State is 11333 McCormick Road, Hunt Valley, Maryland 21031. The name and
post office address of the resident agent of the corporation in this State is
William B. Hendricks, 11333 McCormick Road, Hunt Valley, Maryland. Said resident
agent is an individual actually residing in this State.
FIFTH: The total number of shares of stock which the Corporation has
authority to issue is One Thousand (1,000) shares, without par value, all of one
class.
SIXTH: The number of directors of the Corporation shall be three (3). The
number of directors of the Corporation may be increased or decreased pursuant to
the By-Laws of the Corporation, but shall never be less than three (3); and the
names of the directors who shall act until the first annual
-6-
<PAGE>
meeting or until their successors are duly chosen and qualified are: Jerome W.
Geckle, William B. Hendricks and Frank J. Schmieder.
SEVENTH: The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
1. The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of its stock, with or without
par value, of any class, whether now or hereafter authorized, and securities
convertible into shares of its stock, with or without par value, of any class,
whether now or hereafter authorized, for such considerations as said Board of
Directors may deem advisable, irrespective of the value or amount of such
considerations, but subject to such limitations and restrictions, if any, as may
be set forth in the By-Laws of the Corporation.
2. No contract or other transaction between this Corporation and any
other corporation and no act of this Corporation shall in any way be affected or
invalidated by the fact that any of the directors of this Corporation are
pecuniarily or otherwise interested in, or are directors or officers of, such
other corporation; any directors individually or any firm of which any director
may be a member, may be a party to, or may be pecuniarily or otherwise
interested in, any contract or transaction of this Corporation, provided that
the fact that he or such firm is so interested shall be disclosed or shall have
been known to the Board of Directors or a
-7-
<PAGE>
majority thereof; and any director of this Corporation who is also a director or
officer of such other corporation or who is so interested may be counted in
determining the existence of a quorum at any meeting of the Board of Directors
of this Corporation, which shall authorize any such contract or transaction,
with like force and effect as if he were not such director or officer of such
other corporation or not so interested.
3. The Board of Directors shall have power, from time to time, to
fix and determine and to vary the amount of working capital of the Corporation;
to determine whether any, and, if any, what part, of the surplus of the
Corporation or of the net profits arising from its business shall be declared in
dividends and paid to the stockholders, subject, however, to the provisions of
the charter, and to direct and determine the use and disposition of any of such
surplus or net profits. The Board of Directors may in its discretion use and
apply any of such surplus or net profits in purchasing or acquiring any of the
shares of the stock of the Corporation or any of its bonds or other evidences of
indebtedness, to such extent and in such manner and upon such lawful terms as
the Board of Directors shall deem expedient.
4. The Board of Directors shall have power, subject to any
limitations or restrictions herein set forth or imposed by law, to classify or
reclassify any unissued shares of stock, whether now or hereafter authorized, by
fixing or altering in any one or more respects, from time to time before
-8-
<PAGE>
issuance of such shares, the preferences, rights, voting powers, restrictions
and qualifications of, the dividends on, the times and prices of redemption of,
and the conversion rights of, such shares.
5. The Board of Directors shall have power, without the vote of the
stockholders, to issue bonds, debentures, debenture bonds, trust certificates,
mortgages, loan and trust agreements, or other instruments of indebtedness and
to pledge the assets of the Corporation as security therefor.
6. The Board of Directors shall have the power to declare and
authorize the payment of stock dividends, whether or not payable in stock of one
class to holders of stock of the same class or to holders of stock of another
class or classes; and shall have authority to exercise, without a vote of
stockholders, all powers of the Corporation, whether conferred by law or by
these articles, to purchase, lease or otherwise acquire the business, assets or
franchises, in whole or in part, of other corporations or unincorporated
business entities.
EIGHTH: The duration of the Corporation shall be perpetual.
-9-
<PAGE>
IN WITNESS WHEREOF, I have signed these Articles of Incorporation this
22nd day of November, 1982.
WITNESS:
/s/ Sandra M. Penn /s/ E. F. Miller (L.S.)
- ---------------------------------- ----------------------------------
STATE OF MARYLAND )
) SS
COUNTY OF BALTIMORE )
I HEREBY CERTIFY, that on this 22nd day of November, 1982, before me, the
subscriber, a Notary Public of the State of Maryland in and for the County of
Baltimore, personally appeared Edwin F. Miller and severally acknowledged the
foregoing Articles of Incorporation to be his act.
WITNESS my hand and Notarial Seal, the day of the year first above
written.
/s/ Sandra M. Penn
-----------------------------------------
Notary Public
My Commission Expires: 7-1-82
------------
-10-
<PAGE>
Ex 3.14(b)
NOTICE OF CHANGE OF RESIDENT AGENT
OF
DEALERS HOLDING, INC.
received for record November 6, 1986, at 9:12 A.M. and recorded on Film No.
______ Frame No. _______ one of the charter records of the State Department of
Assessments and Taxation of Maryland. To the clerk of the Circuit court of
Baltimore County 53
AA No. 25185
Special Fee Paid $5.00
Recording Fee Paid $3.00
-----
Total $8.00
PHH GROUP, INC.
ATTENTION: MS. SHARON L. CURLEY
11333 MCCORMICK ROAD
HUNT VALLEY, MARYLAND 21031
STATE OF [ILLEGIBLE]
I hereby certify that this is a true and complete copy of the 2 page document on
file in this office. DATED: June 24, 1999
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
By: /s/ Darla D. Simms, Custodian
This stamp replaces our previous certification system. Effective: [ILLEGIBLE]
<PAGE>
The Board of Directors of Dealers Holding, Inc., a corporation organized in the
State of Maryland, on September 19, 1986 duly approved the following
resolutions:
RESOLVED: That the resident agent of the Corporation in the State of
Maryland be and he is hereby changed from WILLIAM B. HENDRICKS, whose post
office address is 11333 McCormick Road, Hunt Valley, Maryland 21031, to
JOHN T. CONNOR, JR., whose post office address is 11333 McCormick Road,
Hunt Valley, Maryland 21031, and who is a resident of the State of
Maryland.
RESOLVED: That the proper officers of the Corporation be and they are
hereby authorized and directed for and on behalf of the Corporation to
file an appropriate certified copy of this resolution with the State
Department of Assessments and Taxation of Maryland and to do and perform
any and all other necessary and proper acts incident thereto.
I, Edwin F. Miller, Vice President and Secretary certify under the penalties of
perjury that to the best of my knowledge, information, and belief the foregoing
resolutions are true in all material respects.
/s/ Edwin F. Miller
-----------------------------
Edwin F. Miller
<PAGE>
Ex 3.14(c)
CHANGE OF RESIDENT AGENT
OF
DEALERS HOLDING, INC.
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND DECEMBER 27, 1989 AT 11:45 O'CLOCK A.M. AS IN CONFORMITY
WITH LAW AND ORDERED RECORDED.
---------------
ORGANIZATION AND RECORDING SPECIAL
CAPITALIZATION FEE PAID FEE PAID FEE PAID
$ $ 10.00 $
---------------------- ---------- ---------
---------------
D1482793
TO THE CLERK OF THE COURT OF BALTIMORE COUNTY
IT IS HEREBY CERTIFIED THAT THE WITHIN INSTRUMENT, TOGETHER WITH ALL
ENDORSEMENTS THEREON, HAS BEEN RECEIVED, APPROVED AND RECORDED BY THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
RETURN TO:
PHH CORPORATION
ATTN: S.L. CURLEY
113333 MCCORMICK ROAD
HUNT VALLEY MD 21031
[STAMP ILLEGIBLE]
<PAGE>
The Board of Directors of Dealers Holding, Inc., a corporation organized in the
State of Maryland on December 15, 1989 duly approved the following resolutions:
RESOLVED: That the Corporation in the State of Maryland be and he from
JOHN T. CONNOR, JR., whose post office address is 11333 McCormick Road,
Hunt Valley, Maryland 21031, whose post office address is 11333 McCormick
Road, Hunt Valley, Maryland 21031, and who is a resident of the State of
Maryland.
RESOLVED: That the proper officers of the Corporation be and they are
hereby authorized and directed for and on behalf of the Corporation to
file an appropriate certified copy of this resolution with the State
Department of Assessments and Taxation of Maryland and to do and perform
any and all other necessary and proper acts incident thereto.
I, Samuel H. Wright, Secretary certify under the penalties of perjury that to
the best of my knowledge, information, and belief the foregoing resolutions are
true in all material respects.
/s/ Samuel H. Wright
-----------------------------------
Samuel H. Wright
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
12-27-89 at 11:45 a.m.
[STAMP]
1989 DEC 27 A 11:45
<PAGE>
Ex 3.14(d)
CHANGE OF ADDRESS OF RESIDENT AGENT
The Corporation Trust Incorporated hereby submits the following for the purpose
of changing the address of the resident agent for the business entities on the
attached list:
1. The name of the resident agent is The Corporation Trust Incorporated.
2. The old address of the resident agent is:
32 South Street
Baltimore, Maryland 21202
3. The new address of the resident agent is:
300 East Lombard Street
Baltimore, Maryland 21202
4. Notice of the above changes are being sent to the business entities on the
attached list.
5. The above changes are effective when this document is filed with the
Department of Assessments and Taxation.
/s/ Kenneth J. Uva
- -------------------------------
Kenneth J. Uva
Assistant Secretary
[STAMP ILLEGIBLE]
<PAGE>
- --------------------------------------------------------------------------------
STATE OF MARYLAND
RESIDENT ADDRESS UNCHANGED LIST
STATUS - ACTIVE
<TABLE>
<CAPTION>
ID. NO. o---C 0 R P 0 R A T E N A M E----o STATUS o--R E S I D E N T A G E N T--o o---P R I N C I P A L N A M E---o
<S> <C> <C> <C> <C>
F0314419 D. COMPE, INC. X THE CORPORATION TRUST
INCORPORATED 2785 S. OAKLAND STREET
32 SOUTH STREET
BALTIMORE MD 21202 ARLINGTON VA 66606
F3367683 DC PARTNERSHIP MANAGEMENT INC. I CORPORATION TRUST INCORPORATED
2030 DOW CENTER
32 SOUTH STREET
BALTIMORE MD 21202 MIDLAND MI 48674
F1558600 D. C. TAYLOR CO. I THE CORPORATION TRUST
INCORPORATED P.O. BOX 97
32 SOUTH STREET
BALTO. MD 21202 CEDAR RAPIDS IA 52406
F4385670 DC TRANSPORTATION SERVICES, INC. I CORPORATION TRUST
INCORPORATED P.O. BOX 33034
32 SOUTH STREET
BALTIMORE MD 21202 CLEVELAND OH 44133
F2169662 DDL 0MNI ENGINEERING CORP. I CORPORATION TRUST INCORPORATED
7925 CENTER AVENUE
32 SOUTH STREET
BALTIMORE MD 21202 CUCAMONGA CA 91730
Z4817995 DDRC PDK HAGERSTOWN LLC A THE CORPORATION TRUST
INCORPORATED 34555 CHAGRIN BLVD.
32 SOUTH STREET
BALTIMORE MD 21202 MORELAND HILLS OH 44022
Z4818357 DDRC PKD SALISBURY LLC A CORPORATION TRUST INCORPORATED
34555 CHAGRIN BLVD.
32 SOUTH STREET
BALTIMORE MD 21202 MORELAND HILLS OH 44022
F3373881 DEALER COMPUTER SERVICES, INC. I CORPORATION TRUST INCORPORATED
6700 HOLLISTER
32 SOUTH STREET
BALTIMORE MD 21202 HOUSTON TX 77040
F3984473 DEALER FINANCE CORPORATION OF AMERICA I CORPORATION TRUST INCORPORATED
415 N. MCKINLEY SUITE 902
32 SOUTH STREET
BALTIMORE MD 21202 LITTLE ROCK AR 72205
F3678539 DEALERS ENGINE SALES, INC. I CORPORATION TRUST INCORPORATED
3445 DEVELOPERS RD
32 SOUTH STREET
BALTIMORE MD 21202 INDIANOPOLIS IN 44227
D1482793 DEALERS HOLDING, INC. I CORPORATION TRUST INCORPORATED SAMUEL N. WRIGHT
11333 MCCORMICK ROAD
300 E. LOMBARD ST.
BALTIMORE MD 21202 HUNT VALLEY MD 21031
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 3.14(e)
3992 236
11-17-97
CERTIFIED COPY OF RESOLUTION OF BOARD OF DIRECTORS
FOR DESIGNATION OR CHANGE OF
RESIDENT AGENT AND/OR
PRINCIPAL OFFICE
I, Jeanne M. Murphy do hereby certify that I am the duly elected,
qualified and acting secretary of Dealers Holding, Inc., a corporation formed
and existing under the laws of the State of Maryland, and that at a meeting of
the board of directors of said corporation, held on the 1st day of October,
1997, the following resolution was adopted, which said resolution remain in full
force and effect:
"RESOLVED that the resident agent of this corporation in the State
of Maryland be and it hereby is changed to THE CORPORATION TRUST
INCORPORATED, the post-office address of which is 300 East Lombard Street,
Baltimore, Maryland 21202. The said resident agent so designated is a
corporation of the State of Maryland.
/s/ Jeanne M. Murphy
--------------------
Jeanne M. Murphy
(CORPORATE SEAL)
I.D. NO# D1482793
ACKN. NO. - 100C3114883
DEALERS HOLDING, INC.
11/17/97 AT 03:45 P.M.
- --------------------------------------------------------------------------------
STATE OF MARYLAND
I hereby certify that this is a true and complete copy of the 2 page document on
file in this office. DATED: June 24, 1999.
BY: Darla D. Simms, Custodian.
This stamp replaces our previous certification system. Effective: 6/95
(MD. -757- 7/20/82)
11-17-99 at 3:45 p.m
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 3.15(a)
ARTICLES OF INCORPORATION
OF
WILLIAMSBURG MOTORS, INC.
THIS IS TO CERTIFY:
FIRST: I, THE UNDERSIGNED EDWIN F. MILLER, whose post office address is
11335 McCormick Road, Hunt Valley, Maryland 21031, being at least twenty-one
years of age, do hereby declare myself as an incorporator with the intention of
forming a corporation under and by virtue of the General Laws of the State of
Maryland.
SECOND: The name of the corporation (which is hereinafter called the
"Corporation") is Williamsburg Motors, Inc.
THIRD: The purposes for which the Corporation is formed are as follows:
1. To engage in and carry on an automobile and truck dealership; to
engage in and carry on the business of selling, leasing, renting, trading or
otherwise dealing in new and used automobiles, trucks, trailer-trucks, tractors,
trailers, buses and motor vehicles and conveyances of every kind and description
for itself, or for account of others, or in their behalf, or through others for
its own account; to engage in and carry on the business of leasing, renting,
financing, managing, buying, selling, producing, manufacturing, distribution,
trading, or otherwise dealing in any and all kinds of machinery, equipment,
implements, materials, products, supplies, accessories, substances, furniture,
goods, wares,
<PAGE>
merchandise and other personal property of any and every kind and description
for itself, or for account of others and in their behalf or through others for
its own account; to engage in and carry on the business of leasing, renting,
financing, managing, buying, selling, distribution, trading or otherwise dealing
in plant, office, industrial and commercial equipment and machinery and other
equipment and machinery of any and every kind and description, including, but
not limited to, machinery and equipment used in road and bridge building or any
other kind of construction, demolition, excavations, ditching, well digging,
logging and any other type of activity, operations or business, and also railway
and railroad machine and equipment of every kind and description and boats,
barges and vessels of every kind and description and any equipment and machinery
used in connection therewith and airplanes and aircrafts and aircraft machinery
and equipment of any kind and description and office, commercial, industrial and
manufacturing buildings of every kind and description and any equipment and
machinery in, a part of or used in connection therewith; and in connection with
the businesses aforesaid, to act for itself, or for account of others and in
their behalf or through others for its own account and to act as agent, broker,
distributor, commission merchant, representative, manager and consultant of any
person, partnership, firm, corporation or association.
2. To manufacture, purchase or otherwise acquire, hold, mortgage,
pledge, sell, transfer or in any manner
-2-
<PAGE>
encumber or dispose of goods, wares, merchandise, implements and other personal
property or equipment of every kind.
3. To purchase, lease, hire or in any manner to acquire, hold, own,
develop, improve, operate, manage, build upon, mortgage, encumber, sell,
exchange or otherwise dispose of, and otherwise deal in and with any land or
interests therein and improvements thereon, and to engage in and carry on any
business which may be considered necessary or advisable for the purpose of
promoting the general development of any such land or enhancing its value or
furnishing useful or desirable conveniences and advantages to the owners thereof
or dwellers and occupants thereon.
4. To purchase, lease, hire of otherwise acquire, hold, own, build,
construct, erect, improve, manage, operate, mortgage, sell or otherwise dispose
of houses, buildings, apartments, stores, warehouses, plants, gasoline filling
stations, factories, works and structures of all kinds and character for
residential, commercial, industrial or other purposes, and facilities,
appliances and conveniences which may appertain to or be useful in the conduct
of any of the business of the Corporation or which the Corporation may think
directly or indirectly conducive to these objects.
5. To carry on and transact, for itself or for account of others,
the business of general merchants, general brokers, general agents,
manufacturers, buyers and sellers of, dealers in, importers and exporters of
natural products, raw materials, manufacturer products and marketable goods,
wares
-3-
<PAGE>
and merchandise of every description.
6. To purchase or otherwise acquire, hold, sell, and/or reissue
shares of its capital stock of any class; and to purchase, lease or otherwise
acquire, all or any part of the property, rights, businesses, contract,
good-will franchises and assets of every kind, of any corporation,
co-partnership or individual (including the estate of a decedent), carrying on
or having carried on in whole or in part any of the aforesaid businesses or any
other businesses that the Corporation may be authorized to carry on and to
undertake, guarantee, assume and pay the indebtedness and liabilities thereof,
and to pay for any such property, rights, business contracts, goodwill
franchises or assets by the issue, in accordance with the laws of Maryland, of
stock, bonds or other securities of the Corporation or otherwise.
7. To apply for, obtain, purchase or otherwise acquire any patents,
copyrights, licenses, trademarks, tradenames, rights, processes, formulas and
the like, which might be used for any of the purposes of the Corporation; and to
use, exercise, develop, grant licenses in respect of, and sell and otherwise
turn to account, the same.
8. To guarantee the payment of dividends upon any shares of stock
of, or the performance of any contract by any other corporation or association
in which the Corporation has an interest, and to endorse or otherwise guarantee
the payment of the principal and interest, or either, of any bonds, debentures,
notes, securities or other evidences of
-4-
<PAGE>
indebtedness created or issued by any such other corporation or association.
9. To loan or advance money with or without security, without limit
as to amount; and to borrow or raise money for any of the purposes of the
Corporation and to issue bonds, debentures, notes or other obligations of any
nature, and in any manner permitted by law, for money so borrowed or in payment
for property purchased, or for any other lawful consideration, and to secure the
payment thereof and of the interest thereon, by loan and trust agreement, by
mortgage upon, or pledge or conveyance or assignment in trust of, the whole or
any part of the property of the Corporation, real or personal, including, but
not limited to contract rights and leases of any kind, character or nature,
whether at the time owned or thereafter acquired; and to sell, pledge, discount
or otherwise dispose of such bonds, notes or other obligations of the
Corporation for its corporate purposes.
10. To carry on any of the businesses hereinbefore enumerated for
itself, or for account of others, or through others for its own account, and to
carry on any other business which may be deemed by it to be calculated, directly
or indirectly, to effectuate or facilitate the transaction of the aforesaid
objects or businesses, or any of them, or any part thereof or to enhance the
value of its property, business or rights.
The aforegoing enumeration of the purposes, objects and businesses
of the Corporation is made in
-5-
<PAGE>
furtherance, and not in limitation of the powers conferred upon the Corporation
by law, and is not intended, by the mention of any particular purpose, object or
business, in any manner to limit or restrict the generality of any other
purpose, object or business mentioned, or to limit or restrict any of the powers
of the Corporation. The Corporation is formed upon the articles, conditions and
provisions herein expressed, and subject in all particulars to the limitation
relative to corporations which are contained in the general laws of this State.
FOURTH: The post office address of the principal office of the
Corporation in this State is 11333 McCormick Road, Hunt Valley, Maryland 21031.
The name and post office address of the resident agent of the corporation in
this State is William B. Hendricks, 11333 McCormick Road, Hunt Valley, Maryland.
Said resident agent is an individual actually residing in this State.
FIFTH: The total number of shares of stock which the Corporation has
authority to issue is One Thousand (1,000) shares, without par value, all of one
class.
SIXTH: The number of directors of the Corporation shall be three
(3). The number of directors of the Corporation may be increased or decreased
pursuant to the By-Laws of the Corporation, but shall never be less than three
(3); and the names of the directors who shall act until the first annual meeting
or until their successors are duly chosen and qualified are: Jerome W. Geckle,
William B. Hendricks and Frank J.
-6-
<PAGE>
Schmieder.
SEVENTH: The following provisions are hereby adopted for the purpose
of defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
1. The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of its stock, with or without
par value, of any class, whether now or hereafter authorized, and securities
convertible into shares of its stock, with or without par value, of any class,
whether now or hereafter authorized, for such considerations as said Board of
Directors may deem advisable, irrespective of the value or amount of such
considerations, but subject to such limitations and restrictions, if any, as may
be set forth in the By-Laws of the Corporation.
2. No contract or other transaction between this Corporation and any
other corporation and no act of this Corporation shall in any way be affected or
invalidated by the fact that any of the directors of this Corporation are
pecuniarily or otherwise interested in, or are directors or officers of, such
other corporation; any directors individually or any firm of which any director
may be a member, may be a party to, or may be pecuniarily or otherwise
interested in, any contract or transaction of this Corporation, provided that
the fact that he or such firm is so interested shall be disclosed or shall have
been known to the Board of Directors or a majority thereof; and any director of
this Corporation who is also a director or officer of such other corporation or
who is
-7-
<PAGE>
so interested may be counted in determining the existence of a quorum at any
meeting of the Board of Directors of this Corporation, which shall authorize any
such contract or transaction, with like force and effect as if he were not such
director or officer of such other corporation or not so interested.
3. The Board of Directors shall have power, from time to time, to
fix and determine and to vary the amount of working capital of the Corporation;
to determine whether any, and, if any, what part, of the surplus of the
Corporation or of the net profits arising from its business shall be declared in
dividends and paid to the stockholders, subject, however, to the provisions of
the charter, and to direct and determine the use and disposition of any of such
surplus or net profits. The Board of Directors may in its discretion use and
apply any of such surplus or net profits in purchasing or acquiring any of the
shares of the stock of the Corporation or any of its bonds or other evidences of
indebtedness, to such extent and in such manner and upon such lawful terms as
the Board of Directors shall deem expedient.
4. The Board of Directors shall have power, subject to any
limitations or restrictions herein set forth or imposed by law, to classify or
reclassify any unissued shares of stock, whether now or hereafter authorized, by
fixing or altering in any one or more respects, from time to time before
issuance of such shares, the preferences, rights, voting powers, restrictions
and qualifications of, the dividends on,
-8-
<PAGE>
the times and prices of redemption of, and the conversion rights of, such
shares.
5. The Board of Directors shall have power, without the vote of the
stockholders, to issue bonds, debentures, debenture bonds, trust certificates,
mortgages, loan and trust agreements, or other instruments of indebtedness and
to pledge the assets of the Corporation as security therefor.
6. The Board of Directors shall have the power to declare and
authorize the payment of stock dividends, whether or not payable in stock of one
class to holders of stock of the same class or to holders of stock of another
class or classes; and shall have authority to exercise, without a vote of
stockholders, all powers of the Corporation, whether conferred by law or by
these articles, to purchase, lease or otherwise acquire the business, assets or
franchises, in whole or in part, of other corporations or unincorporated
business entities.
EIGHTH: The duration of the Corporation shall be perpetual.
-9-
<PAGE>
IN WITNESS WHEREOF, I have signed these Articles of Incorporation this
22nd day of November, 1982.
WITNESS:
/s/ Sandra M. Penn /s/ Edwin F. Miller (L.S.)
- ------------------------------- ----------------------------------
STATE OF MARYLAND )
) SS
COUNTY OF BALTIMORE )
I HEREBY CERTIFY, that on this 22nd day of November, 1982, before me, the
subscriber, a Notary Public of the State of Maryland in and for the County of
Baltimore, personally appeared Edwin F. Miller and severally acknowledged the
foregoing Articles of Incorporation to be his act.
WITNESS my hand and Notarial Seal, the day of the year first above
written.
/s/ Sandra M. Penn
---------------------------
Notary Public
My commission Expires: 7-1-86
-10-
<PAGE>
Exhibit 3.15(b)
2864 2615
11-6-86
NOTICE OF CHANGE OF RESIDENT AGENT
OF
WILLIAMSBURG MOTORS, INC.
received for record November 6, 1986, at 9:12 A.M. and recorded a Film No.
Frame No. one of the charter records of the State Department of
Assessments and Taxation of Maryland.
To the clerk of the Circuit court of Baltimore County 53
AA No. 25192
Special Fee Paid $5.00
Recording Fee Paid $3.00
-----
Total $8.00
PHH GROUP, INC.
ATTENTION: MS. SHARON L. CURLEY
11333 MCCORMICK ROAD
HUNT VALLEY, MARYLAND 21031
- --------------------------------------------------------------------------------
STATE OF MARYLAND
I hereby certify that this is a true and complete copy of the 2 page document on
file in this office. DATED: June 24, 1999.
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: Darla D. Simms, Custodian.
This stamp replaces our previous certification system. Effective: 6/95
(MD. -757- 7/20/82)
11-17-99 at 3:45 p.m
- --------------------------------------------------------------------------------
<PAGE>
The Board of Directors of Williamsburg Motors, Inc., a corporation organized in
the State of Maryland, on September 19, 1986 duly approved the following
resolutions:
RESOLVED: That the resident agent of the Corporation in the State of
Maryland be and he is hereby changed from WILLIAM B. HENDRICKS, whose post
office address is 11333 McCormick Road, Hunt Valley, Maryland 21031, to
JOHN T. CONNORS JR., whose post office address is 11333 McCormick Road,
Hunt Valley, Maryland 21031, and who is a resident of the State of
Maryland.
RESOLVED: That the proper officers of the Corporation be and they are
hereby authorized and directed for and on behalf of the Corporation to
file an appropriate certified copy of this resolution with the State
Department of Assessments and Taxation of Maryland and to do and perform
any and all other necessary and proper acts incident thereto.
I, Edwin F. Miller, Vice President and Secretary certify under the penalties of
perjury that to the best of my knowledge, information, and belief the foregoing
resolutions are true in all material respects.
/s/ Edwin F. Miller
-------------------
Edwin F. Miller
<PAGE>
Exhibit 3.15(c)
3208 1148
12-27-89
CHANGE OF RESIDENT AGENT
OF
WILLIAMSBURG MOTORS, INC.
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND DECEMBER 27, 1989 AT 11:45 O'CLOCK A.M. AS IN CONFORMITY
WITH LAW AND ORDERED RECORDED.
------------------------
ORGANIZATION AND RECORDING SPECIAL
CAPITALIZATION FEE PAID FEE PAID FEE PAID
$ $10.00 $
---------------------- ------------------- -------------------
D1483742
TO THE CLERK OF THE COURT OF BALTIMORE COUNTY
IT IS HEREBY CERTIFIED THAT THE WITHIN INSTRUMENT, TOGETHER WITH ALL
ENDORSEMENTS THEREON, HAS BEEN RECEIVED, APPROVED AND RECORDED BY THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
RETURN TO:
PHH CORPORATION
11333 MCCORMICK ROAD
HUNT VALLEY MD 21031
141C3032484
A 316794
- --------------------------------------------------------------------------------
[SEAL: STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.]
- --------------------------------------------------------------------------------
STATE OF MARYLAND
I hereby certify that this is a true and complete copy of the 2 page document on
file in this office. DATED: June 24, 1999.
STATE DEPARTMENT OF ASSESMENTS AND TAXATION
BY: Darla D. Simms, Custodian.
This stamp replaces our previous certification system. Effective: 6/95
(MD. -757- 7/20/82)
11-17-99 at 3:45 p.m
- --------------------------------------------------------------------------------
RECORDED IN THE RECORDS OF THE
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION OF MARYLAND IN LIBER. FOLIO.
<PAGE>
The Board of Directors of Williamsburg Motors, Inc., a corporation organized in
the State of Maryland on December 15, 1989 duly approved the following
resolutions:
RESOLVED: That the resident agent of the Corporation in the State of
Maryland be and he is hereby changed from JOHN T. CONNOR, JR., whose post
office address is 11333 McCormick Road, Hunt Valley, Maryland 21031, to
SAMUEL H. WRIGHT, whose post office address is 11333 McCormick Road, Hunt
Valley, Maryland 21031, and who is a resident of the State of Maryland.
RESOLVED: That the proper officers of the Corporation be and they are
hereby authorized and directed for and on behalf of the Corporation to
file an appropriate certified copy of this resolution with the State
Department of Assessments and Taxation of Maryland and to do and perform
any and all other necessary and proper acts incident thereto.
I, Samuel H. Wright, Secretary certify under the penalties of perjury that to
the best of my knowledge, information, and belief the foregoing resolutions are
true in all material respects.
/s/ Samuel H. Wright
--------------------
Samuel H. Wright
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
12-27-89 at 11:45 A.M.
<PAGE>
EXHIBIT 3.15(d)
3998 94
11-17-97
CHANGE OF ADDRESS OF RESIDENT AGENT
The Corporation Trust Incorporated hereby submits the following for the purpose
of changing the address of the resident agent for the business entities on the
attached list:
1. The name of the resident agent is The Corporation Trust Incorporated.
2. The old address of the resident agent is:
32 South Street
Baltimore, Maryland 21202
3. The new address of the resident agent is:
300 East Lombard Street
Baltimore, Maryland 21202
4. Notice of the above changes are being sent to the business entities on the
attached list.
5. The above changes are effective when this document is filed with the
Department of Assessments and Taxation.
/s/ Kenneth J. Uva
- --------------------------
Kenneth J. Uva
Assistant Secretary
[STAMP ILLEGIBLE]
<PAGE>
DATE: 12/06/97 STATE OF MARYLAND PAGE 1098
RESIDENT ADDRESS UNCHANGED LIST
STATUS - ACTIVE
<TABLE>
<CAPTION>
ID. NO. o---C 0 R P 0 R A T E N A M E----o STATUS o--R E S I D E N T A G E N T--o o---P R I N C I P A L N A M E---o
<S> <C> <C> <C> <C>
F4833094 WILLIAMS AND STAZZONE INSURANCE I THE CORPORATION TRUST
AGENCY, INC. INCORPORATED 66 N. ATLANTIC AVENUE, SUITE 201
300 E. LOMBARD ST.
BALTIMORE MD 21202 COCOA BEACH, FL 32931
D1483742 WILLIAMSBURG MOTORS, INC. I CORPORATION TRUST INCORPORATED SAMUEL M. WRIGHT
11333 MCCORMICK ROAD
300 E. LOMBARD ST.
BALTIMORE MD 21202 HUNT VALLEY MD 21031
F4215885 WILLIAMS ENERGY SERVICES COMPANY I CORPORATION TRUST INCORPORATED
ONE WILLIAMS CENTER
32 SOUTH STREET
BALTIMORE MD 21202 TULSA OK 74172
F4212270 WILLIAMS ENERGY VENTURES, INC. I CORPORATION TRUST INCORPORATED
ONE WILLIAMS CENTER
32 SOUTH STREET
BALTIMORE MD 21202 TULSA OK 74172
F3429735 WILLIAMS INFORMATION SERVICES I CORPORATION TRUST INCORPORATED
CORPORATION ONE WILLIAMS CENTER
32 SOUTH STREET
BALTIMORE MD 21202 TULSA OK 74172
F3055902 WILLIAMS INSULATION COMPANY OF I CORPORATION TRUST INCORPORATED
HOUSTON, INC. 7951 FAIRVIEW
32 SOUTH STREET
BALTIMORE MD 21202 HOUSTON TX 77041
F4444196 WILLIAMS LEARNING NETWORK, INC. I CORPORATION TRUST INCORPORATED
111 E. 1ST STREET
32 SOUTH STREET
BALTIMORE MD 21202 TULSA OK [ILLEGIBLE]
F4737664 WILLIAMS OAK MOUNTAIN CONSTRUCTION, INC. I CORPORATION TRUST INCORPORATED
A/K/A/ OAK MOUNTAIN CONSTRUCTION, INC. 1335 NORMANDY DR.
32 SOUTH STREET
BALTIMORE MD 21202 PORTSMOUTH OH 45662
D4484579 WILLIAMSPORT LODGE NO. 2462, LOYAL ORDER I CORPORATION TRUST INCORPORATED
OF MOOSE, INC. 14836 TAMMANY HANDS ROAD
32 SOUTH STREET
BALTIMORE MD 21202 WILLIAMSPORT MD 21795
F2794352 WILLIAMSPORT WIREROPE WORKS, INC. I CORPORATION TRUST INCORPORATED
100 MAYNARD STREET
32 SOUTH STREET
BALTIMORE MD 21202 WILLIAMSPORT PA 17701
F3138089 WILLIAMS POWER CORP. R CORPORATION TRUST INCORPORATED
2076 WEST PARK PLACE
32 SOUTH STREET
BALTIMORE MD 21202 STONE MOUNTAIN GA [ILLEGIBLE]
</TABLE>
<PAGE>
EXHIBIT 3.15(e)
3992 220
11-17-97
CERTIFIED COPY OF RESOLUTION OF BOARD OF DIRECTORS
FOR DESIGNATION OR CHANGE OF
RESIDENT AGENT AND/OR
PRINCIPAL OFFICE
I, Jeanne M. Murphy do hereby certify that I am the duly elected,
qualified and acting secretary of Williamsburg Motors, Inc., a corporation
formed and existing under the laws of the State of Maryland, and that at a
meeting of the board of directors of said corporation, held on the 1st day of
October, 1997, the following resolution was adopted, which said resolution
remain in full force and effect:
"RESOLVED that the resident agent of this corporation in the State
of Maryland be and it hereby is changed to THE CORPORATION TRUST
INCORPORATED, the post-office address of which is 300 East Lombard Street,
Baltimore, Maryland 21202. The said resident agent so designated is a
corporation of the State of Maryland.
/s/ Jeanne M. Murphy
-----------------------------
Jeanne M. Murphy
(CORPORATE SEAL)
73228556
I.D. NO# D1483742
ACKN. NO. - 100C3114875
WILLIAMSBURG MOTORS, INC.
11/17/97 AT 03:43 P.M.
[STAMP ILLEGIBLE]
<PAGE>
EXHIBIT 3.15(f)
4099 439
1-12-99
WILLIAMSBURG MOTORS, INC.
ARTICLES OF AMENDMENT
WILLIAMSBURG MOTORS, INC., a Maryland corporation, having its principal
office at 307 International Circle, Hunt Valley, Maryland, 21030, (hereinafter
referred to as the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland (hereinafler referred to as the
"Department") that:
FIRST: The Articles of Incorporation are hereby amended by adding to
Article THIRD the following new section:
11. To act as an insurance agency to sell life, accident and health
insurance and extended warranty coverage to customers of the Corporation.
IN WITNESS WHEREOF, WILLIAMSBURG MOTORS, INC., has caused these presents to be
signed in its name and on its behalf by its Vice President and its corporate
seal to be hereunder affixed and attested by its Assistant Secretary on this 7th
day of January, 1998, and its Vice President acknowledges that these Articles of
Amendment are the act and deed of Williamsburg Motors, Inc. and under the
penalties of perjury, that the matters and facts set forth herein with respect
to authorization and approval are true in all material respects to the best of
his knowledge, information and belief.
ATTEST: WILLIAMSBURG MOTORS. INC
/s/ Michael P. Sawicki By /s/ Joseph W. Weikel
- --------------------------------------- ---------------------------------
Michael P. Sawicki, Assistant Secretary Joseph W. Weikel, Vice President
I.D. NO# D1483742
ACKN. NO. - 146C3127600
WILLIAMSBURG MOTORS, INC.
01/12/99 AT 12:32 P.M.
[STAMP ILLEGIBLE]
<PAGE>
Exhibit 3.16(a)
1984 OCT 11 A 10:15
ARTICLES OF INCORPORATION
OF
PHH-OMW LEASING, INC.
FIRST: I, John T. Connor, Jr., whose post office address is 11333
McCormick Road, Hunt Valley, Maryland 21031, being at least eighteen (18) years
of age, hereby form a corporation under and by virtue of the General Laws of the
State of Maryland.
SECOND: The name of the corporation (which is hereafter referred to
as the "Corporation") is PHH-OMW LEASING, INC.
THIRD: The purpose for which the Corporation is formed are:
(1) to engage in the general business of leasing motor
vehicles and equipment; and to engage in any other lawful purpose and/or
business.
(2) To do anything permitted by Section 2-103 of the Corporation and
Association Article of the Annotated Code of Maryland, as amended from time to
time.
FOURTH: The post office address of the principal office of the
Corporation in this state is 11333 McCormick Road, Hunt Valley, Maryland 21031.
The name and post office of the resident agent of the Corporation in this state
are John T. Connor, Jr., 11333 McCormick Road, Hunt Valley, Maryland 21031. Said
resident agent in an individual actually residing in this state.
FIFTH: The total number of shares of capital stock which the
Corporation has authority to issue is five-thousand (5,000) shares of common
stock, without par value.
SIXTH: The number of directors of the Corporation shall be three
(3), which number may be increased or decreased pursuant to the bylaws of the
Corporation, but shall never be less than three (3), provided that;
(1) If there is no stock outstanding, the number of directors may be
less than three (3) but not less than one (1); and
(2) If there is stock outstanding and so long as there are less than
three (3) stockholders, the number of directors may be less than three (3) but
not less than the number of stockholders.
<PAGE>
The names of the directors who shall act until the first annual
meeting or until their successors are duly chosen and qualified are: Jerome W.
Geckle, John T. Connor, Jr., and A. Samuel Fenn.
SEVENTH: The following provisions are hereby adopted for the purpose
of defining, limiting, and regulating the powers of the Corporation and of the
directors and stockholders;
(1) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of its stock of any class,
whether now or hereafter authorized, or securities convertible into shares of
its stock of any class or classes, whether nor or hereafter authorized.
(2) The Board of Directors of the Corporation may classify or
reclassify any unissued shares by fixing or altering in any one or more
respects, from time to time before issuance of such shares, the preferences,
rights, voting powers, restrictions, and qualifications of, the dividends on,
the times and prices of redemption of, and the conversion rights of, such
shares.
The enumeration and definition of a particular power of the Board of
Directors included in the foregoing shall in no way be limited or restricted by
reference to or inference from the terms of any other clause or this or any
other article of these Articles or incorporation of the Corporation, or
construed as or deemed by inference or otherwise in any manner to exclude or
limit any powers conferred upon the Board of Directors under the General Laws of
the State of Maryland now or hereafter in force.
EIGHT: Except as may otherwise be provided by the Board of
Directors, no holders of any shares of the stock of the Corporation shall have
any pre-emptive right to purchase, subscribe for, or otherwise acquire any
shares of stock of the Corporation of any class nor or hereafter authorized, or
any securities exchangeable for or convertible into such shares, or any warrants
of other instruments evidencing rights or options to subscribe for, purchase, or
otherwise acquire such shares.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation
this 1st day of October, 1984, and I acknowledge the same to be my act.
/s/ John T. Connor, Jr.
---------------------------
John T. Connor, Jr.
<PAGE>
Exhibit 3.16(b)
2864 2567
11-6-86
NOTICE OF CHANGE OF RESIDENT AGENT
OF
PHH-OMW LEASING, INC.
received for record November 6, 1986, at 9:12 A.M. and recorded on Film No.
Frame No. one of the charter records of the State Department of
Assessments and Taxation of Maryland. To the clerk of the Circuit court of
Baltimore County 53
AA No. 25168
Special Fee Paid $5.00
Recording Fee Paid $3.00
-----
Total $8.00
PHH GROUP, INC.
ATTENTION: MS. SHARON L. CURLEY
11333 MCCORMICK ROAD
HUNT VALLEY, MARYLAND 21031
- --------------------------------------------------------------------------------
STATE OF MARYLAND
I hereby certify that this is a true and complete copy of the 2 page document on
file in this office. DATED: June 24, 1999
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: /s/ Darla D. Simms, Custodian
This stamp replaces our previous certification system. Effective: 6/95
- --------------------------------------------------------------------------------
<PAGE>
The Board of Directors of PHH OMW Leasing, Inc., a corporation organized in the
State of Maryland, on September 19, 1986 duly approved the following
resolutions:
RESOLVED: That the resident agent of the Corporation in the State of
Maryland be and he is hereby changed from WILLIAM B. HENDRICKS, whose post
office address is 11333 McCormick Road, Hunt Valley, Maryland 21031, to
JOHN T. CONNOR, JR., whose post office address is 11333 McCormick Road,
Hunt Valley, Maryland 21031, and who is a resident of the State of
Maryland.
RESOLVED: That the proper officers of the Corporation be and they are
hereby authorized and directed for and on behalf of the Corporation to
file an appropriate certified copy of this resolution with the State
Department of Assessments and Taxation of Maryland and to do and perform
any and all other necessary and proper acts incident thereto.
I, Edwin F. Miller, Vice President and Secretary certify under the penalties of
perjury that to the best of my knowledge, information, and belief the foregoing
resolutions are true in all material respects.
/s/ Edwin F. Miller
-----------------------------
Edwin F. Miller
<PAGE>
Exhibit 3.16(c)
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
4/20/87 at 9:15 a.m.
PHH-OMW LEASING, INC.
ARTICLES OF AMENDMENT
PHH-OMW Leasing, Inc., a Maryland corporation, having its principal
office at 11333 McCormick Road, Hunt Valley, Maryland 21031 (hereinafter
referred to as the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland (the "Department") that:
FIRST: The Charter of the Corporation is hereby amended by striking
in their entirety Articles SECOND and THIRD and by substituting in lieu thereof
the following:
"SECOND: The name of the corporation is Harrisonburg Motors, Inc."
"THIRD: The purposes for which the Corporation is formed are:
(1) To engage in the general business of buying, selling and
leasing of motor vehicles and equipment; and to engage in any other
lawful purpose and/or business.
(2) To do anything permitted by Section 2-103 of the
Corporations and Associations Article of the Annotated Code of
Maryland, as amended from time to time."
SECOND: By written informal action, unanimously taken by the Board
of Directors of the Corporation, pursuant to and in accordance with Section
2-408(c) of the Corporations and Associations Article of the Annotated Code of
Maryland, the Board of Directors of the Corporation duly advised the foregoing
amendment and by written informal action unanimously taken by the sole
stockholder of the Corporation in accordance with Section 2-505 of the
Corporations and Associations Article of the Annotated Code of Maryland, the
stockholder of the Corporation duly approved said amendment.
IN WITNESS WHEREOF, PHH-OMW Leasing, Inc. has caused these presents
to be signed in its name and on its behalf by a Vice President and its corporate
seal to be hereunder affixed and attested by an Assistant Secretary on this 30th
day of March, 1987, and its Vice President acknowledges that these
<PAGE>
Articles of Amendment are the act and deed or PHH-OMW Leasing, Inc. and, under
the penalties of perjury, that the matters and facts set forth herein with
respect to authorization and approval are true in all material respects to the
best of his knowledge, information and belief.
ATTEST: PHH-OMW Leasing, Inc.
/s/ Lauren MacLure, Jr. By: /s/ Gregory K. Hare
- ------------------------- -----------------------------
Lauren MacLure, Jr. Gregory K. Hare
Assistant Secretary Vice President
[STAMP OF OMW-LEASING, INC. 1984 MARYLAND]
<PAGE>
EXHIBIT 3.16(d)
11-16-88 9:38a
ARTICLES OF AMENDMENT
Harrisonburg Motors, Inc., a Maryland corporation, having its
principal office at 11333 McCormick Road, Hunt Valley, Maryland 21031
(hereinafter referred to as the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland (the "Department") that:
FIRST: The Charter of the Corporation is hereby amended by striking
in its entirety Article SECOND and by substituting in lieu thereof
the following:
"SECOND: The name of the Corporation is Edenton Motors, Inc."
SECOND: By written informal action, unanimously taken by the Board
of Directors of the Corporation, pursuant to and in accordance with
Section 2-408(c) of the Corporations and Associations Article of the
Annotated Code of Maryland, the Board of Directors of the
Corporation duly advised the foregoing amendment and by written
informal action unanimously taken by the stockholder of the
Corporation in accordance with Section 2-505 of the Corporations
and Associations Article of the Annotated Code of Maryland, the
stockholder of the Corporation duly approved said amendment.
IN WITNESS WHEREOF, Harrisonburg Motors, Inc. has caused these
presents to be signed in its name and on its behalf by its Vice President and
its corporate seal to be hereunder affixed and attested by its Assistant
Secretary on this 9th day of November, 1988, and its Vice President acknowledges
that these Articles of Amendment are the act and deed of Harrisonburg Motors,
Inc. and, under the penalties of perjury, that the matters and facts set forth
herein with respect to authorization and approval are true in all material
respects to the best of his knowledge, information and belief.
ATTEST: Harrisonburg Motors, Inc.
/s/ William F. Brown By /s/ John T. Connor, Jr.
- ---------------------------- -------------------------------
William F. Brown John T. Connor, jr., Vice
Assistant Secretary President
<PAGE>
EXHIBIT 3.16(e)
3208 971
12-27-89
CHANGE OF RESIDENT AGENT
OF
EDENTON MOTORS, INC.
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND DECEMBER 27, 1989 AT 11:45 O'CLOCK A.M. AS IN CONFORMITY
WITH LAW AND ORDERED RECORDED.
------------------
ORGANIZATION AND RECORDING SPECIAL
CAPITALIZATION FEE PAID FEE PAID FEE PAID
$ $ 10.00 $
---------------------- ------------------ -----------------------
------------------
D1792753
TO THE CLERK OF THE COURT OF BALTIMORE COUNTY
IT IS HEREBY CERTIFIED, THAT THE WITHIN INSTRUMENT, TOGETHER WITH ALL
ENDORSEMENTS THEREON, HAS BEEN RECEIVED, APPROVED AND RECORDED BY THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
RETURN TO:
PHH CORPORATION
11333 MCCORMICK RD.
HUNT VALLEY MD 21031
141C3032425
A 316735
RECORDED IN THE RECORDS OF THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
OF MARYLAND IN [ILLEGIBLE]
[SEAL]
[STAMP ILLEGIBLE]
<PAGE>
The Board of Directors of Edenton Motors, Inc., a corporation organized in the
State of Maryland on December 15, 1989 duly approved the following resolutions:
RESOLVED: That the Corporation in the State of Maryland be and he from
JOHN T. CONNOR, JR., whose post office address is 11333 McCormick Road,
Hunt Valley, Maryland 21031, whose post office address is 11333 McCormick
Road, Hunt Valley, Maryland 21031, and who is a resident of the State of
Maryland.
RESOLVED: That the proper officers of the Corporation be and they are
hereby authorized and directed for and on behalf of the Corporation to
file an appropriate certified copy of this resolution with the State
Department of Assessments and Taxation of Maryland and to do and perform
any and all other necessary and proper acts incident thereto.
I, Samuel H. Wright, Secretary certify under the penalties of perjury that to
the best of my knowledge, information, and belief the foregoing resolutions are
true in all material respects.
/s/ Samuel H. Wright
----------------------
Samuel H. Wright
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
12-27-89 at 11:45 a.m.
<PAGE>
EXHIBIT 3.16(f)
3998 94
11-17-97
CHANGE OF ADDRESS OF RESIDENT AGENT
The Corporation Trust Incorporated hereby submits the following for the purpose
of changing the address of the resident agent for the business entities on the
attached list:
1. The name of the resident agent is The Corporation Trust Incorporated.
2. The old address of the resident agent is:
32 South Street
Baltimore, Maryland 21202
3. The new address of the resident agent is:
300 East Lombard Street
Baltimore, Maryland 21202
4. Notice of the above changes are being sent to the business entities on the
attached list.
5. The above changes are effective when this document is filed with the
Department of Assessments and Taxation.
/s/ Kenneth J. Uva
- --------------------
Kenneth J. Uva
Assistant Secretary
[STAMP ILLEGIBLE]
<PAGE>
DATE: 12/08/97 PAGE 335
STATE OF MARYLAND
RESIDENT ADDRESS UNCHANGED LIST
STATUS - ACTIVE
<TABLE>
<CAPTION>
ID. NO. o---C 0 R P 0 R A T E N A M E----o STATUS o--R E S I D E N T A G E N T--o o---P R I N C I P A L N A M E---o
<S> <C> <C> <C> <C>
F2832087 ECONO-LUBE N'TUNE, INC. I CORPORATION TRUST INCORPORATED
4511 BIRCH STREET
32 SOUTH STREET
BALTIMORE MD 21202 NEWPORT BEACH CA 92632
F1277193 ECONOMIC RESEARCH ASSOCIATES I THE CORPORATION TRUST
INCORPORATED 10960 WILSHIRE BOULEVARD
32 SOUTH STREET 24TH FLOOR
BALTIMORE MD 21202 LOS ANGELES CA 90024
F1150036 ECP INCORPORATED I THE CORPORATION TRUST
INCORPORATED 1200 JOSIE BOULEVARD
32 SOUTH STREET
BALTIMORE MD 21202 OAK BROOK IL 60521
F4660396 EDCO INSURANCE SERVICES, INC. I CORPORATION TRUST INCORPORATION 2700 BANK ONE TOWER
111 MONUMENT CIRCLE
32 SOUTH STREET
BALTIMORE MD 21202 INDIANAPOLIS IN 46284
D1792753 EDENTON MOTORS, INC. I CORPORATION TRUST INCORPORATED SAMUEL H. WRIGHT
11333 MCCORMICK RD.
300 E. LOMBARD ST.
BALTIMORE MD 21202 HUNT VALLEY MD 21031
D2937337 EDGEMERE, TRI-ANGLE HOLDING I CORPORATION TRUST INCORPORATED
CORPORATION 7524 N. POINT ROAD
32 SOUTH STREET
BALTIMORE MD 21202 EDGEMERE MD 21219
D4428964 EDGEMOOR MATERIALS OF MARYLAND, INC. I CORPORATION TRUST
INCORPORATED 284 QUARRY ROAD
32 SOUTH STREET
BALTIMORE MD 21202 NORTHEAST MD 21931
F2188998 EDIS COMPANY R THE CORPORATION TRUST
INCORPORATED P.O. BOX 2697
32 SOUTH STREET
BALTIMORE MD 21202 WILMINGTON DE 19805
F4122888 EDISON CORPORATION I CORPORATION TRUST INCORPORATED
55 GLENLAKE PARKWAY NE
32 SOUTH STREET
BALTIMORE MD 21202 ATLANTA GA 30328
F4746814 EDISON PARKING MANAGEMENT LIMITED A CORPORATION TRUST INCORPORATED
PARTNERSHIP A/K/A EDISON PARKING 15 EAST NORTH ST.
MANAGEMENT L.P. 32 SOUTH
BALTIMORE MD 21202 DOVER DE 19901
F8722718 EDMUND J. FLYNN COMPANY X THE CORPORATION TRUST
INCORPORATED 3408 WISCONSIN AVE., N.W.
32 SOUTH STREET
BALTIMORE MD 21202 WASHINGTON DC 20016
</TABLE>
<PAGE>
EXHIBIT 3.16(g)
3992 215
11-17-97
CERTIFIED COPY OF RESOLUTION OF BOARD OF DIRECTORS
FOR DESIGNATION OR CHANGE OF
RESIDENT AGENT AND/OR
PRINCIPAL OFFICE
I, Jeanne M. Murphy do hereby certify that I am the duly elected,
qualified and acting secretary of Edenton Motors, Inc., a corporation formed and
existing under the laws of the State of Maryland, and that at a meeting of the
board of directors of said corporation, held on the 1st day of October, 1997,
the following resolution was adopted, which said resolution remain in full force
and effect:
"RESOLVED that the resident agent of this corporation in the State
of Maryland be and it hereby is changed to THE CORPORATION TRUST
INCORPORATED, the post-office address of which is 300 East Lombard Street,
Baltimore, Maryland 21202. The said resident agent so designated is a
corporation of the State of Maryland.
/s/ Jeanne M. Murphy
---------------------------
Jeanne M. Murphy
(CORPORATE SEAL)
I.D. NO# D1792753
ACKN. NO. - 100C3114873
EDENTON MOTORS, INC.
11/17/97 AT 03:43 P.M.
[STAMP ILLEGIBLE]
<PAGE>
EXHIBIT 3.17
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:30 PM 05/24/1999
991206399 - 3047536
CERTIFICATE OF INCORPORATION
OF
PHH CANADIAN HOLDINGS, NC.
FIRST: The name of the Corporation is PHH Canadian Holdings, Inc.
(hereinafter the "Corporation").
SECOND: The address of the registered office of the Corporation in
the State of Delaware is 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware
Code (the "GCL").
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 1,000 shares of Common Stock, each having a par
value of one penny ($.01).
FIFTH: The name and mailing address of the Sole Incorporator is as
follows:
Name Address
---- -------
Mary E. Keogh P.O. Box 636
Wilmington, DE 19899
SIXTH: The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
<PAGE>
(1) The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the stockholders
to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
(3) The number of directors of the Corporation shall be as from time
to time fixed by, or in the manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot unless
the By-Laws so provide
(4) No director shall be personally liable to the Corporation or any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the GCL or (iv)
for any transaction from which the director derived an improper personal
benefit. Any repeal or modification of this Article SIXTH by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such
repeal or modification with respect to acts or omissions occurring prior
to such repeal or modification.
(5) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the GCL, this Certificate of Incorporation, and any By-Laws
adopted by the stockholders; provided, however, that no By-Laws hereafter
adopted by the stockholders shall invalidate any prior act of the
directors which would have been valid if such By-Laws had not been
adopted.
SEVENTH: Meetings of stockholders may be held within or without the
State of Delaware, as the By-Laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the GCL) outside the State of
2
<PAGE>
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
EIGHTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the GCL, do make this
Certificate, hereby declaring and certifying that this is my act and deed and
the facts herein stated are true, and accordingly have hereunto set my hand this
24th day of May, 1999.
/s/ Mary E. Keogh
---------------------------
Mary E. Keogh
Sole Incorporator
3
<PAGE>
EXHIBIT 3.18(a)
ARTICLES 0F INCORPORATION
OF
HOMEQUITY SERVICES, INC.
FIRST: I, John T. Connor,jr., whose post office address is 11333
McCormick Road, Hunt Valley, Maryland 21031 being at least eighteen (18) years
of age, hereby form a corporation under and by virtue of the General Laws of the
State of Maryland.
SECOND: The name of the corporation (which is hereinafter referred
to as the "Corporation") is Homequity Services, Inc.
THIRD: The purposes for which the Corporation is formed are:
(1) To provide real-estate related services to companies that are
relocating employees.
(2) In general, to possess and exercise all the powers and
privileges granted by by Section 2-103 of the Corporations and Associations
Article of the Annotated Code of Maryland, as amended from time to time, or by
any other law or Maryland or by these Articles of Incorporation, together with
any powers incidental thereto, so far as such powers and privileges are
necessary or convenient to the conduct, promotion or attainment of the business
or purposes of the Corporation.
FOURTH: The post office address of the principal office of the
Corporation in this state is 11333 McCormick Road, Hunt Valley, Maryland 21031.
The name and post office of the resident agent of the Corporation in this state
is John T. Connor, jr., 11333 McCormick Road, Hunt Valley, Maryland 21031. Said
resident agent is an individual actually residing in this state.
FIFTH: The total number of shares of capital stock which the
Corporation has authority to issue is five thousand (5,000) shares of common
stock, without par value.
SIXTH: The number of directors of the Corporation shall be three
(3), which number may be increased or decreased pursuant to the by-laws of the
Corporation, but shall never be less than three (3), provided that:
(1) If there is no stock outstanding, the number of directors may be
less than three (3) but not less than one (1); and
<PAGE>
(2) If there is stock outstanding and so long as there are less than
three (3) stockholders, the number of directors may be less than three (3) but
not less than the number of stockholders.
The names of the directors who shall act until the first annual
meeting or until their successors are duly chosen and qualified are: Jerome W.
Geckle, John T. Conner, jr., Robert D. Kunisch and John J. Gottsman.
SEVENTH: The following provisions are hereby adopted for the purpose
of defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
(1) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of its stock of any class,
whether now or hereafter authorized, or securities convertible into shares of
its stock of any class or classes, whether now or hereafter authorized.
(2) The Board of Directors of the Corporation may classify or
reclassify any unissued shares by fixing or altering in any one or more
respects, from time to time before issuance of such shares, the preferences,
rights, voting powers, restrictions, and qualifications of, the dividends on,
the times and prices of redemption of, and the conversion rights of, such
shares.
The enumeration and definition of a particular power of the Board of
Directors included in the foregoing shall in no way be limited or restricted by
reference to or inference from the terms of any other clause of this or any
other article of these Articles of Incorporation of the Corporation, or
construed as or deemed by inference or otherwise in any manner to exclude or
limit any powers conferred upon the Board of Directors under the General Laws of
the State of Maryland now or hereafter in force.
EIGHTH: Except as may otherwise be provided by the Board of
Directors, no holder of any shares of the stock of the Corporation shall have
any pre-emptive right to purchases, subscribe for, or otherwise acquire any
shares of stock of the Corporation of any class now or hereafter authorized, or
any securities exchangeable for or convertible into such shares, or any warrants
or other instruments evidencing rights or options to subscribe for, purchase, or
otherwise acquire such shares.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation
this [ILLEGIBLE] day of April, 1985, and I acknowledge the same to be my act.
/s/ John T. Connor, jr.
-------------------------------
John T. Connor, jr.
<PAGE>
EXHIBIT 3.18(b)
STATE DEPARTMENT OF ASSESSMENT
AND TAXATION
APPROVED FOR RECORD
7-20-87 at 9:56 a.m.
HOMEQUITY SERVICES, INC.
ARTICLES OF AMENDMENT
Homequity Services, Inc., a Maryland Corporation, having its
principal office in Baltimore County, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by striking
out Article SECOND of the Articles of Incorporation in its entirety, and
substituting in lieu thereof the following:
"SECOND: The name of the Corporation (which is hereinafter called
the "Corporation") is PHH CashCard, Inc."
SECOND: The Board of Directors of the Corporation duly adopt
resolutions setting forth the foregoing amendment to the charter, declaring it
to be advisable and directing that it be submitted for action thereon at a
special meeting of the stockholders of the Corporation to be held on July 16,
1987.
THIRD: Notice setting forth the said amendment of the charter and
stating that the purpose of the meeting of the stockholders would be to take
action thereon, was given as required by law, to all stockholders of the
Corporation entitled to vote thereon. The amendment of the charter of the
Corporation as hereinabove set forth was approved by the stockholders of the
Corporation at said meeting by the affirmation vote of more than two-thirds of
all the shares of the Common Stock of the Corporation outstanding and entitled
to vote thereon.
FOURTH: The amendment of the charter of the Corporation as
hereinabove set forth has been duly advised by the Board of Directors and
approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, Homequity Services, Inc. has caused these
presents to be signed in its name and on its behalf by its Vice President and
its corporate seal to be hereunto affixed and attested by its Assistant
Secretary on July 16, 1987.
ATTEST: HOMEQUITY SERVICES, INC.
By /s/ Gordon W Priest Jr By /s/ [ILLEGIBLE]
------------------------- ------------------------------
Assistant Secretary Vice President
<PAGE>
Page Two
THE UNDERSIGNED, Vice President of Homequity Services, Inc., who
executed on behalf of said corporation the foregoing Articles of Amendment, of
which this certificate is made a part hereby acknowledges in the name and on
behalf of said corporation, the foregoing Articles of Amendment to be the
corporate act of said corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.
/s/ [ILLEGIBLE]
-------------------------
Vice President
<PAGE>
EXHIBIT 3.18(c)
PHH CashCard, Inc.
ARTICLES OF AMENDMENT
PHH CashCard, Inc., a Maryland Corporation, having its principal
office in Baltimore County, Maryland (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: The charter of the Corporation is hereby amended by striking
out paragraph (1) of Article THIRD of the Articles of Incorporation in its
entirety, and substituting in lieu thereof the following:
(1) The operation and management of payment and cost control
systems for goods and services of all kinds and in particular for vehicle fuel
and maintenance.
SECOND: The Board of Directors of the Corporation duly adopt
resolutions setting forth the foregoing amendment to the charter, declaring it
to be advisable and directing that it be submitted for action thereon at a
special meeting of the stockholders of the Corporation to be held on September
18, 1987.
THIRD: Notice setting forth the said amendment of the charter and
stating that the purpose of the meeting of the stockholders would be to take
action thereon, was given as required by law, to all stockholders of the
Corporation entitled to vote thereon. The amendment of the charter of the
Corporation as hereinabove set forth was approved by the stockholders of the
Corporation at said meeting by the affirmation vote of more than two-thirds of
all the shares of the Common Stock of the Corporation outstanding and entitled
to vote thereon.
FOURTH: The amendment of the charter of the Corporation as
hereinabove set forth has been duly advised by the Board of Directors and
approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, PHH CashCard, Inc. has caused these presents to
be signed in its name and on its behalf by its Vice President and its corporate
seal to be hereunto affixed and attested by its Assistant Secretary on September
18, 1987.
ATTEST: PHH CashCard, Inc.
By /s/ Gordon W Priest Jr By /s/ [ILLEGIBLE]
------------------------- ------------------------------
Assistant Secretary Vice President
<PAGE>
Page Two
THE UNDERSIGNED. Vice President of PHH CashCard, Inc., who executed
on behalf of said corporation the foregoing Articles of Amendment, of which this
certificate is made a part, hereby acknowledges in the name and on behalf of
said corporation, the foregoing Articles of Amendment to be the corporate act of
said corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under the penalties of
perjury.
/s/ [ILLEGIBLE]
-------------------------
Vice President
STATE DEPARTMENT OF ASSESSMENTS
AND NOTIFY
APPROVED FOR RECORD
9/22/87 at 9:40 a.m.
<PAGE>
EXHIBIT 3.18(d)
STATE DEPARTMENT OF ASSESSMENT
AND TAXATION
APPROVED FOR RECORD
7-28-89 at 9:18 a.m.
Received
'89 JUL 28 AM 9 18
STATE DEPT. OF
ASSESSMENT & TAXATION
PHH CashCard, Inc.
ARTICLES OF AMENDMENT
PHH CashCard, Inc., a Maryland corporation, having its principal
office at 11333 McCormick Road, Hunt Valley, Maryland 21031 (hereinafter
referred to as the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland (the "Department") that:
FIRST: The Charter of the Corporation is hereby amended by striking
in its entirety Article SECOND and by substituting in lieu thereof
the following:
"SECOND: The name of the Corporation is PHH Deutschland, Inc."
SECOND: By written informal action, unanimously taken by the Board
of Directors of the Corporation, pursuant to and in accordance with
Section 2-408(c) of the Corporations and Associations Article of the
Annotated Code of Maryland, the Board of Directors of the
Corporation duly advised the foregoing amendment and by written
informal action unanimously taken by the stockholder of the
Corporation in accordance with Section 2-505 of the Corporations and
Associations Article of the Annotated Code of Maryland, the
stockholder of the Corporation duly approved said amendment.
IN WITNESS WHEREOF, PHH CashCard, Inc. has caused these presents to
be signed in its name and on its behalf by its President and its corporate seal
to be hereunder affixed and attested by its Assistant Secretary on this 24th day
of July, 1989, and its President acknowledges that these Articles of Amendment
are the act and deed of PHH CashCard, Inc. and, under the penalties of perjury,
that the matters and facts set forth herein with respect to authorization and
approval are true in all material respects to the best of his knowledge,
information and belief.
ATTEST: PHH CashCard, Inc.
/s/ Gordon W Priest Jr /s/ Joachim F. Diedrich
- --------------------------- ------------------------------
Gordon W. Priest, Jr. Joachim F. Diedrich.
Assistant Secretary President
<PAGE>
EXHIBIT 3.18(e)
3208 920
12-27-89
CHANGE OF RESIDENT AGENT
OF
PHH DEUTSCHLAND, INC.
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND DECEMBER 27, 1989 AT 11:45 O'CLOCK A.M. AS IN CONFORMITY
WITH LAW AND ORDERED RECORDED.
--------------------
ORGANIZATION AND RECORDING SPECIAL
CAPITALIZATION FEE PAID FEE PAID FEE PAID
$ $ 10.00 $
- ---------------------- ---------------- ----------------------
----------------
D1921337
TO THE CLERK OF THE COURT OF BALTIMORE COUNTY
IT IS HEREBY CERTIFIED, THAT THE WITHIN INSTRUMENT, TOGETHER WITH ALL
INDORSEMENTS THEREON, HAS BEEN RECEIVED, APPROVED AND RECORDED BY THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
RETURN TO:
PHH CORPORATION
11333 MCCORMICK RD.
HUNT VALLEY MD 21031
141C3032428
- --------------------------------------------------------------------------------
STATE OF MARYLAND
A 316738
This certifies that this is a true and correct copy of the [ILLEGIBLE].
[SEAL OF THE STATE DEPARTMENT OF ASSESSMENT AND TAXATION OF MARYLAND]
June 24, 1999
BY: /s/ Darla D. Simms, Custodian
This stamp replaces our previous certification system. Effective:
RECORDED IN THE RECORDS OF THE
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION OF MARYLAND IN LIBER, FOLIO
- --------------------------------------------------------------------------------
<PAGE>
The Board of Directors of PHH Deutschland, Inc., a corporation organized in the
State of Maryland on December 15, 1989 duly approved the following resolutions:
RESOLVED: That the Corporation in the State of Maryland be and he from
JOHN T. CONNOR, JR., whose post office address is 11333 McCormick Road,
Hunt Valley, Maryland 21031, , whose post office address is 11333
McCormick Road, Hunt Valley, Maryland 21031, and who is a resident of the
State of Maryland.
RESOLVED: That the proper officers of the Corporation be and they are
hereby authorized and directed for and on behalf of the Corporation to
file an appropriate certified copy of this resolution with the State
Department of Assessments and Taxation of Maryland and to do and perform
any and all other necessary and proper acts incident thereto.
I, Samuel H. Wright, Secretary certify under the penalties of perjury that to
the best of my knowledge, information, and belief the foregoing resolutions are
true in all material respects.
/s/ Samuel H. Wright
----------------------------------------
Samuel H. Wright
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
12-27-89 at 11:45 A.m.
<PAGE>
EXHIBIT 3.18(f)
3736 275
7-17-95
ARTICLES OF AMENDMENT
OF
PHH DEUTSCHLAND, INC.
CHANGING ITS NAME TO:
PHH VEHICLE MANAGEMENT SERVICES (DEUTSCHLAND)
CORPORATION
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND JULY 17, 1995 AT 9:37 O'CLOCK A.M. AS IN CONFORMITY
WITH LAW AND ORDERED RECORDED.
--------------------
ORGANIZATION AND RECORDING SPECIAL
CAPITALIZATION FEE PAID FEE PAID FEE PAID
$ $ 20.00 $
- ---------------------- ---------------- ----------------------
--------------------
D1921337
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
IT IS HEREBY CERTIFIED, THAT THE WITHIN INSTRUMENT, TOGETHER WITH ALL
INDORSEMENTS THEREON, HAS BEEN RECEIVED, APPROVED AND RECORDED BY THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
SHARON CURLEY
11333 MCCORMICK ROAD
HUNT VALLEY MD 21031
01703098273
- --------------------------------------------------------------------------------
STATE OF MARYLAND
A 493470
This certifies that this is a true and correct copy of the [ILLEGIBLE].
[SEAL OF THE STATE DEPARTMENT OF ASSESSMENT AND TAXATION OF MARYLAND]
June 24, 1999
BY: /s/ Darla D. Simms, Custodian
This stamp replaces our previous certification system. Effective:
RECORDED IN THE RECORDS OF THE
STATE DEPARTMENT OF ASSESSMENT
AND TAXATION OF MARYLAND IN LIBER, FOLIO
- --------------------------------------------------------------------------------
<PAGE>
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
7-17-95 at 9:37
RECEIVED
95 JUL 17 A9:37
PHH DEUTSCHLAND, INC.
ARTICLES OF AMENDMENT
PHH Deutschland, Inc. a Maryland corporation, having its principal office
at 11333 McCormick Road, Hunt Valley, Maryland 21031 (hereinafter referred to as
the "Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland (the "Department") that:
FIRST: The Charter of the Corporation is hereby amended by striking in
their entirety Articles SECOND and THIRD and by substituting in lieu thereof the
following:
"SECOND: The name of the Corporation (which is hereinafter referred to as
the "Corporation") is PHH Vehicle Management Services (Deutschland) Corporation.
"THIRD: The purposes for which the Corporation is formed are:
(1) To engage in the business of operation and management of vehicle
acquisition, disposal, leasing, maintenance and cost control programs.
(2) To do anything permitted by Section 2-103 of the Corporations and
Associations Article of the Annotated Code of Maryland, as amended from time to
time.
SECOND: By written informal action, unanimously taken by the Board of Directors
of the Corporation, pursuant to and in accordance with Section 2-408(c) of the
Corporations and Associations Article of the Annotated Code of Maryland, the
Board of Directors of the Corporation duly advised the foregoing amendment and
by written informal action unanimously taken by the stockholder of the
Corporation in accordance with Section 2-505 of the Corporations and
Associations Article of the Annotated Code of Maryland, the stockholder of the
Corporation duly approved said amendment.
RECEIVED
95 JUL 14 92:33
<PAGE>
IN WITNESS WHEREOF, PHH Deutschland, Inc. has caused these presents to be
signed in its name and on its behalf by its Vice President and its corporate
seal to be hereunder affixed and attested by its Assistant Secretary on this
13th day of July 1995, and its Vice President acknowledges that these Articles
of Amendment are the act and deed of PHH Deutschland, Inc. and, under the
penalties of perjury, that the matters and facts set forth herein with respect
to authorization and approval are true in all material respects to the best of
his knowledge, information and belief.
ATTEST: PHH Deutschland, Inc.
By: /s/ Gordon W. Priest, Jr. By: /s/ Samuel H. Wright
------------------------------- -------------------------------
Gordon W. Priest, Jr. Samuel H. Wright
Assistant Secretary Vice President
<PAGE>
EXHIBIT 3.18(g)
10-4-96
ARTICLES OF AMENDMENT
OF:
PHH VEHICLE MANAGEMENT SERVICES (DEUTSCHLAND)
CORPORATION
CHANGING ITS NAME TO:
PHH DEUTSCHLAND, INC.
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND OCTOBER 4, 1996 AT 11:28 O'CLOCK A.M. AS IN CONFORMITY
WITH LAW AND ORDERED RECORDED.
--------------------
ORGANIZATION AND RECORDING SPECIAL
CAPITALIZATION FEE PAID FEE PAID FEE PAID
$ $ 20.00 $
- ---------------------- ---------------- ----------------------
--------------------
D1921337
IT IS HEREBY CERTIFIED, THAT THE WITHIN INSTRUMENT, TOGETHER WITH ALL
INDORSEMENTS THEREON, HAS BEEN RECEIVED, APPROVED AND RECORDED BY THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
PHH GROUP
SHARON CURLEY
11333 MCCORMICK ROAD
HUNT VALLEY MD 21031
071C310690
- --------------------------------------------------------------------------------
STATE OF MARYLAND
A 536813
This certifies that this is a true and correct copy of the 2 page [ILLEGIBLE].
[SEAL OF THE STATE DEPARTMENT OF ASSESSMENT AND TAXATION OF MARYLAND]
June 24, 1999
BY: /s/ Darla D. Simms, Custodian
This stamp replaces our previous certification system. Effective:
RECORDED IN THE RECORDS OF THE
STATE DEPARTMENT OF ASSESSMENT
AND TAXATION OF MARYLAND IN LIBER, FOLIO
- --------------------------------------------------------------------------------
<PAGE>
STATE DEPARTMENT OF ASSESSMENT
AND TAXATION
APPROVED FOR RECORD
10-4-96 at 11:28.m.
RECEIVED
96 OCT -4 A11:28
PHH VEHICLE MANAGEMENT SERVICES (DEUTSCHLAND) CORPORATION
ARTICLES OF AMENDMENT
PHH Vehicle Management Services (Deutschland) Corporation, a Maryland
corporation, having its principal office at 11333 McCormick Road, Hunt Valley,
Maryland 21031 (hereinafter referred to as the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland (the
"Department") that:
FIRST: The Charter of the Corporation is hereby amended by striking in
its entirety Articles SECOND and by substituting in lieu thereof the
following:
"SECOND: The name of the Corporation is PHH Deutschland Inc."
SECOND: By written informal action, unanimously taken by the Board of
Directors of the Corporation, pursuant to and in accordance with section
2-408(c) of the Corporations and Associations Article of the Annotated Code of
Maryland, the Board of Directors of the Corporation duly advised the foregoing
amendment and by written informal action unanimously taken by the stockholder of
the Corporation in accordance with section 2-505 of the Corporations and
Associations Article of the Annotated Code of Maryland, the stockholder of the
Corporation duly approved said amendment.
62818041
IN WITNESS WHEREOF, PHH Vehicle Management Services (Deutschland)
Corporation has caused these presents to be signed in its name and on its behalf
by its Vice President and its corporate seal to be hereunder affixed and
attested by its Assistant Secretary on this 1st day of October, 1996, and its
Vice President acknowledges that these Articles of Amendment are the act and
deed of PHH Vehicle Management Services (Deutschland) Corporation and, under the
penalties of perjury, that the matters and facts set forth herein with respect
to authorization and approval are true in all material respects to the best of
his knowledge, information and belief.
ATTEST: PHH Vehicle Management Services
(Deutschland) Corporation
By: /s/ Gordon W. Priest, Jr. By: /s/ Samuel H. Wright
------------------------------- -------------------------------
Gordon W. Priest, Jr. Samuel H. Wright
Assistant Secretary Vice President
<PAGE>
EXHIBIT 3.18(h)
3992 213
11-17-97
CERTIFIED COPY OF RESOLUTION OF BOARD OF DIRECTORS
FOR DESIGNATION OR CHANGE OF
RESIDENT AGENT AND/OR
PRINCIPAL OFFICE
I, Jeanne M. Murphy do hereby certify that I am the duly elected,
qualified and acting secretary of PHH Deutschland, Inc., a corporation formed
and existing under the laws of the State of Maryland, and that at a meeting of
the board of directors of said corporation, held on the 1st day of October,
1997, the following resolution was adopted, which said resolution remain in full
force and effect:
"RESOLVED that the resident agent of this corporation in the State
of Maryland be and it hereby is changed to THE CORPORATION TRUST
INCORPORATED, the post-office address of which is 300 East Lombard Street,
Baltimore, Maryland 21202. The said resident agent so designated is a
corporation of the State of Maryland.
/s/ Jeanne M. Murphy
----------------------------------------
Jeanne M. Murphy
(CORPORATE SEAL)
I.D. NO# D1921337
ACKN. NO. - 100C3114872
PHH DEUTSCHLAND, INC.
11/17/97 AT 03:43 P.M.
- --------------------------------------------------------------------------------
STATE DEPARTMENT [ILLEGIBLE]
STATE OF MARYLAND
(MD - 757 - 7/20/82)
I hereby certify that this is a true and complete copy of the 2 page document on
[ILLEGIBLE].
11-17-97 AT 3:43 P m.
June 24, 1999
BY: /s/ Darla D. Simms, Custodian
This stamp replaces our previous certification system. Effective:
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 3.18(i)
3998 94
11-14-97
CHANGE OF ADDRESS OF RESIDENT AGENT
The Corporation Trust Incorporated hereby submits the following for the purpose
of changing the address of the resident agent for the business entities on the
attached list:
1. The name of the resident agent is The Corporation Trust Incorporated.
2. The old address of the resident agent is:
32 South Street
Baltimore, Maryland 21202
3. The new address of the resident agent is:
300 East Lombard Street
Baltimore, Maryland 21202
4. Notice of the above changes are being sent to the business entities on the
attached list.
5. The above changes are effective when this document is filed with the
Department of Assessments and Taxation.
/s/ Kenneth J. Uva
- ------------------
Kenneth J. Uva
Assistant Secretary
- --------------------------------------------------------------------------------
STATE OF MARYLAND
I hereby certify that this is a true and complete copy of the 3 page document on
on file in this office DATED: June 24, 1999.
BY: /s/ Darla D. Simms, Custodian
This stamp replaces our previous certification system. Effective: 6/95
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
11-17-97 AT 8:30 A. m.
- --------------------------------------------------------------------------------
<PAGE>
[ILLEGIBLE]
S T A T U S - A C T I V E
<TABLE>
<CAPTION>
ID. NO. *-----C O R P O R A T E N A M E------* STATUS *---R E S I D E N T A G E N T---* *--P R I N C I P A L N A M E--*
<S> <C> <C> <C> <C>
D0171744 PHH CORPORATION X CORPORATION TRUST INCORPORATED SAMUEL H. WRIGHT
11333 MCCORMICK ROAD
300 E. LOMBARD ST.
BALTIMORE MD 21202 HUNT VALLEY MD 21031
D1921337 PHH DEUTSCHLAND, INC. I CORPORATION TRUST INCORPORATED SAMUEL H. WRIGHT
11333 MCCORMICK ROAD
300 E. LOMBARD ST.
BALTIMORE MD 21202 HUNT VALLEY MD 21031
D1563105 PHH FINANCIAL SERVICES, INC. I CORPORATION TRUST INCORPORATED SAMUEL H. WRIGHT
11333 MCCORMICK ROAD
300 E. LOMBARD ST.
BALTIMORE MD 21202 HUNT VALLEY MD 21031
D0166512 PHH FOUNDATION, INC. X CORPORATION TRUST INCORPORATED SAMUEL H. WRIGHT
11333 MCCORMICK ROAD
300 E. LOMBARD ST.
BALTIMORE MD 21202 HUNT VALLEY MD 21031
D0496034 PHH-GALLOP LEASING, INC. X CORPORATION TRUST INCORPORATED SAMUEL H. WRIGHT
11333 MCCORMICK ROAD
300 E. LOMBARD ST.
BALTIMORE MD 21202 HUNT VALLEY MD 21031
D1403104 PHH-GATE LEASING, INC. I CORPORATION TRUST INCORPORATED SAMUEL H. WRIGHT
11333 MCCORMICK ROAD
300 E. LOMBARD ST.
BALTIMORE MD 21202 HUNT VALLEY MD 21031
D1905843 PHH HOLDINGS CORPORATION I CORPORATION TRUST INCORPORATED SAMUEL H. WRIGHT
11333 MCCORMICK ROAD
300 E. LOMBARD ST.
BALTIMORE MD 21202 HUNT VALLEY MD 21031
D0114824 PHH INSURANCE ASSOCIATES CORPORATION I CORPORATION TRUST INCORPORATED SAMUEL H. WRIGHT
11333 MCCORMICK ROAD
300 E. LOMBARD ST.
BALTIMORE MD 21202 HUNT VALLEY MD 21031
D1260223 PHH INTER-GROUP LEASING, INC. I CORPORATION TRUST INCORPORATED SAMUEL H. WRIGHT
11333 MCCORMICK ROAD
300 E. LOMBARD ST.
BALTIMORE MD 21202 HUNT VALLEY MD 21031
D138471 PHH-LONG LEASING, INC. X CORPORATION TRUST INCORPORATED SAMUEL H. WRIGHT
11333 MCCORMICK ROAD
300 E. LOMBARD ST.
BALTIMORE MD 21202 HUNT VALLEY MD 21031
D1452838 PHH-MARKET LEASING, INC. I CORPORATION TRUST INCORPORATED SAMUEL H. WRIGHT
11333 MCCORMICK ROAD
300 E. LOMBARD ST.
BALTIMORE MD 21202 HUNT VALLEY MD 21031
</TABLE>
<PAGE>
Exhibit 3.19(a)
CERTIFICATE OF INCORPORATION
OF
KOBRICK-HFS FUNDS, INC.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the "Corporation")
is
KOBRICK-HFS FUNDS, INC.
SECOND: The address, including street, number, city, and county, of the
registered office of the Corporation in the State of Delaware is 1013 Centre
Road, City of Wilmington, County of New Castle; and the name of the registered
agent of the Corporation in the State of Delaware is The Prentice-Hall
Corporation System, Inc.
THIRD: The nature of the business to be conducted and the purposes of the
Corporation are to engage in any lawful act or activity or carry on any business
for which corporations may be organized under the Delaware General Corporation
Law or any successor statute.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is Twenty-Three Thousand (23,000),
consisting of:
(i) 15,000 shares of Common Stock, Zero Dollars and One Cent ($0.01)
Par Value per share (the "Common Stock"); and
(ii) 8,000 shares of Series A Preferred Stock, Zero Dollars and One
Cent ($0.01) Par Value per share (the "Series A Preferred Stock").
The Series A Preferred Stock is sometimes referred to herein as the
"Preferred Stock." The number of authorized shares of Preferred Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the shares
of Common Stock, without a vote of the holders of the Preferred Stock, or of any
series thereof, unless a vote of any such holders is required pursuant to the
terms of any Preferred Stock then outstanding.
The relative powers, designations, preferences, special rights,
restrictions and other matters relating to the Common Stock and the Preferred
Stock are as set forth below in this Article FOURTH.
<PAGE>
A. Common Stock.
1. General. The voting, dividend and liquidation and other rights of
the holders of the Common Stock are expressly made subject to and qualified by
the rights of the holders of any series of Preferred Stock.
2. Voting Rights. Except as otherwise provided in this Article
FOURTH or as otherwise required by the laws of the State of Delaware, the entire
voting power and all voting rights shall be vested exclusively in the Common
Stock. The holders of record of the Common Stock are entitled to one vote per
share held on all matters to be voted on by the Corporation's stockholders.
There shall be no cumulative voting.
3. Dividends and Distributions. Dividends may be declared and paid
on the Common Stock from funds lawfully available therefor if, as and when
determined and declared by the Board of Directors in their sole discretion,
subject to provisions of applicable law, subject to any provision of this
Certificate of Incorporation, as amended from time to time, and subject to the
relative rights and preferences of any shares of Preferred Stock authorized,
issued and outstanding hereunder.
4. Liquidation Rights. Upon the dissolution, liquidation or winding
up of the Corporation, whether voluntary or involuntary, holders of record of
the Common Stock will be entitled to receive pro rata all assets of the
Corporation available for distribution to its stockholders, subject, however, to
the liquidation rights of the holders of Preferred Stock authorized, issued and
outstanding hereunder.
B. Series A Preferred Stock.
1. Designation and Number of Shares; Seniority. A total of Eight
Thousand (8,000) shares of the Preferred Stock shall be designated as the Series
A Preferred Stock. As used in this Article FOURTH, the term "Preferred Stock"
includes the Series A Preferred Stock. Such number of shares may be decreased by
vote of the Board of Directors, subject to any limitations prescribed by law.
The rights of holders of Series A Preferred Stock with respect to dividends and
distributions and upon liquidation of the Corporation shall be senior to such
rights of holders of any other series of Preferred Stock or Common Stock.
2. Voting Rights. Except as otherwise required by the laws of the
State of Delaware, the holders of Series A Preferred Stock shall have no voting
rights or powers and shall not be entitled to receive notice of any meeting of
stockholders of the Corporation. On any matter as to which the laws of the State
of Delaware require a vote of the holders of Series A Preferred Stock, the
holders of Series A Preferred Stock shall vote together with the holders of
Common Stock and the holders of all other series of Preferred Stock, voting as a
single class, except as otherwise required by the laws of the State of Delaware.
-2-
<PAGE>
3. Dividends and Distributions.
(a) Cumulative Dividends.
(i) Computation of Cumulative Dividends. The holders of
record of the outstanding shares of Series A Preferred Stock
shall be entitled to receive, out of any funds legally
available therefor, cumulative dividends at the annual rate of
6% of the Liquidation Preference Amount (as defined in
subparagraph 4(a) below) per share from time to time
outstanding, payable semi-annually on the first day of April
and October of each year. Such dividends shall accrue from day
to day on each share of Series A Preferred Stock from the date
of original issuance of such share, whether or not earned or
declared, and shall accrue until paid.
All numbers relating to the calculation of cumulative
dividends shall be determined and paid in United States
Dollars and shall be subject to equitable adjustment in the
event of any stock dividend, stock split, combination,
reorganization, recapitalization, reclassification or other
similar event involving a change in the capital structure of
the Series A Preferred Stock.
Such dividends on the Series A Preferred Stock shall be
cumulative so that if such dividends in respect of any
previous or current annual dividend period, at the annual rate
specified above, shall not have been paid or declared and a
sum sufficient for the payment thereof has not been set aside,
the deficiency shall first be fully paid before any dividend
or other distribution shall be paid or declared and set aside
for the Common Stock.
(ii) Restrictions on Distributions. Unless all accrued
dividends on each share of the Series A Preferred Stock shall
have been paid or declared and a sum sufficient for the
payment thereof set aside, no dividend shall be paid or
declared, and no distribution shall be made, on any Common
Stock (other than a dividend on Common Stock payable solely in
the form of additional shares of Common Stock).
(b) Preference Distributions.
(i) Computation of Preference Distributions. The holders
of record of the outstanding shares of Series A Preferred
Stock shall be entitled to receive, pro rata in accordance
with their respective holdings, out of any funds legally
available therefor, "Preference Distributions" equal to the
percentage of Aggregate Operating Income (as defined below)
set forth below, payable annually within 90 days after the end
of each fiscal year, commencing with the fiscal year ending
December 31, 1997:
Aggregate Operating Income Percentage Payable as
Greater than But Not Over Preference Distribution
------------ ------------ -----------------------
$0 $ 2.0 million 0%
$2.0 million $ 5.0 million 33%
$5.0 million $10.0 million 40%
$10.0 million 50%
-3-
<PAGE>
provided, however, that holders of record of outstanding
shares of Series A Preferred Stock shall cease to be entitled
to receive further Preference Distributions at such time as
the aggregate amount of Preference Distributions paid or
payable by the Corporation pursuant to this subparagraph 3(b)
equals $8,000,000.
As used in this Article FOURTH, "Aggregate Operating
Income" shall mean, for any fiscal year, the pre-tax operating
income of the Corporation for such fiscal year, as calculated
in accordance with generally accepted accounting principles
consistently applied (except that, to the extent any officers
of the Corporation receive incentive compensation under a
formula based upon pre-tax operating income which does not
treat such incentive compensation as an operating expense,
such incentive compensation shall also be excluded as an
operating expense for purposes of the definition of Aggregate
Operating Income hereunder), minus accrued dividends paid or
payable to holders of Series A Preferred Stock in respect of
such fiscal year pursuant to subparagraph 3(a) above.
All numbers relating to the calculation of Preference
Distributions shall be determined and paid in United States
Dollars and shall be subject to equitable adjustment in the
event of any stock dividend, stock split, combination,
reorganization, recapitalization, reclassification or other
similar event involving a change in the capital structure of
the Series A Preferred Stock.
Preference Distributions shall be calculated and paid
prior to the payment by the Corporation of any Additional
Distributions (as defined in subparagraph 3(c) below) and
shall accrue until paid. Such Preference Distribution on the
Series A Preferred Stock shall be cumulative so that if such
distributions in respect of any previous or current fiscal
year shall not have been paid or declared and a sum sufficient
for the payment thereof has not been set aside, the deficiency
shall first be fully paid before any dividend or other
distribution shall be paid or declared and set aside for the
Common Stock.
(c) Additional Distributions.
(i) Computation of Additional Distributions. The holders
of record of the outstanding shares of Sales A Preferred Stock
shall be entitled to receive, pro rata in accordance with
their respective holdings, out of any funds legally available
therefor, "Additional Distributions" equal to the percentage
of Aggregate Net Operating Income (as defined below) set forth
below, payable annually within 90 days after the end of each
fiscal year, commencing with the fiscal year ending December
31, 1998:
Aggregate Net Operating Income Percentage Payable as
Greater than But Not Over Preference Distribution
------------ ------------ -----------------------
$O $ 5.0 million 50%
$5.0 $10.0 million 60%
$10.0 million 70%
As used in this subparagraph 3(e), "Aggregate Net
Operating Income" shall mean, for any fiscal year, the
Aggregate Operating Income of the Corporation for such fiscal
year, as calculated in accordance with subparagraph
-4-
<PAGE>
3(b) above, minus the aggregate amount of Preference
Distributions paid or payable to holders of Series A Preferred
Stock in respect of such fiscal year pursuant to subparagraph
3(b) above.
All numbers relating to the calculation of Additional
Distributions shall be determined and paid in United States
Dollars and shall be subject to equitable adjustment in the
event of any stock dividend, stock split, combination,
reorganization, recapitalization, reclassification or other
similar event involving a change in the capital structure of
the Series A Preferred Stock.
Additional Distributions shall accrue until paid. Such
Additional Distributions on the Series A Preferred Stock shall
be cumulative so that if such distributions in respect of any
previous or current fiscal year shall not have been paid or
declared and a sum sufficient for the payment thereof has not
been set aside, the deficiency shall first be fully paid
before any dividend or other distribution shall be paid or
declared and set aside for the Common Stock.
4. Liquidation Rights.
(a) Treatment at Liquidation. Dissolution or Winding Up. The
Series A Preferred Stock shall be preferred as to assets over the
Common Stock of the Corporation. In the event any liquidation,
dissolution, or winding up of the Corporation, whether voluntary or
involuntary, or in the event of its insolvency, the holders of
Series A Preferred Stock shall be entitled to have set apart for
them, or to be paid, out of the assets of the Corporation available
for distribution to stockholders, and before any distribution or
payment is made to any holders of any shares of Common Stock or any
other class or series of capital stock of the Corporation, an amount
equal to:
(i) $1,000 per share of Series A Preferred Stock (which
amount shall be subject to equitable adjustment in the event
of a stock dividend, stock split, combination, reorganization,
recapitalization, reclassification or other similar event
involving a change in the capital structure of the Corporation
with respect to the Series A Preferred Stock) minus all
Preference Distributions paid thereon (the "Liquidation
Preference Amount"); plus
(ii) all accrued and unpaid dividends thereon, whether
or not earned or declared; plus
(iii) all accrued and unpaid Preference Distributions
and Additional Distributions thereon, whether or not earned or
declared;
up to and including the date full payment shall be tendered to the
holders of the Series A Preferred Stock with respect to such
liquidation, dissolution or winding up.
If, upon any liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary, the assets legally
available for distribution among the holders of the Series A
Preferred Stock shall be insufficient to permit payment to such
holders of the full preferential amounts as provided for above, then
such holders shall share ratably to any distribution of available
assets according to the respective amounts which would otherwise be
payable with respect to the shares of Series A Preferred Stock held
by them upon such liquidating distribution if all amounts payable on
or with respect to said shares were paid in full, based upon the
aggregate liquidation value of the Series
-5-
<PAGE>
A Preferred Stock.
After such payment shall have been made in full to the holders
of the Series A Preferred Stock, or funds necessary for such payment
shall have been set aside by the Corporation in trust for the
account of holders of the Series A Preferred Stock so as to be
available for such payment, the remaining assets available for
distribution shall be distributed ratably among the holders of the
Common Stock.
(b) Distributions Other than Cash. Whenever the distribution
provided for in this paragraph 4 shall be payable in property other
than cash, the value of such distribution shall be the fair market
value of such property as determined in good faith by the Board of
Directors of the Corporation.
5. Reacquired Shares. Unless all accrued dividends on each share of
the Series A Preferred Stock shall have been paid or declared and a sum
sufficient for the payment thereof set aside, the Corporation shall not
repurchase any shares of its Common Stock or of any series of Preferred
Stock other than the Series A Preferred Stock except in connection with
the exercise of a contractual right or fulfillment of a contractual
obligation of the Corporation to repurchase any such shares pursuant to
that certain Stockholders Agreement by and among the Corporation and
Frederick R. Kobrick, Michael T. Carmen and HFS Incorporated. Any shares
of Series A Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof.
FIFTH: The name and mailing address of the sole incorporator are as
follows:
Name Mailing Address
---- ---------------
Ellen J. Grossman Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
One Financial Center
Boston, MA 02111
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition and not in limitation of
the powers of the Corporation and of its directors and of its stockholders or
any class thereof, as the case may be, conferred by the State of Delaware, it is
further provided that:
A. The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed by, or in the
manner provided in, the Bylaws. The phrase "whole Board" and the phrase "total
number of directors" shall be deemed to have the same meaning, to wit, the total
number of directors which the Corporation would have if there were no vacancies.
No election of directors need be by written ballot.
B. After the original or other Bylaws of the Corporation have been
adopted, amended or repealed, as the case may be, in accordance with the
provisions of Section 109 of the General Corporation Law of the State of
Delaware, and, after the Corporation has received any payment for any of its
stock, the power to adopt, amend, or repeal the Bylaws of the Corporation may be
exercised by the Board of Directors of the Corporation.
-6-
<PAGE>
C. The books of the Corporation may be kept at such place within or
without the State of Delaware as the Bylaws of the Corporation may provide or as
may be designated from time to time by the Board of Directors of the
Corporation.
EIGHTH: The Corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented from time to time, indemnify and advance expenses to
(i) its directors, officers, employees, controlling persons and agents and (ii)
any person who at the request of the Corporation is or was serving as a
director, officer, employee, controlling person or agent of another corporation,
partnership, joint venture, trust or other enterprise, from and against any and
all of the expenses, liabilities, or other matters referred to in or covered by
said section as amended or supplemented (or any successor), provided, however,
that except with respect to proceedings to enforce rights to indemnification,
the Bylaws of the Corporation may provide that the Corporation shall indemnify
any director, officer or such person in connection with a proceeding (or part
thereof) initiated by such director, officer or such person only if such
proceeding (or part thereof) was authorized by the Board of Directors of the
Corporation. The Corporation, by action of its Board of Directors, may provide
indemnification or advance expenses to employees and agents of the Corporation
or other persons only on such terms and conditions and to the extent determined
by the Board of Directors in its sole and absolute discretion. The
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in their official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
NINTH: No director of this Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director except to the extent that exemption from
liability or limitation thereof is not permitted under the General
Corporation Law of the State of Delaware as in effect at the time such
liability or limitation thereof is determined. No amendment, modification or
repeal of this Article shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with respect to
any acts or omissions of such director occurring prior to such amendment,
modification or repeal. If the General Corporation Law of the State of
Delaware is amended after approval by the stockholders of this Article to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as so mended.
TENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths (3/4) in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case way be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said
-7-
<PAGE>
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
ELEVENTH: From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the Corporation by this
Certificate of Incorporation are granted subject to the provisions of this
Article.
I, the undersigned, being the sole incorporator, for the purpose of
forming a Corporation under the laws of the State of Delaware, do make, file
and record this Certificate of Incorporation, to certify that the facts
herein stated are true, and accordingly have hereto set my hand this 6th day
of October, 1997.
/s/ Ellen J. Grossman
-----------------------------------
Ellen J. Grossman
Incorporator
-8-
<PAGE>
Exhibit 3.19(b)
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 01/06/1998
981006625 - 2804924
Certificate of Amendment to Certificate of Incorporation
of
KOBRICK-HFS FUNDS, INC.
It is hereby certified that:
1. The present name of the corporation (hereinafter called the
"Corporation") is Kobrick-HFS Funds, Inc.
2. The Certificate of Incorporation of the Corporation is hereby amended
by striking out Article FIRST thereof and by substituting in lieu of said
Article the following new article:
FIRST: The name of the corporation (hereinafter called the "Corporation")
is
Kobrick-Cendant Funds, Inc.
3. The amendment of the Certificate of Incorporation herein certified has
been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
Signed this 6th day of January, 1998.
/s/ Frederick R. Kobrick
----------------------------------
Name: Frederick R. Kobrick
Title: President
<PAGE>
Exhibit 3.19(c)
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 12/30/1998
981511105 - 2804924
Certificate of Amendment to Certificate of Incorporation
of
KOBRICK-CENDENT FUNDS, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is
Kobrick-Cendant Funds, Inc.
2. The Certificate of Incorporation of the Corporation, as amended to
date, is hereby amended by deleting Section B.5 of Article FOURTH thereof in its
entirety and by substituting in lieu of said Section the following new Section
B.5:
5. Reacquired Shares. Unless all accrued dividends on each
share of the Series A Preferred Stock shall have been paid or
declared and a sum sufficient for the payment thereof set aside, the
Corporation shall not repurchase any shares of its Common Stock or
of any series of Preferred Stock other than the Series A Preferred
Stock except in connection with the exercise of a contractual right
or fulfillment of a contractual obligation of the Corporation to
repurchase any such shares pursuant to that certain Stockholders
Agreement by and among the Corporation and Frederick R. Kobrick,
Michael T. Carmen and Cendant Corporation or unless the Board of
Directors shall have approved such repurchase. Any shares of Series
A Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof.
3. The amendment of the Certificate of Incorporation herein certified has
been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
Signed this 30th day of December, 1998.
/s/ Frederick R. Kobrick
----------------------------------
Name: Frederick R. Kobrick
Title: President
<PAGE>
Exhibit 3.19(d)
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 01/04/1999
991002463 - 2804924
Certificate of Amendment to Certificate of Incorporation
of
KOBRICK-CENDANT FUNDS, INC.
It is hereby certified that:
1. The present name of the corporation (hereinafter called the
"Corporation") is Kobrick-Cendant Funds, Inc.
2. The Certificate of Incorporation of the Corporation, as amended to
date, is hereby amended by striking out Article FIRST thereof and by
substituting in lieu of said Article the following new article:
FIRST: The name of the corporation (hereinafter called the "Corporation")
is
FAH Company, Inc.
3. The amendment of the Certificate of Incorporation herein certified has
been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
Signed this 31st day of December, 1998.
/s/ Frederick R. Kobrick
----------------------------------
Name: Frederick R. Kobrick
Title: President
<PAGE>
Exhibit 3.20
LIMITED LIABILITY COMPANY AGREEMENT
OF
PHH VEHICLE MANAGEMENT SERVICES, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") of PHH
Vehicle Management Services, LLC (the "Company") dated as of this 1st day of
April, 1999, by PHH Holdings Corporation, a Maryland corporation, as the sole
member of the Company (the "Member").
RECITAL
The Member has formed the Company as a limited liability company
under the laws of the State of Delaware and desires to enter into a written
agreement, in accordance with the provisions of the Delaware Limited Liability
Company Act and any successor statute, as amended from time to time (the "Act"),
governing the affairs of the Company and the conduct of its business.
ARTICLE 1
The Limited Liability Company
1.1 Formation. The Member has previously formed the Company as a
limited liability company pursuant to the provisions of the Act. A Certificate
of Formation for the Company (the "Certificate of Formation") has been filed in
the Office of the Secretary of State of the State of Delaware in conformity with
the Act. Express authorization is hereby given to Deborah M. Reusch for the
exclusive purpose of executing the Certificate of Formation of the Company which
has been filed in the Office of the Secretary of State of Delaware.
1.2 Name. The name of the Company shall be "PHH Vehicle Management
Services, LLC" and its business shall be carried on in such name with such
variations and changes as the Board (as hereinafter defined) shall determine or
deem necessary to comply with requirements of the jurisdictions in which the
Company's operations are conducted.
<PAGE>
1.3 Business Purpose; Powers. The Company is formed for the purpose
of engaging in any lawful business, purpose or activity for which limited
liability companies may be formed under the Act. The Company shall possess and
may exercise all the powers and privileges granted by the Act or by any other
law or by this Agreement, together with any powers incidental thereto, so far as
such powers and privileges are necessary or convenient to the conduct, promotion
or attainment of the business purposes or activities of the Company.
1.4 Registered Office and Agent. The location of the registered
office of the Company shall be Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801. The Company's Registered Agent at such address shall
be The Corporation Trust Company.
1.5 Term. Subject to the provisions of Articles 7 and 9 below, the
Company shall have perpetual existence.
1.6 Principal Place of Business. The principal place of business of
the Company shall be at such location as the Board may, from time to time,
select.
1.7 Title to Company Property. Legal title to all property of the
Company shall be held and vested and conveyed in the name of the Company and no
real or other property of the Company shall be deemed to be owned by the Member
individually. The Common Interests (as hereinafter defined) of the Member shall
constitute personal property.
1.8 Business Transactions of the Member with the Company. In
accordance with Section 18-107 of the Act, the Member may transact business with
the Company and, subject to applicable law, shall have the same rights and
obligations with respect to any such matter as a person who is not a member.
1.9 Fiscal Year. The fiscal year of the Company (the "Fiscal Year")
for financial statement purposes shall be determined by the Board.
2
<PAGE>
ARTICLE 2
The Member
2.1 The Member. The name and address of the Member is as follows:
Name Address
---- -------
PHH Holdings Corporation 307 International Circle
Hunt Valley, Maryland 21030-1337
2.2 Member Meetings.
(a) Actions by the Member; Meetings. The Member may approve a
matter or take any action at a meeting or without a meeting by the written
consent of the Member pursuant to subparagraph (b) below. Meetings of the Member
may be called at any time by the Member.
(b) Action by Written Consent. Any action may be taken by the
Member without a meeting if authorized by the written consent of the Member. In
no instance where action is authorized by written consent of the Member will a
meeting of the Member be called or notice be given. However, a copy of the
action taken by written consent shall be filed with the records of the Company.
2.3 Liability of the Member. All debts, obligations and liabilities
of the Company, whether arising in contract, tort or otherwise, shall be solely
the debts, obligations and liabilities of the Company, and the Member shall not
be obligated personally for any such debt, obligation or liability of the
Company solely by reason of being a member.
2.4 Power to Bind the Company. The Member (acting in its capacity as
such) shall have the authority to bind the Company to any third party with
respect to any matter.
2.5 Admission of Members. New members shall be admitted only upon
the approval of the Member.
3
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ARTICLE 3
The Board
3.1 Management By Board of Managers.
(a) Subject to such matters which are expressly reserved
hereunder or under the Act to the Member for decision, the business and affairs
of the Company shall be managed by a board of managers (the "Board"), which
shall be responsible for policy setting and approving the overall direction of
the Company. The Board shall consist of one (1) to seven (7) individuals (the
"Managers"), the exact number of Managers to be determined from time to time by
resolution of the Member or the Board.
(b) Each Manager shall be elected by the Member and shall
serve until his or her successor has been duly elected and qualified, or until
his or her earlier removal, resignation, death or disability. The Member may
remove any Manager from the Board or from any other capacity with the Company at
any time, with or without cause. A Manager may resign at any time upon written
notice to the Board.
(c) Any vacancy occurring on the Board as a result of the
resignation, removal, death or disability of a Manger or an increase in the size
of the Board shall be filled by a majority of the remaining Mangers. A Manager
chosen to fill a vacancy resulting from the resignation, removal, death or
disability of a Manager shall serve the unexpired term of his or her predecessor
in office.
3.2 Meetings of the Board.
(a) The Board shall meet at such times as may be necessary for
the Company's business on at least two (2) days' prior written notice of the
time and place of such meeting. A majority of the Managers shall constitute a
quorum for the transaction of business by the Board.
(b) Notice of any Board meeting may be waived by any Manager
before or after such meeting.
(c) All actions of the Board shall require the affirmative
vote of a majority of the Managers. Each Manager shall be entitled to one vote
on all matters. A Manager who is present at a meeting of the Board when action
is taken
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shall be deemed to have assented to the action taken unless: (i) the Manager
objects at the beginning of the meeting, or promptly upon his or her arrival, to
holding the meeting or transacting business thereat, (ii) the Manager's dissent
or abstention from the action taken is entered in the minutes of the meeting; or
(iii) the Manager delivers written notice of his or her dissent or abstention to
the presiding officer of the meeting before its adjournment or to the Secretary
of the Company immediately after adjournment of the meeting. The right of
dissent or abstention shall not be available to a Manager who votes in favor of
the action taken.
(d) Meetings of the Board may be conducted in person or by
conference telephone facilities and each Manager shall be entitled to
participate in any meeting of the Board by telephone. Any action required or
permitted to be taken at any meeting of the Board may be taken without a meeting
if such number of Managers sufficient to approve such action pursuant to the
terms of this Agreement consent thereto in writing. The writing or writings
effectuating such written consent must be filed with the minutes of proceedings
of the Board.
3.3 Power to Bind Company. No Manager (acting in his capacity as
such) shall have any authority to bind the Company to any third party with
respect to any matter except pursuant to a resolution expressly authorizing such
action which resolution is duly adopted by the Board by the affirmative vote
required for such matter pursuant to this Agreement.
3.4 Officers and Related Persons. The Board shall have the authority
to appoint and terminate officers of the Company and retain and terminate
employees, agents and consultants of the Company and to delegate such duties to
any such officers, employees, agents and consultants as the Board deems
appropriate, including the power, acting individually or jointly, to represent
and bind the Company in all matters, in accordance with the scope of their
respective duties.
ARTICLE 4
Capital Structure and Contributions
4.1 Capital Structure. The capital structure of the Company shall
consist of one class of common interests (the "Common Interests"). All Common
Interests shall be identical with each other in every respect. Initially, the
Member shall own one hundred (100) Common Interests.
5
<PAGE>
4.2 Capital Contributions. From time to time, the Board may
determine that the Company requires capital and may request the Member to make
capital contribution(s) in an amount determined by the Board. A capital account
shall be maintained for the Member, to which contributions and profits shall be
credited and against which distributions and losses shall be charged.
ARTICLE 5
Profits, Losses and Distributions
5.1 Profits and Losses. For financial accounting purposes, the
Company's net profits or net losses shall be determined on an annual basis in
accordance with generally accepted accounting principles. In each year, profits
and losses shall be allocated entirely to the Member.
5.2 Distributions. The Board shall determine profits available for
distribution and the amount, if any, to be distributed to the Member, and shall
authorize and distribute on the Common Interests the determined amount when, as
and if declared by the Board. Any distributions by the Company shall be
allocated entirely to the Member.
ARTICLE 6
Accounts; Tax Returns; Tax Characterization
6.1 Books. The Board shall cause to be maintained complete and
accurate books of account of the Company's affairs at the Company's principal
place of business. Such books shall be kept on such method of accounting as the
Board shall select. The Company's accounting period shall be as determined by
the Board.
6.2 Company Tax Returns. The Member shall cause to be prepared and
timely filed all tax returns required to be filed for the Company. Subject to
Section 6.3, the Member may, in its sole discretion, make or refrain from making
any tax election for the Company that it deems necessary.
6.3 Tax Treatment. To the extent the Member is the sole member of
the Company, (i) it is the intention of the Member that, for income tax
purposes, the Company be treated as an entity that is disregarded as an entity
separate from its owner and (ii) the Member and the Company shall timely make
all necessary
6
<PAGE>
elections and filings, if any, for income tax purposes such that it will not be
treated as a separate entity, but, instead, will be treated for income tax
purposes as an entity that is disregarded as an entity separate from its owner.
ARTICLE 7
Events of Dissolution
The Company shall be dissolved upon the occurrence of any of
the following events (each, an "Event of Dissolution"):
(a) The Member votes for dissolution; or
(b) A judicial dissolution of the Company under Section 18-802
of the Act.
No other event, including the retirement, withdrawal,
insolvency, liquidation, dissolution, insanity, resignation, expulsion,
bankruptcy, death, incapacity or adjudication of incompetency of the Member,
shall cause the existence of the Company to terminate.
ARTICLE 8
Transfer of Interests in the Company
The Member may sell, assign, transfer, convey, gift, exchange
or otherwise dispose of any or all of its Common Interests and, upon receipt by
the Company of a written agreement by the person or entity to whom such Common
Interests are to be transferred agreeing to be bound by the terms of this
Agreement, such person shall be admitted as a member of the Company.
7
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ARTICLE 9
Termination
9.1 Liquidation. In the event that an Event of Dissolution shall
occur, then the Company shall be liquidated and its affairs shall be wound up.
All proceeds from such liquidation shall be distributed in accordance with the
provisions of Section 18-804 of the Act, and all Common Interests in the Company
shall be cancelled.
9.2 Final Accounting. In the event of the dissolution of the
Company, prior to any liquidation, a proper accounting shall be made to the
Member from the date of the last previous accounting to the date of dissolution.
9.3 Distribution in Kind. All or any portion of the Company's assets
may be distributed in kind to the Member in the event the Board determines that
such distribution is in the best interest of the Company.
9.4 Cancellation of Certificate. Upon the completion of the winding
up of the Company and the distribution of the Company's assets, the Company
shall be terminated and the Member shall cause the Company to execute and file a
Certificate of Cancellation in accordance with Section 18-203 of the Act.
ARTICLE 10
Exculpation and Indemnification
10.1 Exculpation. Notwithstanding any other provision of this
Agreement, whether express or implied, or obligation or duty at law or in
equity, none of the Member or any officers, directors, stockholders, managers,
partners, employees, affiliates, representatives or agents of the Member, nor
any Manager, officer, employee, representative or agent of the Company or any of
its affiliates (individually, a "Covered Person" and, collectively, the "Covered
Persons") shall be liable to the Company or any other person for any act or
omission (in relation to the Company, this Agreement, any related document or
any transaction contemplated hereby or thereby) taken or omitted in good faith
by a Covered Person in the reasonable belief that such act or omission was in or
was not contrary to the best interests of the Company, and was within the scope
of authority granted to such Covered Person by this Agreement, the Act, the
Member or the Managers, provided
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such act or omission does not constitute fraud, willful misconduct, bad faith or
gross negligence.
10.2 Indemnification. To the fullest extent permitted by law, the
Company shall indemnify and hold harmless each Member, Manager and each
director, stockholder, manager and partner of the Member (collectively,
"Indemnified Parties") from and against any and all losses, claims, demands,
liabilities, expenses, judgments, fines, settlements and other amounts arising
from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative ("Claims"), in which such Indemnified
Party may be involved, or threatened to be involved, as a party or otherwise, by
reason of its management of the affairs of the Company or which relates to or
arises out of the Company or its property, business or affairs. Notwithstanding
the foregoing, none of the Indemnified Parties shall be entitled to
indemnification under this Section 10.2 with respect to any Claim with respect
to which such Indemnified Party has engaged in fraud, willful misconduct, bad
faith or gross negligence. The Company may, but shall not be required to,
provide indemnification rights to officers, employees, representatives, agents
and affiliates of the Company or the Member to the same extent provided to
Indemnified Parties pursuant to this Section 10.2, when as, and if determined by
the Board, in its sole discretion.
10.3 Advancement of Expenses. The Company may pay for in advance or
reimburse as incurred the reasonable expenses, including reasonable attorneys'
fees, incurred by a Indemnified Party in such proceeding referred to in Section
10.2, or otherwise reimburse such expenses in advance of the final disposition
of such proceeding, or, where appropriate, may assume the defense of any such
Indemnified Party at the Company's expense upon the receipt by the Company of an
undertaking by such Indemnified Party to repay any such amounts if such
Indemnified Party is ultimately determined not to be entitled to indemnification
pursuant to Section 10.2 hereof.
10.4 Indemnification Not Exclusive. The indemnification and
advancement of expenses provided for in this Article X shall not exclude, limit
or preclude any other rights to which any such Indemnified Party seeking
indemnification or advancement of expenses may be entitled under the Act, any
agreement or contract, any other applicable law or otherwise, and shall continue
as to a Indemnified Party who has ceased to serve as a Member (or director,
stockholder, manager or partner of the Member) or Manager of the Company, or in
any other indemnified
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capacity, and shall inure to the benefit of the heirs, executors, and
administrators of any such Indemnified Party.
10.5 Insurance. The Company may purchase and maintain insurance on
behalf of any Indemnified Party against any liability asserted against or
incurred by such Indemnified Party in any capacity or arising out of his or her
status as such, whether or not the Company has the obligation or power to
indemnify such Indemnified against such liability pursuant to the provisions of
this Article X, the Act, or otherwise.
10.6 Continuation of Indemnity. The provisions of this Article X
shall continue to apply to any proceeding specified in Section 10.2 made or
commenced against any Indemnified Party who has ceased to be a Indemnified Party
entitled to indemnification hereunder and shall inure to the benefit of the
estate, heirs and personal representatives of such Indemnified Party.
10.7 Amendments. Any repeal or modification of this Article X by the
Member shall not adversely affect any rights of such Indemnified Party pursuant
to this Article X, including the right to indemnification and to the advancement
of expenses of a Indemnified Party existing at the time of such repeal or
modification with respect to any acts or omissions occurring prior to such
repeal or modification.
ARTICLE 11
Amendment to Agreement
Amendments to this Agreement and to the Certificate of Formation
must be approved in writing by the Member. An amendment shall become effective
as of the date specified in the approval of the Member or if none is specified
as of the date of such approval or as otherwise provided in the Act.
ARTICLE 12
General Provisions
12.1 Notices. Unless otherwise specifically provided in this
Agreement, all notices and other communications required or permitted to be
given hereunder shall be in writing and shall be (i) delivered by hand, (ii)
delivered by a nationally recognized commercial overnight delivery service,
(iii) mailed postage
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prepaid by first class mail in any such case directed or addressed to the
address set forth below or (iv) transmitted by facsimile to:
If to the Member, to:
PHH Holdings Corporation
307 International Circle
Hunt Valley, Maryland 21030-1337
Such notices shall be effective: (a) in the case of hand deliveries, when
received; (b) in the case of an overnight delivery service, on the next business
day after being placed in the possession of such delivery service, with delivery
charges prepaid; (c) in the case of mail, seven (7) days after deposit in the
postal system, first class mail, postage prepaid; and (d) in the case of
facsimile notices, when electronic indication of receipt is received. Any party
may change its address and telecopy number by written notice to the other given
in accordance with this Section 12.1.
12.2 Construction Principles. As used in this Agreement, words in
any gender shall be deemed to include all other genders. The singular shall be
deemed to include the plural and vice versa. The captions and article and
section headings in this Agreement are inserted for convenience of reference
only and are not intended to have significance for the interpretation of or
construction of the provisions of this Agreement.
12.3 Severability. If any provision of this Agreement is held to be
invalid or unenforceable for any reason, such provision shall be ineffective to
the extent of such invalidity or unenforceability; provided, however, that the
remaining provisions will continue in full force without being impaired or
invalidated in any way unless such invalid or unenforceable provision or clause
shall be so significant as to materially affect the expectations of the Member
regarding this Agreement. Otherwise, any invalid or unenforceable provision
shall be replaced by the Member with a valid provision which most closely
approximates the intent and economic effect of the invalid or unenforceable
provision.
12.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
the principles of conflicts of laws thereof.
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12.5 Binding Effect. This Agreement shall be binding upon, and inure
to the benefit of, the Member.
12.6 Additional Documents and Acts. The Member agrees to execute and
deliver such additional documents and instruments and to perform such additional
acts as may be necessary or appropriate to effectuate, carry out and perform all
of the terms, provisions, and conditions of this Agreement and of the
transactions contemplated hereby.
12.7 No Third-Party Beneficiary. This Agreement is made solely for
the benefit of the Member and no other person shall have any rights, interest,
or claims hereunder or otherwise be entitled to any benefits under or on account
of this Agreement as a third-party beneficiary or otherwise.
12.8 Limited Liability Company. The Member intends to form a limited
liability company and does not intend to form a partnership under the laws of
the State of Delaware or any other laws.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned has duly executed this Agreement
as of the day first above written.
PHH HOLDINGS CORPORATION
By: /s/ James E. Buckman
---------------------------------
Name: James E. Buckman
Title: Executive Vice President
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Exhibit 3.21
LIMITED LIABILITY COMPANY AGREEMENT
OF
WRIGHT EXPRESS LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") of Wright
Express LLC (the "Company"), dated as of this 18th day of June, 1999, by PHH
Holdings Corporation, a Texas corporation, as the sole member of the Company
(the "Member").
RECITAL
The Member has formed the Company as a limited liability company
under the laws of the State of Delaware and desires to enter into a written
agreement, in accordance with the provisions of the Delaware Limited Liability
Company Act and any successor statute, as amended from time to time (the "Act"),
governing the affairs of the Company and the conduct of its business.
ARTICLE 1
The Limited Liability Company
1.1 Formation. The Member has previously formed the Company as a
limited liability company pursuant to the provisions of the Act. A Certificate
of Formation for the Company (the "Certificate of Formation") has been filed in
the Office of the Secretary of State of the State of Delaware in conformity with
the Act. Express authorization is hereby given to Deborah M. Reusch for the
exclusive purpose of executing the Certificate of Formation of the Company which
has been filed in the Office of the Secretary of State of Delaware.
1.2 Name. The name of the Company shall be "Wright Express LLC" and
its business shall be carried on in such name with such variations and changes
as the Board (as hereinafter defined) shall determine or deem necessary to
comply with requirements of the jurisdictions in which the Company's operations
are conducted.
<PAGE>
1.3 Business Purpose; Powers. The Company is formed for the purpose
of engaging in any lawful business, purpose or activity for which limited
liability companies may be formed under the Act. The Company shall possess and
may exercise all the powers and privileges granted by the Act or by any other
law or by this Agreement, together with any powers incidental thereto, so far as
such powers and privileges are necessary or convenient to the conduct, promotion
or attainment of the business purposes or activities of the Company.
1.4 Registered Office and Agent. The location of the registered
office of the Company shall be Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801. The Company's Registered Agent at such address shall
be The Corporation Trust Company.
1.5 Term. Subject to the provisions of Articles 7 and 9 below, the
Company shall have perpetual existence.
1.6 Principal Place of Business. The principal place of business of
the Company shall be at such location as the Board may, from time to time,
select.
1.7 Title to Company Property. Legal title to all property of the
Company shall be held and vested and conveyed in the name of the Company and no
real or other property of the Company shall be deemed to be owned by the Member
individually. The Common Interests (as hereinafter defined) of the Member shall
constitute personal property.
1.8 Business Transactions of the Member with the Company. In
accordance with Section 18-107 of the Act, the Member may transact business with
the Company and, subject to applicable law, shall have the same rights and
obligations with respect to any such matter as a person who is not a member.
1.9 Fiscal Year. The fiscal year of the Company (the "Fiscal Year")
for financial statement purposes shall be determined by the Board.
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ARTICLE 2
The Member
2.1 The Member. The name and address of the Member is as follows:
Name Address
---- -------
PHH Holdings Corporation 307 International Circle
Hunt Valley, Maryland 21030-1337
2.2 Member Meetings.
(a) Actions by the Member; Meetings. The Member may approve a
matter or take any action at a meeting or without a meeting by the written
consent of the Member pursuant to subparagraph (b) below. Meetings of the Member
may be called at any time by the Member.
(b) Action by Written Consent. Any action may be taken by the
Member without a meeting if authorized by the written consent of the Member. In
no instance where action is authorized by written consent of the Member will a
meeting of the Member be called or notice be given. However, a copy of the
action taken by written consent shall be filed with the records of the Company.
2.3 Liability of the Member. All debts, obligations and liabilities
of the Company, whether arising in contract, tort or otherwise, shall be solely
the debts, obligations and liabilities of the Company, and the Member shall not
be obligated personally for any such debt, obligation or liability of the
Company solely by reason of being a member.
2.4 Power to Bind the Company. The Member (acting in its capacity as
such) shall have the authority to bind the Company to any third party with
respect to any matter.
2.5 Admission of Members. New members shall be admitted only upon
the approval of the Member.
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ARTICLE 3
The Board
3.1 Management By Board of Managers.
(a) Subject to such matters which are expressly reserved
hereunder or under the Act to the Member for decision, the business and affairs
of the Company shall be managed by a board of managers (the "Board"), which
shall be responsible for policy setting and approving the overall direction of
the Company. The Board shall consist of one (1) to seven (7) individuals (the
"Managers"), the exact number of Managers to be determined from time to time by
resolution of the Member or the Board. The initial Board of Managers shall
consist of three (3) individuals who shall be James E. Buckman, Stephen P.
Holmes and Michael E. Dubyak.
(b) Each Manager shall be elected by the Member and shall
serve until his or her successor has been duly elected and qualified, or until
his or her earlier removal, resignation, death or disability. The Member may
remove any Manager from the Board or from any other capacity with the Company at
any time, with or without cause. A Manager may resign at any time upon written
notice to the Board.
(c) Any vacancy occurring on the Board as a result of the
resignation, removal, death or disability of a Manger or an increase in the size
of the Board shall be filled by a majority of the remaining Mangers. A Manager
chosen to fill a vacancy resulting from the resignation, removal, death or
disability of a Manager shall serve the unexpired term of his or her predecessor
in office.
3.2 Meetings of the Board.
(a) The Board shall meet at such times as may be necessary for
the Company's business on at least two (2) days' prior written notice of the
time and place of such meeting. A majority of the Managers shall constitute a
quorum for the transaction of business by the Board.
(b) Notice of any Board meeting may be waived by any Manager
before or after such meeting.
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(c) All actions of the Board shall require the affirmative
vote of a majority of the Managers. Each Manager shall be entitled to one vote
on all matters. A Manager who is present at a meeting of the Board when action
is taken shall be deemed to have assented to the action taken unless: (i) the
Manager objects at the beginning of the meeting, or promptly upon his or her
arrival, to holding the meeting or transacting business thereat, (ii) the
Manager's dissent or abstention from the action taken is entered in the minutes
of the meeting; or (iii) the Manager delivers written notice of his or her
dissent or abstention to the presiding officer of the meeting before its
adjournment or to the Secretary of the Company immediately after adjournment of
the meeting. The right of dissent or abstention shall not be available to a
Manager who votes in favor of the action taken.
(d) Meetings of the Board may be conducted in person or by
conference telephone facilities and each Manager shall be entitled to
participate in any meeting of the Board by telephone. Any action required or
permitted to be taken at any meeting of the Board may be taken without a meeting
if such number of Managers sufficient to approve such action pursuant to the
terms of this Agreement consent thereto in writing. The writing or writings
effectuating such written consent must be filed with the minutes of proceedings
of the Board.
3.3 Power to Bind Company. No Manager (acting in his capacity as
such) shall have any authority to bind the Company to any third party with
respect to any matter except pursuant to a resolution expressly authorizing such
action which resolution is duly adopted by the Board by the affirmative vote
required for such matter pursuant to this Agreement.
3.4 Officers and Related Persons. The Board shall have the authority
to appoint and terminate officers of the Company and retain and terminate
employees, agents and consultants of the Company and to delegate such duties to
any such officers, employees, agents and consultants as the Board deems
appropriate, including the power, acting individually or jointly, to represent
and bind the Company in all matters, in accordance with the scope of their
respective duties.
ARTICLE 4
Capital Structure and Contributions
4.1 Capital Structure. The capital structure of the Company shall
consist of one class of common interests (the "Common Interests"). All Common
5
<PAGE>
Interests shall be identical with each other in every respect. Initially, the
Member shall own one hundred (100) Common Interests.
4.2 Capital Contributions. From time to time, the Board may
determine that the Company requires capital and may request the Member to make
capital contribution(s) in an amount determined by the Board. A capital account
shall be maintained for the Member, to which contributions and profits shall be
credited and against which distributions and losses shall be charged.
ARTICLE 5
Profits, Losses and Distributions
5.1 Profits and Losses. For financial accounting purposes, the
Company's net profits or net losses shall be determined on an annual basis in
accordance with generally accepted accounting principles. In each year, profits
and losses shall be allocated entirely to the Member.
5.2 Distributions. The Board shall determine profits available for
distribution and the amount, if any, to be distributed to the Member, and shall
authorize and distribute on the Common Interests the determined amount when, as
and if declared by the Board. Any distributions by the Company shall be
allocated entirely to the Member.
ARTICLE 6
Accounts; Tax Returns; Tax Characterization
6.1 Books. The Board shall cause to be maintained complete and
accurate books of account of the Company's affairs at the Company's principal
place of business. Such books shall be kept on such method of accounting as the
Board shall select. The Company's accounting period shall be as determined by
the Board.
6.2 Company Tax Returns. The Member shall cause to be prepared and
timely filed all tax returns required to be filed for the Company. Subject to
Section 6.3, the Member may, in its sole discretion, make or refrain from making
any tax election for the Company that it deems necessary.
6
<PAGE>
6.3 Tax Treatment. To the extent the Member is the sole member of
the Company, (i) it is the intention of the Member that, for income tax
purposes, the Company be treated as an entity that is disregarded as an entity
separate from its owner and (ii) the Member and the Company shall timely make
all necessary elections and filings, if any, for income tax purposes such that
it will not be treated as a separate entity, but, instead, will be treated for
income tax purposes as an entity that is disregarded as an entity separate from
its owner.
ARTICLE 7
Events of Dissolution
The Company shall be dissolved upon the occurrence of any of
the following events (each, an "Event of Dissolution"):
(a) The Member votes for dissolution; or
(b) A judicial dissolution of the Company under Section 18-802
of the Act.
No other event, including the retirement, withdrawal,
insolvency, liquidation, dissolution, insanity, resignation, expulsion,
bankruptcy, death, incapacity or adjudication of incompetency of the Member,
shall cause the existence of the Company to terminate.
ARTICLE 8
Transfer of Interests in the Company
The Member may sell, assign, transfer, convey, gift, exchange
or otherwise dispose of any or all of its Common Interests and, upon receipt by
the Company of a written agreement by the person or entity to whom such Common
Interests are to be transferred agreeing to be bound by the terms of this
Agreement, such person shall be admitted as a member of the Company.
7
<PAGE>
ARTICLE 9
Termination
9.1 Liquidation. In the event that an Event of Dissolution shall
occur, then the Company shall be liquidated and its affairs shall be wound up.
All proceeds from such liquidation shall be distributed in accordance with the
provisions of Section 18-804 of the Act, and all Common Interests in the Company
shall be cancelled.
9.2 Final Accounting. In the event of the dissolution of the
Company, prior to any liquidation, a proper accounting shall be made to the
Member from the date of the last previous accounting to the date of dissolution.
9.3 Distribution in Kind. All or any portion of the Company's assets
may be distributed in kind to the Member in the event the Board determines that
such distribution is in the best interest of the Company.
9.4 Cancellation of Certificate. Upon the completion of the winding
up of the Company and the distribution of the Company's assets, the Company
shall be terminated and the Member shall cause the Company to execute and file a
Certificate of Cancellation in accordance with Section 18-203 of the Act.
ARTICLE 10
Exculpation and Indemnification
10.1 Exculpation. Notwithstanding any other provision of this
Agreement, whether express or implied, or obligation or duty at law or in
equity, none of the Member or any officers, directors, stockholders, managers,
partners, employees, affiliates, representatives or agents of the Member, nor
any Manager, officer, employee, representative or agent of the Company or any of
its affiliates (individually, a "Covered Person" and, collectively, the "Covered
Persons") shall be liable to the Company or any other person for any act or
omission (in relation to the Company, this Agreement, any related document or
any transaction contemplated hereby or thereby) taken or omitted in good faith
by a Covered Person in the reasonable belief that such act or omission was in or
was not contrary to the best interests of the Company, and was within the scope
of authority granted to such Covered Person by this Agreement, the Act, the
Member or the Managers, provided
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such act or omission does not constitute fraud, willful misconduct, bad faith or
gross negligence.
10.2 Indemnification. To the fullest extent permitted by law, the
Company shall indemnify and hold harmless each Member, Manager and each
director, stockholder, manager and partner of the Member (collectively,
"Indemnified Parties") from and against any and all losses, claims, demands,
liabilities, expenses, judgments, fines, settlements and other amounts arising
from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative ("Claims"), in which such Indemnified
Party may be involved, or threatened to be involved, as a party or otherwise, by
reason of its management of the affairs of the Company or which relates to or
arises out of the Company or its property, business or affairs. Notwithstanding
the foregoing, none of the Indemnified Parties shall be entitled to
indemnification under this Section 10.2 with respect to any Claim with respect
to which such Indemnified Party has engaged in fraud, willful misconduct, bad
faith or gross negligence. The Company may, but shall not be required to,
provide indemnification rights to officers, employees, representatives, agents
and affiliates of the Company or the Member to the same extent provided to
Indemnified Parties pursuant to this Section 10.2, when as, and if determined by
the Board, in its sole discretion.
10.3 Advancement of Expenses. The Company may pay for in advance or
reimburse as incurred the reasonable expenses, including reasonable attorneys'
fees, incurred by a Indemnified Party in such proceeding referred to in Section
10.2, or otherwise reimburse such expenses in advance of the final disposition
of such proceeding, or, where appropriate, may assume the defense of any such
Indemnified Party at the Company's expense upon the receipt by the Company of an
undertaking by such Indemnified Party to repay any such amounts if such
Indemnified Party is ultimately determined not to be entitled to indemnification
pursuant to Section 10.2 hereof.
10.4 Indemnification Not Exclusive. The indemnification and
advancement of expenses provided for in this Article 10 shall not exclude, limit
or preclude any other rights to which any such Indemnified Party seeking
indemnification or advancement of expenses may be entitled under the Act, any
agreement or contract, any other applicable law or otherwise, and shall continue
as to a Indemnified Party who has ceased to serve as a Member (or director,
stockholder, manager or partner of the Member) or Manager of the Company, or in
any other indemnified
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<PAGE>
capacity, and shall inure to the benefit of the heirs, executors, and
administrators of any such Indemnified Party.
10.5 Insurance. The Company may purchase and maintain insurance on
behalf of any Indemnified Party against any liability asserted against or
incurred by such Indemnified Party in any capacity or arising out of his or her
status as such, whether or not the Company has the obligation or power to
indemnify such Indemnified against such liability pursuant to the provisions of
this Article 10, the Act, or otherwise.
10.6 Continuation of Indemnity. The provisions of this Article 10
shall continue to apply to any proceeding specified in Section 10.2 made or
commenced against any Indemnified Party who has ceased to be a Indemnified Party
entitled to indemnification hereunder and shall inure to the benefit of the
estate, heirs and personal representatives of such Indemnified Party.
10.7 Amendments. Any repeal or modification of this Article 10 by
the Member shall not adversely affect any rights of such Indemnified Party
pursuant to this Article 10, including the right to indemnification and to the
advancement of expenses of a Indemnified Party existing at the time of such
repeal or modification with respect to any acts or omissions occurring prior to
such repeal or modification.
ARTICLE 11
Amendment to Agreement
Amendments to this Agreement and to the Certificate of Formation
must be approved in writing by the Member. An amendment shall become effective
as of the date specified in the approval of the Member or if none is specified
as of the date of such approval or as otherwise provided in the Act.
ARTICLE 12
General Provisions
12.1 Notices. Unless otherwise specifically provided in this
Agreement, all notices and other communications required or permitted to be
given hereunder shall be in writing and shall be (i) delivered by hand, (ii)
delivered by a nationally recognized commercial overnight delivery service,
(iii) mailed postage
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<PAGE>
prepaid by first class mail in any such case directed or addressed to the
address set forth below or (iv) transmitted by facsimile to:
If to the Member, to:
PHH Holdings Corporation
307 International Circle
Hunt Valley, Maryland 21030-1337
Such notices shall be effective: (a) in the case of hand deliveries, when
received; (b) in the case of an overnight delivery service, on the next business
day after being placed in the possession of such delivery service, with delivery
charges prepaid; (c) in the case of mail, seven (7) days after deposit in the
postal system, first class mail, postage prepaid; and (d) in the case of
facsimile notices, when electronic indication of receipt is received. Any party
may change its address and telecopy number by written notice to the other given
in accordance with this Section 12.1.
12.2 Construction Principles. As used in this Agreement, words in
any gender shall be deemed to include all other genders. The singular shall be
deemed to include the plural and vice versa. The captions and article and
section headings in this Agreement are inserted for convenience of reference
only and are not intended to have significance for the interpretation of or
construction of the provisions of this Agreement.
12.3 Severability. If any provision of this Agreement is held to be
invalid or unenforceable for any reason, such provision shall be ineffective to
the extent of such invalidity or unenforceability; provided, however, that the
remaining provisions will continue in full force without being impaired or
invalidated in any way unless such invalid or unenforceable provision or clause
shall be so significant as to materially affect the expectations of the Member
regarding this Agreement. Otherwise, any invalid or unenforceable provision
shall be replaced by the Member with a valid provision which most closely
approximates the intent and economic effect of the invalid or unenforceable
provision.
12.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
the principles of conflicts of laws thereof.
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<PAGE>
12.5 Binding Effect. This Agreement shall be binding upon, and inure
to the benefit of, the Member.
12.6 Additional Documents and Acts. The Member agrees to execute and
deliver such additional documents and instruments and to perform such additional
acts as may be necessary or appropriate to effectuate, carry out and perform all
of the terms, provisions, and conditions of this Agreement and of the
transactions contemplated hereby.
12.7 No Third-Party Beneficiary. This Agreement is made solely for
the benefit of the Member and no other person shall have any rights, interest,
or claims hereunder or otherwise be entitled to any benefits under or on account
of this Agreement as a third-party beneficiary or otherwise.
12.8 Limited Liability Company. The Member intends to form a limited
liability company and does not intend to form a partnership under the laws of
the State of Delaware or any other laws.
[SIGNATURE PAGE FOLLOWS]
12
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this Agreement
as of the day first above written.
PHH HOLDINGS CORPORATION
By: /s/ [Illegible]
-------------------------------
Name:
Title:
<PAGE>
Exhibit 3.22
OPERATING AGREEMENT
OF
PHH/PAYMENTECH L.L.C.
Effective with the first proper filing of a Certificate of Formation
(the "Certificate") with the Secretary of State of the State of Delaware, the
undersigned (the "Members") form a limited liability company pursuant to and in
accordance with the Delaware Limited Liability Company Act, as amended from time
to time (the "Act"), and in connection therewith agree as follows:
1. Name. The name of the limited liability company formed hereby is
PHH/PAYMENTECH L.L.C. (the "Company").
2. Purpose. The Company is organized for the purposes of engaging in
(i) the provision of payment cards and related services, (ii) the ownership and
operation of any property of the Company acquired in connection with the
foregoing and (iii) such other business as may be conducted by the Company from
time to time (collectively, the "Business").
3. Members. The names and addresses of the Members are as follows:
Name Address
------------------------------------------------------------------
PHH Vehicle Management 307 International Circle
Services Corporation Hunt Valley, Maryland 21030
("PHH Member")
Paymentech Fleet Services, Inc. 1601 Elm Street, 8th Floor
("FUSA Member") Dallas, Texas 75201
4. Powers. The business and affairs of the Company shall be managed
by the Managing Member. The Managing Member shall be PHH Member. Except for
situations in which the approval of FUSA Member is expressly required by this
Agreement or by nonwaivable provisions of applicable law, the Managing Member
shall have full, complete, and exclusive
<PAGE>
2
authority to manage and control the business, affairs, and properties of the
Company, to make all decisions regarding those matters, and to perform any and
all other acts or activities customary or incident to the management of the
Business.
5. Term. The term of the Company shall commence on the date of the
filing of the Certificate with the Secretary of State of the State of Delaware
and shall be perpetual unless terminated in accordance with Section 13 hereof.
6. Capital Contributions. Concurrently with the execution of this
Agreement, PHH Member has made capital contributions to the Company comprised
of, (i) $10,000 in cash in consideration for which the Company has issued to PHH
Member a 1% membership interest in the Company and (ii) pursuant to a
Contribution Agreement dated as of the date hereof between PHH Member and the
Company, certain of the assets of PHH Member in consideration for which the
Company has issued to PHH Member a 98% membership interest in the Company. The
Members agree that the transfer of assets pursuant to the Contribution Agreement
shall be treated as a capital contribution to the Company of assets with a
recorded basis of $0 and a market value of $35,000,000. Also concurrently with
the execution of this Agreement, FUSA Member has made a capital contribution to
the Company comprised of $10,000 in cash, in consideration for which the Company
has issued to FUSA Member a 1% membership interest in the Company.
7. Capital Accounts. The Members shall have capital accounts
maintained in accordance with Section 704(b) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder.
8. Allocation of Profits and Losses. The Company's profits and
losses shall be allocated in proportion to the capital contributions of the
Members.
<PAGE>
3
9. Distributions. Distributions shall be made to the Members at the
times and in the aggregate amounts determined by the Members. Such distributions
shall be allocated among the Members in the same proportion as their then
capital account balances.
10. Transfers and Assignments. No Member may transfer or assign in
whole or in part its membership interest in the Company without the express
written consent of the other Member, which it may grant or withhold in its sole
discretion.
11. Resignation of a Member. No Member may resign from the Company
except in connection with a transfer permitted pursuant to Section 10 hereof
without the prior written consent of the other Member.
12. Amendment. This Agreement may be amended by the unanimous
written consent of the Members.
13. Dissolution. The Company shall dissolve upon the earliest to
occur of (a) the unanimous written consent of all Members, (b) the death,
retirement, resignation (other than in connection with a transfer permitted
pursuant to Section 10 hereof), expulsion, "event of bankruptcy" (as defined in
Section 18-304 of the Act) or dissolution of any Member, or the occurrence of
any other event which terminates the continued membership of a Member unless the
remaining Member consents within 90 days after the occurrence of such event to
continue the Company or (c) the entry of a decree of judicial dissolution
against the Company in accordance with the Act. Any such dissolution shall be in
accordance with the Act.
14. Indemnification. To the fullest extent permitted by law, the
Company shall indemnify the Members and their officers, directors, committee
members, employees, and agents and hold them harmless from and against any
losses, costs, liabilities, damages, and expenses (including, without
limitation, costs of suit and attorney's fees) any of them may incur as a Member
in the Company or in performing their obligations under this Agreement;
provided,
<PAGE>
4
however, then no person shall be indemnified and held harmless in the case of
bad faith or willful misconduct by such person.
15. Governing Law. This Agreement shall be governed by, and
construed under, the laws of the State of Delaware without regard to its
conflict of laws rules.
IN WITNESS WHEREOF, the undersigned have duly executed this
Operating Agreement as of the 1st day of January, 1997.
PHH VEHICLE MANAGEMENT
SERVICES CORPORATION
By: /s/ [ILLEGIBLE]
-------------------------------------
Name:
Title:
PAYMENTECH FLEET SERVICES, INC.
By: /s/ [ILLEGIBLE]
-------------------------------------
Name:
Title: Senior VP
<PAGE>
FIRST AMENDMENT TO
AMENDED AND RESTATED OPERATING AGREEMENT
OF PHH/PAYMENTECH L.L.C.
THIS FIRST AMENDMENT TO AMENDED AND RESTATED OPERATING AGREEMENT OF
PHH/PAYMENTECH L.L.C. (the "Amendment") is dated as of August 28, 1997, by and
between Paymentech Fleet Services, Inc. ("FUSA") and PHH Vehicle Management
Services Corporation ("PHH").
WITNESSETH:
WHEREAS, FUSA and PHH entered into that certain Amended and Restated
Operating Agreement of PHH/Paymentech L.L.C. dated as of January 1, 1997 (the
"Agreement"); and
WHEREAS, the parties have agreed to amend the Agreement as provided
herein;
NOW, THEREFORE, in consideration of the agreements herein contained and
subject to the terms and conditions herein set forth, FUSA and PHH hereby agree
as follows:
1. Definitions. Capitalized terms used herein and defined in the Agreement
shall have the meanings set forth in the Agreement except as otherwise set forth
herein.
2. Canadian Activities. The parties have agreed to extend to September 30,
1997, the time for agreeing upon the structure and terms relating to the
performance of Covered Activities with respect to Fleet Vehicles in Canada.
Accordingly, the first sentence of Section 9.09 of the Agreement is hereby
deleted in its entirety and in place thereof shall be a new sentence which shall
read as follows:
"Within the nine months after the date of this Agreement, PHH and FUSA
shall negotiate in good faith to endeavor to agree upon the structure and
terms pursuant to which the Company, or the Members jointly through
another entity, will perform Covered Activities with respect to Fleet
Vehicles in Canada; the parties will make good faith efforts to complete
the negotiations prior to the end of such nine months."
3. Continued Effect. Except to the extent amended hereby, all terms,
provisions and conditions of the Agreement shall continue in full force and
effect and the Agreement shall remain enforceable and binding in accordance with
its terms.
<PAGE>
4. Counterparts. This Amendment may be executed in any number of
counterparts, all of which when taken together shall constitute one and the same
document, and each party hereto may execute this Amendment by signing any of
such counterparts.
5. Successors and Assigns. This Amendment shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF, FUSA and PHH have caused this Amendment to be executed
by their respective authorized officers as of the date first written above.
FUSA:
Paymentech Fleet Services, Inc.
By: /s/ Mary F. Dees
-------------------------------------
Name: Mary F. Dees
Title: Senior Vice President
PHH:
PHH Vehicle Management Services
Corporation
By: /s/ Samuel H. Wright
-------------------------------------
Name: Samuel H. Wright
Title: Senior Vice President
2
<PAGE>
Exhibit 3.51
BY-LAWS
OF
AVIS RENT A CAR SYSTEM, INC.
(hereinafter called the "Corporation")
As Amended and Restated as of October 17, 1996
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
<PAGE>
Section 2. Annual Meetings. The Annual Meetings of Stockholders
shall be held on such date and at such time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting, at which
meetings the stockholders shall elect by a plurality vote a Board of Directors,
and transact such other business as may properly be brought before the meeting.
Written notice of the Annual Meeting stating the place, date and hour of the
meeting shall be given to each stockholder entitled to vote at such meeting not
less than ten nor more than sixty days before the date of the meeting.
Section 3. Special Meetings. Unless otherwise prescribed by law or
by the certificate of Incorporation, Special Meetings of Stockholders, for any
purpose or purposes, may be called by either (i) the Chairman, if there be one,
or (ii) the President, (iii) any Vice President, if there be one, (iv) the
Secretary or (v) any Assistant Secretary, if there be one, and shall be called
by any such officer at the request in writing of a majority of the Board of
Directors or at the request in writing of stockholders owning a majority of the
capital stock of the Corporation issued and outstanding and entitled to vote.
Such request shall state the purpose
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<PAGE>
or purposes of the proposed meeting. Written notice of a Special Meeting stating
the place, date and hour of the meeting and the purpose or purposes for which
the meeting is called shall be given not less than ten nor more than sixty days
before the date of the meeting to each stockholder entitled to vote at such
meeting.
Section 4. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned
3
<PAGE>
meeting, a notice of the adjourned meeting shall be given to each stockholder
entitled to vote at the meeting.
Section 5. Voting. Unless otherwise required by law, the Certificate
of Incorporation or these By-Laws, any question brought before any meeting of
stockholders shall be decided by the vote of the holders of a majority of the
stock represented and entitled to vote thereat. Each stockholder represented at
a meeting of stockholders shall be entitled to cast one vote for each share of
the capital stock entitled to vote thereat held by such stockholder. Such votes
may be cast in person or by proxy but no proxy shall be voted on or after three
years from its date, unless such proxy provides for a longer period. The Board
of Directors, in its discretion, or the officer of the Corporation presiding at
a meeting of stockholders, in his discretion, may require that any votes cast at
such meeting shall be cast by written ballot.
Section 6. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation, may be taken without a meeting, without
4
<PAGE>
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Section 7. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at
5
<PAGE>
the place where the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof, and may
be inspected by any stockholder of the Corporation who is present.
Section 8. Stock Ledger. The stock ledger of the Corporation shall
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 7 of this Article II or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The Board of Directors
shall consist of not less than one nor more than fifteen members, the exact
number of which shall initially be fixed by the Incorporator and thereafter from
time to time by the Board of Directors. Except as provided in Section 2 of this
Article, directors shall be elected by a plurality of the votes cast at Annual
Meetings of Stockholders, and each director so elected shall hold office until
the next Annual Meeting and until his successor is duly elected and qualified,
or until his
6
<PAGE>
earlier resignation or removal. Any director may resign at any time upon notice
to the Corporation. Directors need not be stockholders.
Section 2. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
qualified, or until their earlier resignation or removal.
Section 3. Duties and Powers. The business of the Corporation shall
be managed by or under the direction of the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done by the stockholders.
Section 4. Meetings. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors.
7
<PAGE>
Special meetings of the Board of Directors may be called by the Chairman, if
there be one, the President, or any directors. Notice thereof stating the place,
date and hour of the meeting shall be given to each director either by mail not
less than forty-eight (48) hours before the date of the meeting, by telephone or
telegram on twenty-four (24) hours' notice, or on such shorter notice as the
person or persons calling such meeting may deem necessary or appropriate in the
circumstances.
Section 5. Quorum. Except as may be otherwise specifically provided
by law, the Certificate of Incorporation or these By-Laws, at all meetings of
the Board of Directors, a majority of the entire Board of Directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors. If a quorum shall not be present at any meeting of
the Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
8
<PAGE>
Section 6. Actions of Board. Unless otherwise provided by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 7. Meetings by Means of Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these By-Laws, members
of the Board of Directors of the Corporation, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors or
such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 7 shall
constitute presence in person at such meeting.
Section 8. Committees. The Board of Directors may designate one or
more committees, each committee to consist of one or more of the directors of
the Corporation. The Board of Directors may designate one or more
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directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of any such committee. In the absence or
disqualification of a member of a committee, and in the absence of a designation
by the Board of Directors of an alternate member to replace the absent or
disqualified member, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member. Any committee, to the
extent allowed by law and provided in the resolution establishing such
committee, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation.
Each committee shall keep regular minutes and report to the Board of Directors
when required.
Section 9. Compensation. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any
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other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.
Section 10. Interested Directors. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
dis-
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closed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, may also choose a Chairman of the
Board of Directors (who must be a director) and one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers and other officers. Any number of
offices may be held by the same person, unless otherwise prohibited by law, the
Certificate of Incorporation or these By-Laws. The officers of the Corporation
need not be stockholders of the Corporation nor, except in the
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case of the Chairman of the Board of Directors, need such officers be directors
of the Corporation.
Section 2. Election. The Board of Directors at its first meeting
held after each Annual Meeting of Stockholders shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors; and all officers of the Corporation shall hold office until
their successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors. The salaries of all officers of the Corporation shall be fixed by
the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice President and any
such officer may, in the name of and on behalf of the Corporation, take all
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such action as any such officer may deem advisable to vote in person or by proxy
at any meeting of security holders of any corporation in which the Corporation
may own securities and at any such meeting shall possess and may exercise any
and all rights and power incident to the ownership of such securities and which,
as the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of the
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. He shall be the Chief Executive
Officer of the Corporation, and except where by law the signature of the
President is required, the Chairman of the Board of Directors shall possess the
same power as the President to sign all contracts, certificates and other
instruments of the Corporation which may be authorized by the Board of
Directors. During the absence or disability of the President, the Chairman of
the Board of Directors shall exercise all the powers and discharge all the
duties of the President. The Chairman of the Board of Directors shall also
perform such other duties and may
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exercise such other powers as from time to time may be assigned to him by these
By-Laws or by the Board of Directors.
Section 5. President. The President shall, subject to the control of
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. He shall execute all bonds, mortgages, contracts and other instruments
of the Corporation requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except that the other officers of the Corporation may sign and execute documents
when so authorized by these By-Laws, the Board of Directors or the President. In
the absence or disability of the Chairman of the Board of Directors, or if there
be none, the President shall preside at all meetings of the stockholders and the
Board of Directors. If there be no Chairman of the Board of Directors, the
President shall be the Chief Executive Officer of the Corporation. The President
shall also perform such other duties and may exercise such other powers as from
time to
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time may be assigned to him by these By-Laws or by the Board of Directors.
Section 6. Vice Presidents. At the request of the President or in
his absence or in the event of his inability or refusal to act (and if there be
no Chairman of the Board of Directors), the Vice President or the Vice
Presidents if there is more than one (in the order designated by the Board of
Directors) shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. Each Vice President shall perform such other duties and have such
other powers as the Board of Directors from time to time may prescribe. If there
be no Chairman of the Board of Directors and no Vice President, the Board of
Directors shall designate the officer of the Corporation who, in the absence of
the President or in the event of the inability or refusal of the President to
act, shall perform the duties of the President, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the President.
Section 7. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings
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thereat in a book or books to be kept for that purpose; the Secretary shall also
perform like duties for the standing committees when required. The Secretary
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or President, under whose
supervision he shall be. If the Secretary shall be unable or shall refuse to
cause to be given notice of all meetings of the stockholders and special
meetings of the Board of Directors, and if there be no Assistant Secretary, then
either the Board of Directors or the President may choose another officer to
cause such notice to be given. The Secretary shall have custody of the seal of
the Corporation and the Secretary or any Assistant Secretary, if there be one,
shall have authority to affix the same to any instrument requiring it and when
so affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his signature. The Secretary shall see that all books,
reports, statements, certificates and other documents and records required by
law to
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be kept or filed are properly kept or filed, as the case may be.
Section 8. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer. and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and
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other property of whatever kind in his possession or under his control belonging
to the Corporation.
Section 9. Assistant Secretaries. Except as may be otherwise
provided in these By-Laws, Assistant Secretaries, if there be any, shall perform
such duties and have such powers as from time to time may be assigned to them by
the Board of Directors, the President, any Vice President, if there be one, or
the Secretary, and in the absence of the Secretary or in the event of his
disability or refusal to act, shall perform the duties of the Secretary, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the Secretary.
Section 10. Assistant Treasurers. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of his disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Corporation a bond in
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such sum and with such surety or sureties as shall be satisfactory to the Board
of Directors for the faithful performance of the duties of his office and for
the restoration to the Corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the Corporation.
Section 11. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President or a
Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secre-
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tary of the Corporation, certifying the number of shares owned by him in the
Corporation.
Section 2. Signatures. Any or all of the signatures on a certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a
new certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen or destroyed. When authorizing such issue of a new certificate,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond
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in such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be transferable
in the manner prescribed by law and in these By-Laws. Transfers of stock shall
be made on the books of the Corporation only by the person named in the
certificate or by his attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be cancelled before a new
certificate shall be issued.
Section 5. Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or entitled to express consent to corporate action
in writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty days nor less than ten days
before the date of such
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meeting, nor more than sixty days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee
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or stockholder, at his address as it appears on the records of the Corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Written notice
may also be given personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required by
law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed, by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property, or in shares of the capital
stock. Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such sum or sums as
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the Board of Directors from time to time, in its absolute discretion, deems
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for any proper purpose, and the Board of Directors may modify or abolish any
such reserve.
Section 2. Disbursements. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
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ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings other
Than Those by or in the Right of the Corporation. Subject to Section 3 of this
Article VIII, the Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director or officer of the Corporation,
or is or was a director or officer of the Corporation serving at the request of
the Corporation as a director or officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgments, rines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
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The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or
in the Right of the Corporation. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director or officer of the Corporation, or is or was a
director or officer of the Corporation serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settle-
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ment of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standard of conduct set forth in Section 1 or
Section 2 of this Article VIII, as the case may be. Such determination shall be
made (i) by a majority vote of the directors who are not parties to such action,
suit or proceeding, even though less than a quorum, or (ii) if
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there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (iii) by the stockholders. To the extent,
however, that a director or officer of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding described
above, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith, without the necessity of authorization
in the specific case.
Section 4. Good Faith Defined. For purposes of any determination
under Section 3 of this Article VIII, a person shall be deemed to have acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was unlawful,
if his action is based on the records or books of account of the Corporation or
another enterprise, or on information supplied to him by the officers of the
Corporation or another enterprise in the course of their duties, or on the
advice of legal counsel for the Corporation or another enterprise or on
information or records
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given or reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Corporation or another enterprise. The term "another
enterprise" as used in this Section 4 shall mean any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise of
which such person is or was serving at the request of the Corporation as a
director, officer, employee or agent. The provisions of this Section 4 shall not
be deemed to be exclusive or to limit in any way the circumstances in which a
person may be deemed to have met the applicable standard of conduct set forth in
Sections 1 or 2 of this Article VIII, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to any court of competent jurisdiction in the State of
Delaware for indemnification to the extent otherwise permissible under Sections
1 and 2 of this Article VIII. The basis of such indemnification by a court shall
be a determination by such court that indemnification of the director or officer
is proper
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in the circumstances because he has met the applicable standards of conduct set
forth in Sections 1 or 2 of this Article VIII, as the case may be. Neither a
contrary determination in the specific case under Section 3 of this Article VIII
nor the absence of any determination thereunder shall be a defense to such
application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If successful, in
whole or in part, the director or officer seeking indemnification shall also be
entitled to be paid the expense of prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses incurred by a
director or officer in defending or investigating a threatened or pending
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation as authorized in this Article VIII.
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Section 7. Nonexclusivity of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by or granted
pursuant to this Article VIII shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under any By-Law, agreement, contract, vote of stockholders or
disinterested directors or pursuant to the direction (howsoever embodied) of any
court of competent jurisdiction or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, it
being the policy of the Corporation that indemnification of the persons
specified in Sections 1 and 2 of this Article VIII shall be made to the fullest
extent permitted by law. The provisions of this Article VIII shall not be deemed
to preclude the indemnification of any person who is not specified in Sections 1
or 2 of this Article VIII but whom the Corporation has the power or obligation
to indemnify under the provisions of the General Corporation Law of the State of
Delaware, or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation,
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or is or was a director or officer of the Corporation serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
Corporation would have the power or the obligation to indemnify him against such
liability under the provisions of this Article VIII.
Section 9. Certain Definitions. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand in
the same
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position under the provisions of this Article VIII with respect to the resulting
or surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued. For purposes of this
Article VIII, references to "fines" shall include any excise taxes assessed on a
person with respect to an employee benefit plan; and references to "serving at
the request of the Corporation" shall include any service as a director,
officer, employee or agent of the Corporation which imposes duties on, or
involves services by, such director or officer with respect to an employee
benefit plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation" as
referred to in this Article VIII.
Section 10. Survival of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VIII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director or officer and
shall inure to
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the benefit of the heirs, executors and administrators of such a person.
Section 11. Limitation on Indemnification. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 5 hereof),
the Corporation shall not be obligated to indemnify any director or officer in
connection with a proceeding (or part thereof) initiated by such person unless
such proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.
Section 12. Indemnification of Employees and Agents. The Corporation
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
Section 1. Amendments. These By-Laws may be altered, amended or
repealed, in whole or in part, or new
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By-Laws may be adopted by the stockholders or by the Board of Directors,
provided, however, that notice of such alteration, amendment, repeal or adoption
of new By-Laws be contained in the notice of such meeting of stockholders or
Board of Directors as the case may be. All such amendments must be approved by
either the holders of a majority of the outstanding capital stock entitled to
vote thereon or by a majority of the entire Board of Directors then in office.
Section 2. Entire Board of Directors. As used in this Article IX and
in these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no vacancies.
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Exhibit 3.52
BY-LAWS
OF
AVIS INTERNATIONAL, LTD.
(A Delaware Corporation)
as amended through December 21, 1976
ARTICLE 1
DEFINITIONS
As used in these By-laws, unless the context otherwise requires, the
term:
1.1 "Assistant Secretary" means an Assistant Secretary of the
Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the
Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "By-laws" means the initial by-laws of the Corporation, as
amended from time to time.
1.5 "Certificate of Incorporation" means the initial certificate of
incorporation of the Corporation, as amended, supplemented or restated from time
to time.
1.6 "Comptroller" means the Comptroller of the Corporation.
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1.7 "Corporation" means AVIS INTERNATIONAL, LTD.
1.8 "Directors" means directors of the Corporation.
1.9 "General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended from time to time.
1.10 "Office of the Corporation" means the executive office of the
Corporation, anything in Section 131 of the General Corporation Law to the
contrary notwithstanding.
1.11 "President" means the President of the Corporation.
1.12 "Secretary" means the Secretary of the Corporation.
1.13 "Stockholders" means stockholders of the Corporation.
1.14 "Treasurer" means the Treasurer of the Corporation.
1.15 "Vice President" means a Vice President of the Corporation.
ARTICLE 2
STOCKHOLDERS
2.1 Place of Meetings. Every meeting of the stockholders shall be
held at the office of the Corporation or at such other place within or without
the State of Delaware as shall be specified or fixed in the notice of such
meeting or in the waiver of notice thereof.
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2.2 Annual Meeting. A meeting of stockholders shall be held annually
for the election of directors and the transaction of other business at such hour
as may be designated in the notice of meeting on the fourth Wednesday in May in
each year or, if such date falls on a legal holiday, on the first business day
thereafter which is not a Saturday, Sunday or legal holiday.
2.3 Deferred Meeting for Election of Directors, Etc. If the annual
meeting of stockholders for the election of directors and the transaction of
other business is not held on the date fixed in Section 2.2, the Board shall
call a meeting of stockholders for the election of directors and the transaction
of other business as soon thereafter as convenient.
2.4 Other Special Meetings. A special meeting of stockholders (other
than a special meeting for the election of directors), or a special meeting of
any class or series thereof, unless otherwise prescribed by statute, may be
called at any time by the Board or by the President or by the Secretary, and
shall be called by the President or by the Secretary on the written request of
holders of twenty percentum (20%) or more of the shares of capital stock of the
Corporation entitled to vote in an election of directors, which written request
shall state the purpose or purposes of such meeting. At any special meeting of
stockholders only such business may be transacted which is related to the
purpose or purposes of such meeting set forth
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in the notice thereof given pursuant to Section 2.6 of the By-laws or in any
waiver of notice thereof given pursuant to Section 2.7 of the By-laws.
2.5 Fixing Record Date. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or for the purpose of determining stockholders entitled to
receive payment of any dividend or the allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board may fix, in advance, a
date as the record date for any such determination of stockholders. Such date
shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. If no such record
date is fixed:
2.5.1 The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or,
if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held;
2.5.2 The record date for determining stockholders entitled to
express consent to corporate action
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in writing without a meeting, when no prior action by the Board is
necessary, shall be the day on which the first written consent is
expressed;
2.5.3 The record date for determining stockholders for any
purpose other than that specified in Sections 2.5.1 and 2.5.2 shall be at
the close of business on the day on which the Board adopts the resolution
relating thereto.
When a determination of stockholders entitled to notice of or to vote at any
meeting of stockholders has been made as provided in this Section 2.5 such
determination shall apply to any adjournment thereof, unless the Board fixes a
new record date for the adjourned meeting.
2.6 Notice of Meetings of Stockholders. Except as otherwise provided
in Sections 2.5 and 2.7 of the By-laws, whenever under the General Corporation
Law or the Certificate of Incorporation or the By-laws, stockholders are
required or permitted to take any action at a meeting, written notice shall be
given stating the place, date and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. A
copy of the notice of any meeting shall be given, personally or by mail, not
less than ten nor more than fifty days before the date of the meeting, to each
stockholder entitled to notice of or to vote at such
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meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, with postage prepaid, directed to the stockholder at his
address as it appears on the records of the Corporation. An affidavit of the
Secretary or an Assistant Secretary or of the transfer agent of the Corporation
that the notice required by this section has been given shall, in the absence of
fraud, be prima facie evidence of the facts stated therein. When a meeting is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted at the meeting as originally called.
If, however, the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
2.7 Waivers of Notice. Whenever notice is required to be given to
any stockholder under any provision of the General Corporation Law or of the
Certificate of Incorporation or the By-laws, a written waiver thereof, signed by
the stockholder entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a stockholder at a
meeting shall constitute a waiver of notice
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of such meeting, except when the stockholder attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice.
2.8 List of Stockholders. The Secretary shall prepare and make, or
cause to be prepared and made, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
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2.9 Quorum of Stockholders; Adjournment. The holders of one-third of
the shares of stock entitled to vote at any meeting of stockholders, present in
person or represented by proxy, shall constitute a quorum for the transaction of
any business at such meeting. When a quorum is once present to organize a
meeting of stockholders, it is not broken by the subsequent withdrawal of any
stockholders. The holders of a majority of the shares of stock present in person
or represented by proxy at any meeting of stockholders, including an adjourned
meeting, whether or not a quorum is present, may adjourn such meeting to another
time and place.
2.10 Voting; Proxies. Unless otherwise provided in the Certificate
of Incorporation every stockholder of record shall be entitled at every meeting
of stockholders to one vote for each share of capital stock standing in his name
on the record of stockholders determined in accordance with Section 2.5 of the
By-laws. If the Certificate of Incorporation provides for more or less than one
vote for any share, on any matter, every reference in the By-laws or the General
Corporation Law to a majority or other proportion of stock shall refer to such
majority or other proportion of the votes of such stock. The provisions of
Sections 212 and 217 of the General Corporation Law shall apply in determining
whether any shares of capital stock may be voted and the persons, if any,
entitled to vote such shares; but the Corporation shall be protected in treating
the persons in whose names shares of capital stock stand on the record of
stockholders as owners thereof for
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all purposes. At any meeting of stockholders, a quorum being present, all
matters, except as otherwise provided by law or by the Certificate of
Incorporation or by the By-laws, shall be decided by a majority of the votes
cast at such meeting by the holders of shares present in person or represented
by proxy and entitled to vote thereon. All elections of directors shall be by
written ballot unless otherwise provided in the Certificate of Incorporation. In
voting on any other question on which a vote by ballot is required by law or is
demanded by any stockholder entitled to vote, the voting shall be by ballot.
Each ballot shall be signed by the stockholder voting or by his proxy, and shall
state the number of shares voted. On all other questions, the voting may be viva
voce. Every stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent without a meeting may authorize another person or
persons to act for him by proxy. The validity and enforceability of any proxy
shall be determined in accordance with Section 212 of the General Corporation
Law.
2.11 Selection and Duties of Inspectors at Meetings of Stockholders.
The Board, in advance of any meeting of stockholders, may appoint one or more
inspectors to act at the meeting or any adjournment thereof. If inspectors are
not so appointed, the person presiding at such meeting may, and on the request
of any stockholder entitled to vote thereat shall, appoint one or more
inspectors. In case any person
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appointed fails to appear or act, the vacancy may be filled by appointment made
by the Board in advance of the meeting or at the meeting by the person presiding
thereat. Each inspector, before entering upon the discharge of his duties, shall
take and sign an oath faithfully to execute the duties of inspector at such
meeting with strict impartiality and according to the best of his ability. The
inspector or inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting or any stockholder entitled to vote thereat, the inspector or
inspectors shall make a report in writing of any challenge, question or matter
determined by him or them and execute a certificate of any fact found by him or
them. Any report or certificate made by the inspector or inspectors shall be
prima facie evidence of the facts stated and of the vote as certified by him or
them.
2.12 Organization.. At every meeting of stockholders, the President,
or in the absence of the President a Vice Presi-
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dent, and in case more than one Vice President shall be present, that Vice
President designated by the Board (or in the absence of any such designation,
the most senior Vice President, based on age, present), shall act as chairman of
of the meeting. In case none of the officers above designated to act as chairman
of the meeting shall be present, a chairman of the meeting shall be chosen by a
majority of the votes cast at such meeting by the holders of shares of capital
stock present in person or represented by proxy and entitled to vote at the
meeting. The Secretary, or in his absence one of the Assistant Secretaries,
shall act as secretary of the meeting. In the absence of the Secretary and any
Assistant Secretary, the Chairman of the meeting shall appoint a person to act
as secretary of the meeting.
2.13 Order of Business. The order of business at all meetings of
stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present may
be changed by a majority of the votes cast at such meeting by the holders of
shares of capital stock present in person or represented by proxy and entitled
to vote at the meeting.
2.14 Written Consent of Stockholders Without a Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required by
the General Corporation Law to be taken at any annual or special meeting of
stockholders
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of the Corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE 3
DIRECTORS
3.1 General Powers. Except as otherwise provided in the Certificate
of Incorporation or by applicable law, the business and affairs of the
Corporation shall be managed by the Board. The Board may adopt such rules and
regulations, not inconsistent with the Certificate of Incorporation or the
By-laws or applicable laws, as it may deem proper for the conduct of its
meetings and the management of the Corporation. In addition to the powers
expressly conferred by the By-laws, the Board may exercise all powers and
perform all acts which are not required, by the By-laws or the Certificate of
Incorporation or by law, to be exercised and performed by the stockholders.
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3.2 Number; Qualification; Term of Office. The Board shall consist
of one or more members. The number of directors shall be fixed initially by the
incorporator and may thereafter be changed from time to time by action of the
stockholders or of the Board. Directors need not be stockholders. Each director
shall hold office until his successor is elected and qualified or until his
earlier death, resignation or removal.
3.3 Election. Directors shall, exept as otherwise required by law or
by the Certificate of Incorporation, be elected by a plurality of the votes cast
at a meeting of stockholders by the holders of shares entitled to vote in the
election.
3.4 Newly Created Directorships and Vacancies. Unless otherwise
provided in the Certificate of Incorporation, newly created directorships
resulting from an increase in the number of directors and vacancies occurring in
the Board for any reason, including the removal of directors without cause, may
be filled by vote of a majority of the directors then in office, although less
than a quorum, or by a sole remaining director, at any meeting of the Board or
may be elected by a plurality of the votes cast by the holders of shares of
capital stock entitlted to vote in the election at a special meeting of
stockholders called for that purpose. A director elected to fill a vacancy shall
be elected to hold
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office until his successor is elected and qualified, or until his earlier death,
resignation or removal.
3.5 Resignations. Any director may resign at any time by written
notice to the Corporation. Such resignation shall take effect at the time
therein specified, and, unless otherwise specified, the acceptance of such
resignation shall not be necessary to make it effective.
3.6 Removal of Directors. Any or all of the directors may be removed
(i) for cause, by vote of the stockholders or by action of the Board, and (ii)
without cause, by vote of the stockholders.
3.7 Compensation. Each director, in consideration of his service as
such, shall be entitled to receive from the Corporation such amount per annum or
such fees for attendance at directors' meetings, or both, as the Board may from
time to time determine, together with reimbursement for the reasonable expenses
incurred by him in connection with the performance of his duties. Each director
who shall serve as a member of any committee of directors in consideration of
his serving as such shall be entitled to such additional amount per annum or
such fees for attendance at committee meetings, or both, as the Board may from
time to time determine, together with reimbursement for the reasonable expenses
incurred by him in the performance of his duties. Nothing in this section
contained shall preclude any director from serving the Corporation or its
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subsidiaries in any other capacity and receiving proper compensation therefor.
3.8 Place and Time of Meetings of the Board. Meetings of the Board,
regular or special, may be held at any place within or without the State of
Delaware. The times and places for holding meetings of the Board may be fixed
from time to time by resolution of the Board or (unless contrary to resolution
of the Board) in the notice of the meeting.
3.9 Annual Meetings. On the day when and at the place where the
annual meeting of stockholders for the election of directors is held, and as
soon as practicable thereafter, the Board may hold its annual meeting, without
notice of such meeting, for the purposes of organization, the election of
officers and the transaction of other business. The annual meeting of the Board
may be held at any other time and place specified in a notice given as provided
in Section 3.11 of the By-laws for special meetings of the Board or in a waiver
of notice thereof.
3.10 Regular Meetings. Regular meetings of the Board may be held at
such times and places as may be fixed from time to time by the Board. Unless
otherwise required by the Board, regular meetings of the Board may be held
without notice. If any day fixed for a regular meeting of the Board shall be a
Saturday or Sunday or a legal holiday at the
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place where such meeting is to be held, then such meeting shall be held at the
same hour at the same place on the first business day thereafter which is not a
Saturday, Sunday or legal holiday.
3.11 Special Meetings. Special meetings of the Board shall be held
whenever called by the President or the Secretary or by any two or more
directors. Notice of each special meeting of the Board shall, if mailed, be
addressed to each director at the address designated by him for that purpose or,
if none is designated, at his last known address at least two days before the
date on which the meeting is to be held; or such notice shall be sent to each
director at such address by telegraph, cable or wireless, or be delivered to him
personally, not later than the day before the date on which such meeting is to
be held. Every such notice shall state the time and place of the meeting but
need not state the purposes of the meeting, except to the extent required by
law. If mailed, each notice shall be deemed given when deposited, with postage
thereon prepaid, in a post office or official depository under the exclusive
care and custody of the United States post office department. Such mailing shall
be by first class mail.
3.12 Adjourned Meetings. A majority of the directors present at any
meeting of the Board, including an adjourned meeting, whether or not a quorum is
present, may
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adjourn such meeting to another time and place. Notice of any adjourned meeting
of the Board need not be given to any director whether or not present at the
time of the adjournment. Any business may be transacted at any adjourned meeting
that might have been transacted at the meeting as originally called.
3.13 Waiver of Notice. Whenever notice is required to be given to
any director or member of a committee of directors under any provision of the
General Corporation Law or of the Certificate of Incorporation or By-laws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
directors, or members of a committee of directors, need be specified in any
written waiver of notice.
3.14 Organization. At each meeting of the Board, the President, or
in the absence of the President, a chairman chosen by the majority of the
directors present, shall preside. The Secretary shall act as secretary at each
meeting of the
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Board. In case the Secretary shall be absent from any meeting of the Board, an
Assistant Secretary shall perform the duties of secretary at such meeting; and
in the absence from any such meeting of the Secretary and Assistant Secretaries,
the person presiding at the meeting may appoint any person to act as secretary
of the meeting.
3.15 Quorum of Directors. One-third of the total number of directors
shall constitute a quorum for the transaction of business or of any specified
item of business at any meeting of the Board.
3.16 Action by the Board. All corporate action taken by the Board or
any committee thereof shall be taken at a meeting of the Board, or of such
committee, as the case may be, except that any action required or permitted to
be taken at any meeting of the Board, or of any committee thereof, may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee. Members of the Board, or any
committee designated by the Board, may participate in a meeting of the Board, or
of such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
Section 3.16 shall constitute presence in
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person at such meeting. Except as otherwise provided by the Certificate of
Incorporation or by law, the vote of a majority of the directors present
(including those who participate by means of conference telephone or similar
communications equipment) at the time of the vote, if a quorum (including those
who so participate) is present at such time, shall be the act of the Board.
ARTICLE 4
COMMITTEES OF THE BOARD
The Board may, by resolution passed by a majority of the whole
Board, designate one or more committees, each committee to consist of one or
more of the directors of the corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the Board, shall
have and may exercise all the powers and authority of the Board in the
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management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the By-laws of the Corporation; and, unless the resolution
designating it expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.
ARTICLE 5
OFFICERS
5.1 Officers. The Board shall elect a President, a Secretary and a
Treasurer, and may elect or appoint one or more Vice Presidents, a Comptroller,
one or more Associate Treasurers, one or more Assistant Treasurers and such
other officers as it may determine. The Board may designate one or more Vice
Presidents as Executive Vice Presidents, Group Vice Presidents or Senior Vice
Presidents, and may use de-
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scriptive words or phrases to designate the standing, seniority or area of
special competence of the Vice Presidents elected or appointed by it. Each
officer shall hold his office until his successor is elected and qualified or
until his earlier death, resignation or removal in the manner provided in
Section 5.2 of the By-laws. Any two or more offices may be held by the same
person. The Board may require any officer to give a bond or other security for
the faithful performance of his duties, in such amount and with such sureties as
the Board may determine. All officers as between themselves and the Corporation
shall have such authority and perform such duties in the management of the
Corporation as may be provided in the By-laws or as the Board may from time to
time determine.
5.2 Removal of Officers. Any officer elected or appointed by the
Board may be removed by the Board with or without cause. The removal of an
officer without cause shall be without prejudice to his contract rights, if any.
The election or appointment of an officer shall not of itself create contract
rights.
5.3 Resignations. Any officer may resign at any time in writing by
notifying the Board or the President or the Secretary. Such resignation shall
take effect at the
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date of receipt of such notice or at such later time as is therein specified,
and, unless otherwise specified, the acceptance of such resignation shall not be
necessary to make it effective. The resignation of an officer shall be without
prejudice to the contract rights of the Corporation, if any.
5.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause may be filled for the
unexpired portion of the term in the manner prescribed in the By-laws for the
regular election or appointment to such office.
5.5 Compensation. Salaries or other compensation of the officers may
be fixed from time to time by the Board. No officer shall be prevented from
receiving a salary or other compensation by reason of the fact that he is also a
director.
5.6 President. The President shall be the chief executive officer of
the Corporation and shall report directly to the Board. The President shall have
general supervision over the business of the Corporation, subject, however, to
the control of the Board and of any duly authorized committee of directors. The
President shall preside at meetings of the stockholders and at meetings of the
Board. He may, with the Secretary or the Treasurer or an Assistant Secretary or
an Assistant Treasurer, sign certificates for shares of capital
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stock of the Corporation. He may sign and execute in the name of the Corporation
deeds, mortgages, bonds, contracts and other instruments, except in cases where
the signing and execution thereof shall be expressly delegated by the Board or
by the By-laws to some other officer or agent of the Corporation, or shall be
required by law otherwise to be signed or executed; and, in general, he shall
perform all duties incident to the office of the President and chief executive
officer and such other duties consistent therewith as from time to time may be
assigned to him by the Board.
5.7 Vice Presidents. At the request of the President (or in the
President's absence, at the request of the Board), the Vice President shall (in
such order as may be designated by the President or the Board or in the absence
of any such designation in order of seniority based on age) perform all of the
duties of the President and so acting shall have all the powers of and be
subject to all restrictions upon the President. Any Vice President may also,
with the Secretary or the Treasurer or an Assistant Secretary or an Assistant
Treasurer, sign certificates for shares of capital stock of the Corporation; may
sign and execute in the name of the Corporation deeds, mortgages, bonds,
contracts or other
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instruments authorized by the Board, except in cases where the signing and
execution thereof shall be expressly delegated by the Board or by the By-laws to
some other officer or agent of the Corporation, or shall be required by law
otherwise to be signed or executed; and shall perform such other duties as from
time to time may be assigned to him by the Board or by the President.
5.8 Secretary. The Secretary, if present, shall act as secretary of
all meetings of the stockholders and of the Board, and shall keep the minutes
thereof in the proper book or books to be provided for that purpose; he shall
see that all notices required to be given by the Corporation are duly given and
served; he may, with the President or a Vice President, sign certificates for
shares of capital stock of the Corporation; he shall be custodian of the seal of
the Corporation and may seal with the seal of the Corporation, or a facsimile
thereof, all certificates for shares of capital stock of the Corporation and all
documents the execution of which on behalf of the Corporation under its
corporate seal is authorized in accordance with the provisions of the By-laws;
he shall have charge of the stock ledger and also of the other books, records
and papers of the Corporation relating to its organization and management as a
Corporation, and shall see
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that the reports, statements and other documents required by law are properly
kept and filed; and shall, in general, perform all the duties incident to the
office of Secretary and such other duties as from time to time may be assigned
to him by the Board or by the President.
5.9 Treasurer. The Treasurer shall have charge and custody of, and
be responsible for, all funds, securities and notes of the Corporation; receive
and give receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys in the name of the Corporation in such
banks, trust companies or other depositaries as shall be selected in accordance
with these By-laws; against proper vouchers, cause such funds to be disbursed by
checks or drafts on the authorized depositaries of the Corporation signed in
such manner as shall be determined in accordance with any provisions of the
By-laws, and be responsible for the accuracy of the amounts of all moneys so
disbursed; regularly enter or cause to be entered in books to be kept by him or
under his direction full and adequate account of all moneys received or paid by
him for the account of the Corporation; have the right to require, from time to
time, reports or statements giving such information as he may desire with
respect to any and all financial transactions of the Corporation from the
officers
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or agents transacting the same; render to the President or the Board, whenever
the President or the Board, respectively, shall require him so to do, an account
of the financial condition of the Corporation and of all his transactions as
Treasurer; exhibit at all reasonable times his books of account and other
records to any of the directors upon application at the office of the
Corporation where such books and records are kept; and in general, perform all
the duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the Board or by the President; and he may
sign with the President or a Vice President certificates for shares of capital
stock of the Corporation.
5.10 Assistant Secretaries, Associate Treasurers and Assistant
Treasurers. Assistant Secretaries, Associate Treasurers and Assistant Treasurers
shall perform such duties as shall be assigned to them by the Secretary or by
the Treasurer, respectively, or by the Board or by the President. Assistant
Secretaries, Associate Treasurers and Assistant Treasurers may, with the
President or a Vice President, sign certificates for shares of capital stock of
the Corporation.
5.11 Comptroller. The Comptroller shall be responsible for the
maintenance of adequate accounting records of all assets, liabilities and
transactions of the Corporation. The Comptroller shall prepare and render such
balance sheets, budgets and other financial reports as the Board or the
President
<PAGE>
27
may require, and shall perform such other duties as may be prescribed in these
By-laws or assigned to him by the Board or the President and all other acts
incident to the position of Comptroller. Assistant Comptrollers shall perform
such duties as from time to time may be assigned to them by the Comptroller or
by the Board or the President. In the event of the absence of the Comptroller or
of his incapacity or inability to act, then any Assistant Comptroller may
perform any of the duties and may exercise any of the powers of the Comptroller.
ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
6.1 Execution of Contracts. The Board may authorize any officer,
employee or agent, in the name and on behalf of the Corporation, to enter into
any contract or execute and satisfy any instrument, and any such authority may
be general or confirmed to specific instances, or otherwise limited.
6.2 Loans. The President or any other officer, employee or agent
authorized by the By-laws or by the Board may effect loans and advances at any
time time for the Corporation from any bank, trust company or other institutions
or from any firm, corporation or individual and for such loans and advances may
make, execute and deliver promissory notes, bonds or other certificates or
evidences of indebtedness of the Corporation,
<PAGE>
28
and when authorized so to do may pledge and hypothecate or transfer any
securities or other property of the Corporation as security for any such loans
or advances. Such authority conferred by the Board may be general or confined to
specific instances or otherwise limited.
6.3 Checks, Drafts, Etc. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation and all notes or other
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by
resolution of the Board.
6.4 Deposits. The funds of the Corporation not otherwise employed
shall be deposited from time to time to the order of the Corporation in such
banks, trust companies or other depositaries as the Board may select or as may
be selected by an officer, employee or agent of the Corporation to whom such
power may from time to time be delegated by the Board.
ARTICLE 7
STOCK AND DIVIDENDS
7.1 Certificates Representing Shares. The shares of capital stock of
the Corporation shall be represented by certificates in such form (consistent
with the provisions of Section 158 of the General Corporation Law) as shall be
approved by the
<PAGE>
29
Board. Such certificates shall be signed by the President or a Vice President
and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer, and may be sealed with the seal of the Corporation or a facsimile
thereof. The signatures of the officers upon a certificate may be facsimiles, if
the certificate is countersigned by a transfer agent or registrar other than the
Corporation itself or its employee. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon any
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, such certificate may, unless otherwise
ordered by the Board, be issued by the Corporation with the same effect as if
such person were such officer, transfer agent or registrar at the date of issue.
7.2 Transfer of Shares. Transfers of shares of capital stock of the
Corporation shall be made only on the books of the Corporation by the holder
thereof or by his duly authorized attorney appointed by a power of attorney duly
executed and filed with the Secretary or a transfer agent of the Corporation,
and on surrender of the certificate or certificates representing such shares of
capital stock properly endorsed for transfer and upon payment of all necessary
transfer taxes. Every certificate exchanged, returned or surrendered to the
Corporation shall be marked
<PAGE>
30
"Cancelled," with the date of cancellation, by the Secretary or an Assistant
Secretary or the transfer agent of the Corporation. A person in whose name
shares of capital stock shall stand on the books of the Corporation shall be
deemed the owner thereof to receive dividends, to vote as such owner and for all
other purposes as respects the Corporation. No transfer of shares of capital
stock shall be valid as against the Corporation, its stockholders and creditors
for any purpose, except to render the transferee liable for the debts of the
Corporation to the extent provided by law, until such transfer shall have been
entered on the books of the Corporation by an entry showing from and to whom
transferred.
7.3 Transfer and Registry Agents. The Corporation may from time to
time maintain one or more transfer offices or agents and registry offices or
agents at such place or places as may be determined from time to time by the
Board.
7.4 Lost, Destroyed, Stolen and Mutilated Certificates. The holder
of any shares of capital stock of the Corporation shall immediately notify the
Corporation of any loss, destruction, theft or mutilation of the certificate
representing such shares, and the Corporation may issue a new certificate to
replace the certificate alleged to have been lost, destroyed, stolen or
mutilated. The Board may, in its discretion, as a condition to the issue of any
such new certificate, require the owner of the lost, destroyed, stolen
<PAGE>
31
or mutilated certificate, or his legal representatives, to make proof
satisfactory to the Board of such loss, destruction, theft or mutilation and to
advertise such fact in such manner as the Board may require, and to give the
Corporation and its transfer agents and registrars, or such of them as the Board
may require, a bond in such form, in such sums and with such surety or sureties
as the Board may direct, to indemnify the Corporation and its transfer agents
and registrars against any claim that may be made against any of them on account
of the continued existence of any such certificate so alleged to have been lost,
destroyed, stolen or mutilated and against any expense in connection with such
claim.
7.5 Regulations. The Board may make such rules and regulations as it
may deem expedient, not inconsistent with the By-laws or with the Certificate of
Incorporation, concerning the issue, transfer and registration of certificates
representing shares of its capital stock.
7.6 Restriction on Transfer of Stock. A written restriction on the
transfer or registration of transfer of capital stock of the Corporation, if
permitted by Section 202 of the General Corporation Law and noted conspicuously
on the certificate representing such capital stock, may be enforced against the
holder of the restricted capital stock or any successor or transferee of the
holder including an executor, administrator, trustee, guardian or other
fiduciary entrusted with like
<PAGE>
32
responsibilty for the person or estate of the holder. Unless noted conspicuously
on the certificate representing such capital stock, a restriction, even though
permitted by Section 202 of the General Corporation Law shall be ineffective
except against a person with actual knowledge of the restriction. A restriction
on the transfer or registration of transfer of capital stock of the Corporation
may be imposed either by the Certificate of Incorporation or by an agreement
among any number of stockholders or among such stockholders and the Corporation.
No restriction so imposed shall be binding with respect to capital stock issued
prior to the adoption of the restriction unless the holders of such capital
stock are parties to an agreement or voted in favor of the restriction.
7.7 Dividends, Surplus, Etc. Subject to the provisions of the
Certificate of Incorporation and of law, the Board:
7.7.1 May declare and pay dividends or make other
distributions on the outstanding shares of capital stock in such amounts
and at such time or times as, in its discretion, the condition of the
affairs of the Corporation shall render advisable;
7.7.2 May use and apply, in its discretion, any of the surplus
of the Corporation in purchasing or acquiring any shares of capital stock
of the Corporation, or purchase warrants therefor, in accordance
<PAGE>
33
with law, or any of its bonds, debentures, notes, scrip or other
securities or evidences of indebtedness;
7.7.3 May set aside from time to time out of such surplus or
net profits such sum or sums as, in its discretion, it may think proper,
as a reserve fund to meet contingencies, or for equalizing dividends or
for the purpose of maintaining or increasing the property or business of
the Corporation, or for any purpose it may think conducive to the best
interests of the Corporation.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification of Officers and Directors. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was a director or an officer of the Corporation, against expenses
(including attorneys' fees) judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding to the fullest extent and in the manner set forth in and permitted by
the General Corporation Law, and any other applicable law, as
<PAGE>
34
from time to time in effect. Such right of indemnification shall not be deemed
exclusive of any other rights to which such director or officer may be entitled
apart from the foregoing provisions. The foregoing provisions of this Section
8.1 shall be deemed to be a contract between the Corporation and each director
and officer who serves in such capacity at any time while this Article 8 and the
relevant provisions of the General Corporation Law and other applicable law, if
any, are in effect, and any repeal or modification thereof shall not affect any
rights or obligations then existing with respect to any state of facts then or
theretofore existing or any action, suit or proceeding theretofore or thereafter
brought or threatened based in whole or in part upon any such state of facts.
8.2 Indemnification of Other Persons. The Corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was an employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in
<PAGE>
35
connection with such action, suit or proceeding to the extent and in the manner
set forth in and permitted by the General Corporation Law, and any other
applicable law, as from time to time in effect. Such right of indemnification
shall not be deemed exclusive of any other rights to which any such person may
be entitled apart from the foregoing provisions.
ARTICLE 9
BOOKS AND RECORDS
9.1 Books and Records. The Corporation shall keep correct and
complete books and records of account and shall keep minutes of the proceedings
of the stockholders, the Board and any committee of the Board. The Corporation
shall keep at the office designated in the Certificate of Incorporation or at
the office of the transfer agent or registrar of the Corporation in Delaware, a
record containing the names and addresses of all stockholders, the number and
class of shares held by each and the dates when they respectively became the
owners of record thereof.
9.2 Form of Records. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device, provided that the records so kept can be converted into
<PAGE>
36
clearly legible written form within a reasonable time. The Corporation shall so
convert any records so kept upon the request of any person entitled to inspect
the same.
9.3 Inspection of Books and Records. Except as otherwise provided by
law, the Board shall determine from time to time whether, and, if allowed, when
and under what conditions and regulations, the accounts, books, minutes and
other records of the Corporation, or any of them, shall be open to the
inspection of the stockholders.
9.4 Reliance on Books and Records. Each officer, director or member
of any committee designated by the Board of Directors shall, in the performance
of his duties, be fully protected in relying in good faith upon the books of
account of or reports made to the Corporation by any of its officers or by an
independent public accountant or by an appraiser selected with reasonable care
by the Board of Directors or by any such committee and in relying in good faith
upon other books and records of the Corporation.
ARTICLE 10
SEAL
The Board may adopt a corporate seal which shall be in the form of a
circle and shall bear the full name of the Corporation, the year of its
incorporation and the word "Delaware."
<PAGE>
37
ARTICLE 11
FISCAL YEAR
The fiscal year of the Corporation shall be determined, and may be
changed, by resolution of the Board.
ARTICLE 12
VOTING OF SHARES HELD
Unless otherwise provided by resolution of the Board, the President
may, from time to time, appoint one or more attorneys or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the votes
which the Corporation may be entitled to cast as a stockholder or otherwise in
any other corporation, any of whose shares or securities may be held by the
Corporation, at meetings of the holders of stock or other securities of such
other corporation, or to consent in writing to any action by any such other
corporation, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause to
be executed on behalf of the Corporation and under its corporate seal, or
otherwise, such written proxies, consents, waivers or other instruments as he
may deem necessary or proper in the premises; or the President may himself
attend any meeting of the holders of the stock or other securities of any such
other corporation and thereat vote or exercise any or all other
<PAGE>
38
powers of the Corporation as the holder of such stock or other securities of
such other corporation.
ARTICLE 13
AMENDMENTS
The By-laws may be altered, amended, supplemented or repealed, or
new By-laws may be adopted, by vote of the holders of the shares entitled to
vote in the election of directors. The By-laws may be altered, amended,
supplemented, repealed, or new By-laws may be adopted, by the Board, provided
that the vote of a majority of the entire Board shall be required to change the
number of authorized directors. Any By-laws adopted, altered, amended, or
supplemented by the Board may be altered, amended, supplemented or repealed by
the stockholders entitled to vote thereon.
<PAGE>
Exhibit 3.53
AVIS MANAGEMENT SERVICES, LTD.
---oo0oo---
BY-LAWS
---ooOoo---
ARTICLE I
OFFICES
Section 1. The principal office shall be in the City of Wilmington, County
of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held in Garden City, State of New York, at such place
<PAGE>
as may be fixed from time to time by the board of directors. Meetings of
stockholders for any other purpose may be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year 1966,
shall be held on the first Tuesday of June if not a legal holiday, and if a
legal holiday, then on the next secular day following, at 11:00 A.M., at which
they shall elect by a plurality vote a board of directors, and transact such
other business as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting shall be given to each
stockholder entitled to vote thereat at least ten days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every election of
directors, a complete list of the stockholders entitled
<PAGE>
to vote at said election, arranged in alphabetical order, showing the address of
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, during ordinary business
hours, for a period of at least ten days prior to the election, either at a
place within the city, town or village where the election is to be held and
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where said meeting is to be held, and the list shall be
produced and kept at the time and place of election during the whole time
thereof, and subject to the inspection of any stockholder who may be present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled
<PAGE>
to vote. Such request shall state the purpose or purposes of the proposed
meeting.
Section 6. Written notice of a special meeting of stockholders, stating
the time, place and object thereof, shall be given to each stockholder entitled
to vote thereat, at least ten days before the date fixed for the meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of fifty-one per cent of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting,
<PAGE>
until a quorum shall be present or represented. At such adjourned meeting at
which a quorum shall be present or represented any business may be transacted
which might have been transacted at the meeting as originally notified.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period,
and, except where the transfer books of the corporation have been closed or a
date has been fixed as a
<PAGE>
record date for the determination of its stockholders entitled to vote, no share
of stock shall be voted on at any election for directors which has been
transferred on the books of the corporation within twenty days next preceding
such election of directors.
Section 11. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken in connection with any corporate action by any
provisions of the statutes or of the certificate of incorporation, the meeting
and vote of stockholders may be dispensed with, if all the stockholders who
would have been entitled to vote upon the action if such meeting were held,
shall consent in writing to such corporate action being taken.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be three. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this Article, and each director
elected shall hold
<PAGE>
office until his successor is elected and qualified. Directors need not be
stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, and the directors so
chosen shall hold office until the next annual election and until their
successors are duly elected and shall qualify, unless sooner displaced.
Section 3. The business of the corporation shall be managed by its board
of directors which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
<PAGE>
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board may be called by the president on
one day's notice
<PAGE>
to each director, either personally or by mail or by telegram; special meetings
shall be called by the president or secretary in like manner and on like notice
on the written request of two directors.
Section 8. At all meetings of the board two directors shall constitute a
quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if prior to such action a written consent thereto is signed by
<PAGE>
all members of the board or of such committee as the case may be, and such
written consent is filed with the minutes of proceedings of the board or
committee.
COMMITTEES OF DIRECTORS
Section 10. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of two or more of the directors of the corporation, which, to the extent
provided in the resolution, shall have and may exercise the powers of the board
of directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers which
may require it; provided, in the absence or disqualification of any member of
such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in the place of any such absent or disqualified member. Such
committee or committees shall have such name or names as may be determined
<PAGE>
from time to time by resolution adopted by the board of directors.
Section 11. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 12. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders shall be in writing and
delivered personally or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation.
<PAGE>
Notice by mail shall be deemed to be given at the time when the same shall be
mailed. Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers. Two or more
offices may be held by the same person, except that where the offices of
president and secretary are held by the same person, such person shall not hold
any other office.
<PAGE>
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
<PAGE>
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. The vice-president, or if there shall be more than one, the
vice-presidents in the order determined by the board of directors, shall, in the
absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other
<PAGE>
duties and have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
<PAGE>
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
<PAGE>
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the
<PAGE>
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the president or a vice-president and the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation, certifying the number of shares owned by him in the corporation.
Section 2. Where a certificate is signed (1) by a transfer agent or an
assistant transfer agent or (2) by a transfer clerk acting on behalf of the
corporation and a registrar, the signature of any such president,
vice-president, treasurer, assistant treasurer, secretary or assistant secretary
may be facsimile. In case any officer or officers who have signed, or whose
facsimile signature or signatures have been used on, any such certificate or
certificates shall cease to be such officer or officers of the corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates have been delivered by the corporation, such certificate or
certificates may nevertheless be adopted by the corporation and be issued and
delivered as though the person or per-
<PAGE>
sons who signed such certificate or certificates or whose facsimile signature or
signatures have been used thereon had not ceased to be such officer or officers
of the corporation.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the board of directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
<PAGE>
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
Section 5. The board of directors may close the stock transfer books of
the corporation for a period not exceeding fifty days preceding the date of any
meeting of stockholders or the date for payment of any dividend or the date for
the allotment of rights or the date when any change or conversion or exchange of
capital stock shall go into effect or for a period of not exceeding fifty days
in connection with obtaining the consent of stockholders for any purpose. In
lieu of closing the stock transfer books as aforesaid, the board of directors
may fix in advance a date, not exceeding fifty days preceding the
<PAGE>
date of any meeting of stockholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital stock shall go into effect, or a date in
connection with obtaining such consent, as a record date for the determination
of the stockholders entitled to notice of, and to vote at, any such meeting, and
any adjournment thereof, or entitled to receive payment of any such dividend, or
to any such allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, or to give such consent,
and in such case such stockholders and only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to such notice of,
and to vote at, such meeting and any adjournment thereof, or to receive payment
of such dividend, or to receive such allotment of rights, or to exercise such
rights, or to give such consent, as the case may be notwithstanding any transfer
of any stock on the books of the corporation after any such record date fixed as
aforesaid.
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REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of
<PAGE>
the capital stock, subject to the provisions of the certificate of
incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
Section 4. All checks or demands for
<PAGE>
money and notes of the corporation shall be signed by such officer or officers
or such other person or persons as the board of directors may from time to time
designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered or repealed at any regular meeting
of the stockholders or of the board of directors or at any special meeting of
the stockholders or of the board
<PAGE>
of directors if notice of such alteration or repeal be contained in the notice
of such special meeting. No change of the time or place of the meeting for the
election of directors shall be made within sixty days next before the day on
which such meeting is to be held, and in case of any change of such time or
place, notice thereof shall be given to each stockholder in person or by letter
mailed to his last known post-office address at least twenty days before the
meeting is held.
<PAGE>
Exhibit 3.54
BY-LAWS
OF
AVIS CARIBBEAN, LIMITED
(A Delaware Corporation)
ARTICLE I
DEFINITIONS
As used in these By-laws unless the context otherwise requires, the
term:
1.1 "Assistant Secretary" means an Assistant Secretary of the
Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the
Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "By-laws" means the initial by-laws of the Corporation, as
amended from time to time.
1.5 "Certificate of Incorporation" means the initial certificate of
incorporation of the Corporation, as amended, supplemented or restated from time
to time.
1.6 "Comptroller" means the Comptroller of the Corporation.
1.7 "Corporation" means AVIS CARIBBEAN, LIMITED.
<PAGE>
1.8 "Chairman of the Board" means the Chairman of the Board of
Directors.
1.9 "Directors" means directors of the Corporation.
1.10 "General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended from time to time.
1.11 "Office of the Corporation" means the executive office of the
Corporation, anything in Section 131 of the General Corporation Law to the
contrary notwithstanding.
1.12 "President" means the President of the Corporation.
1.13 "Secretary" means the Secretary of the Corporation.
1.14 "Stockholder" means stockholders of the Corporation.
1.15 "Treasurer" means the Treasurer of the Corporation.
1.16 "Vice President" means a Vice President of the Corporation.
ARTICLE 2
STOCKHOLDERS
2.1 Place of Meetings. Every meeting of the stockholders shall be
held at the office of the Corporation or at such other place within or without
the State of Delaware as shall be specified or fixed in the notice of such
meeting or in the waiver of notice thereof.
2.2 Annual Meeting. A meeting of stockholders shall be held annually
for the election of directors and the transaction of
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other business at such hour as may be designated in the notice of meeting on the
fourth Wednesday in May in each year or, if such date falls on a legal holiday,
on the first business day thereafter which is not a Saturday, Sunday or legal
holiday.
2.3 Deferred Meeting for Election of Directors, Etc. If the annual
meeting of stockholders for the election of directors and the transaction of
other business is not held on the date fixed in Section 2.2, the Board shall
call a meeting of stockholders for the election of directors and the transaction
of other business as soon thereafter as convenient.
2.4 Other Special Meetings. A special meeting of stockholders (other
than a special meeting for the election of directors), or a special meeting of
any class or series thereof, unless otherwise prescribed by statute, may be
called at any time by the Board or by the President or by the Secretary, and
shall be called by the President or by the Secretary on the written request of
holders of twenty percentum (20%) or more of the shares of capital stock of the
Corporation entitled to vote in an election of directors, which written request
shall state the purpose or purposes of such meeting. At any special meeting of
stockholders only such business may be transacted which is related to the
purpose or purposes of such meeting set forth in the notice thereof given
pursuant to Section 2.6 of the By-laws or in any waiver of notice thereof given
pursuant to Section 2.7 of the By-laws.
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<PAGE>
2.5 Fixing Record Date. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or for the purpose of determining stockholders entitled to
receive payment of any dividend or the allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board may fix, in advance, a
date as the record date for any such determination of stockholders. Such date
shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. If no such record
date is fixed:
2.5.1 The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice
is given, or, if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held;
2.5.2 The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting,
when no prior action by the Board is necessary, shall be the day on
which the first written consent is expressed;
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2.5.3 The record date for determining stockholders for any
purpose other than that specified in Sections 2.5.1 and 2.5.2 shall
be at the close of business on the day on which the Board adopts the
resolution relating thereto.
When a determination of stockholders entitled to notice of or to vote at any
meeting of stockholders has been made as provided in this Section 2.5 such
determination shall apply to any adjournment thereof, unless the Board fixes a
new record date for the adjourned meeting.
2.6 Notice of Meetings of Stockholders. Except as otherwise provided
in Sections 2.5 and 2.7 of the By-laws, whenever under the General Corporation
Law or the Certificate of Incorporation or the By-laws, stockholders are
required or permitted to take any action at a meeting, written notice shall be
given stating the place, date and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. A copy
of the notice of any meeting shall be given, personally or by mail, not less
than ten nor more than fifty days before the date of the meeting, to each
stockholder entitled to notice of or to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
with postage prepaid, directed to the stockholder at his address as it appears
on the records of the Corporation. An affidavit of the Secretary or an Assistant
Secretary or of the transfer agent of the
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Corporation that the notice required by this section has been given shall, in
the absence of fraud, be prima facie evidence of the facts stated therein. When
a meeting is adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced at the meeting at
which the adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted at the meeting as originally called.
If, however, the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
2.7 Waivers of Notice. Whenever notice is required to be given to
any stockholder under any provision of the General Corporation Law or of the
Certificate of Incorporation or the By-laws, a written waiver thereof, signed by
the stockholder entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a stockholder at a
meeting shall constitute a waiver of notice of such meeting, except when the
stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
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<PAGE>
2.8 List of Stockholders. The Secretary shall prepare and make, or
cause to be prepared and made, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
2.9 Quorum of Stockholders; Adjournment. The holders of one-third of
the shares of stock entitled to vote at any meeting of stockholders, present in
person or represented by proxy, shall constitute a quorum for the transaction of
any business at such meeting. When a quorum is once present to organize a
meeting of stockholders, it is not broken by the subsequent withdrawal of any
stockholders. The holders of a majority of the shares of stock present in person
or represented by proxy at any meeting of stockholders, including an adjourned
meeting, whether or not a quorum is present, may adjourn such meeting to another
time and place.
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<PAGE>
2.10 Voting; Proxies. Unless otherwise provided in the Certificate
of Incorporation every stockholder of record shall be entitled at every meeting
of stockholders to one vote for each share of capital stock standing in his name
on the record of stockholders determined in accordance with Section 2.5 of the
By-laws. If the Certificate of Incorporation provides for more or less than one
vote for any share, on any matter, every reference in the By-laws or the General
Corporation Law to a majority or other proportion of stock shall refer to such
majority or other proportion of the votes of such stock. The provisions of
Sections 212 and 217 of the General Corporation Law shall apply in determining
whether any shares of capital stock may be voted and the persons, if any,
entitled to vote such shares; but the Corporation shall be protected in treating
the persons in whose names shares of capital stock stand on the record of
stockholders as owners thereof for all purposes. At any meeting of stockholders,
a quorum being present, all matters, except as otherwise provided by law or by
the Certificate of Incorporation or by the By-laws, shall be decided by a
majority of the votes cast at such meeting by the holders of shares present in
person or represented by proxy and entitled to vote thereon. All elections of
directors shall be by written ballot unless otherwise provided in the
Certificate of Incorporation. In voting on any other question on which a vote by
ballot is required by law or is demanded by any stockholder entitled to vote,
the voting shall be
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<PAGE>
by ballot. Each ballot shall be signed by the stockholder voting or by his
proxy, and shall state the number of shares voted. On all other questions, the
voting may be viva voce. Every stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent without a meeting may authorize
another person or persons to act for him by proxy. The validity and
enforceability of any proxy shall be determined in accordance with Section 212
of the General Corporation Law.
2.11 Selection and Duties of Inspectors at Meetings of Stockholders.
The Board, in advance of any meeting of stockholders, may appoint one or more
inspectors to act at the meeting or any adjournment thereof. If inspectors are
not so appointed, the person presiding at such meeting may, and on the request
of any stockholder entitled to vote thereat shall, appoint one or more
inspectors. In case any person appointed fails to appear or act, the vacancy may
be filled by appointment made by the Board in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, before entering upon
the discharge of his duties, shall take and sign an oath faithfully to execute
the duties of inspector at such meeting with strict impartiality and according
to the best of his ability. The inspector or inspectors shall determine the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and
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<PAGE>
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the person presiding at the meeting or any
stockholder entitled to vote thereat, the inspector or inspectors shall make a
report in writing of any challenge, question or matter determined by him or them
and execute a certificate of any fact found by him or them. Any report or
certificate made by the inspector in inspectors shall be prima facie evidence of
the facts stated and of the vote as certified by him or them.
2.12 Organization. At every meeting of stockholders, the Chairman or
in the absence of the Chairman, the President and in the absence of the
President, the Vice President, and in case more than one Vice President shall be
present, that Vice President designated by the Board (or in the absence of any
such designation, the most senior Vice President, based on age, present), shall
act as chairman of the meeting. In case none of the officers above designated to
act as chairman of the meeting shall be present, a chairman of the meeting shall
be chosen by a majority of the votes cast at such meeting by the holders of
shares of capital stock present in person or represented by proxy and entitled
to vote at the meeting. The Secretary, or in his absence one of the Assistant
Secretaries, shall act as secretary of the meeting. In the absence of the
Secretary and any Assistant Secretary, the Chairman of the meeting shall appoint
a person to act as secretary of the meeting.
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<PAGE>
2.13 Order of Business. The order of business at all meetings of
stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present may
be changed by a majority of the votes cast at such meeting by the holders of
shares of capital stock present in person or represented by proxy and entitled
to vote at the meeting.
2.14 Written Consent of Stockholders Without a Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required by
the General Corporation Law to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE 3
DIRECTORS
3.1 General Powers. Except as otherwise provided in the Certificate
of Incorporation or by applicable law, the business and
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<PAGE>
affairs of the Corporation shall be managed by the Board. The Board may adopt
such rules and regulations, not inconsistent with the Certificate of
Incorporation or the By-laws or applicable laws, as it may deem proper for the
conduct of its meetings and the management of the Corporation. In addition to
the powers expressly conferred by the By-laws, the Board may exercise all powers
and perform all acts which are not required, by the By-laws or the Certificate
of Incorporation or by law, to be exercised and performed by the stockholders.
3.2 Number; Qualification; Term of Office. The Board shall consist
of one or more members. The number of directors shall be fixed initially by the
incorporator and may thereafter be changed from time to time by action of the
stockholders or of the Board. Directors need not be stockholders. Each director
shall hold office until his successor is elected and qualified or until his
earlier death, resignation or removal.
3.3 Election. Directors shall, except as otherwise required by law
or by the Certificate of Incorporation, be elected by a plurality of the votes
cast at a meeting of stockholders by the holders of shares entitled to vote in
the election.
3.4 Newly Created Directorships and Vacancies. Unless otherwise
provided in the Certificate of Incorporation, newly created directorships
resulting from an increase in the number of directors and vacancies occurring in
the Board for any reason, including the removal of directors without cause, may
be filled by
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<PAGE>
vote of a majority of the directors then in office, although less than a quorum,
or by a sole remaining director, at any meeting of the Board or may be elected
by a plurality of the votes cast by the holders of shares of capital stock
entitled to vote in the election at a special meeting of stockholders called for
that purpose. A director elected to fill a vacancy shall be elected to hold
office until his successor is elected and qualified, or until his earlier death,
resignation or removal.
3.5 Resignations. Any director may resign at any time by written
notice to the Corporation. Such resignation shall take effect at the time
therein specified, and, unless otherwise specified, the acceptance of such
resignation shall not be necessary to make it effective.
3.6 Removal of Directors. Any or all of the directors may be removed
(i) for cause, by vote of the stockholders or by action of the Board, and (ii)
without cause, by vote of the stockholders.
3.7 Compensation. Each director, in consideration of his service as
such, shall be entitled to receive from the Corporation such amount per annum or
such fees for attendance at directors' meetings, or both, as the Board may from
time to time determine, together with reimbursement for the reasonable expenses
incurred by him in connection with the performance of his duties. Each director
who shall serve as a member of any committee of
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directors in consideration of his serving as such shall be entitled to such
additional amount per annum or such fees for attendance at committee meetings,
or both, as the Board may from time to time determine, together with
reimbursement for the reasonable expenses incurred by him in the performance of
his duties. Nothing in this section contained shall preclude any director from
serving the Corporation or its subsidiaries in any other capacity and receiving
proper compensation therefor.
3.8 Place and Time of Meetings of the Board. Meetings of the Board,
regular or special, may be held at any place within or without the State of
Delaware. The times and places for holding meetings of the Board may be fixed
from time to time by resolution of the Board or (unless contrary to resolution
of the Board) in the notice of the meeting.
3.9 Annual Meetings. On the day when and at the place where the
annual meeting of stockholders for the election of directors is held, and as
soon as practicable thereafter, the Board may hold its annual meeting, without
notice of such meeting, for the purposes of organization, the election of
officers and the transaction of other business. The annual meeting of the Board
may be held at any other time and place specified in a notice given as provided
in Section 3.11 of the By-laws for special meetings of the Board or in a waiver
of notice thereof.
3.10 Regular Meetings. Regular meetings of the Board may be held at
such times and places as may be fixed from time to
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time by the Board. Unless otherwise required by the Board, regular meetings of
the Board may be held without notice. If any day fixed for a regular meeting of
the Board shall be a Saturday or Sunday or a legal holiday at the place where
such meeting is to be held, then such meeting shall be held at the same hour at
the same place on the first business day thereafter which is not a Saturday,
Sunday or legal holiday.
3.11 Special Meetings. Special meetings of the Board shall be held
whenever called by the Chairman or the President or by any two or more
directors. Notice of each special meeting of the Board shall, if mailed, be
addressed to each director at the address designated by him for that purpose or,
if none is designated, at his last known address at least two days before the
date on which the meeting is to be held; or such notice shall be sent to each
director at such address by telegraph, cable or wireless, or be delivered to him
personally, not later than the day before the date on which such meeting is to
be held. Every such notice shall state the time and place of the meeting but
need not state the purposes of the meeting, except to the extent required by
law. If mailed, each notice shall be deemed given when deposited, with postage
thereon prepaid, in a post office or official depository under the exclusive
care and custody of the United States post office department. Such mailing shall
be by first class mail.
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3.12 Adjourned Meetings. A majority of the directors present at any
meeting of the Board, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. Notice of any
adjourned meeting of the Board need not be given to any director whether or not
present at the time of the adjournment. Any business may be transacted at any
adjourned meeting that might have been transacted at the meeting as originally
called.
3.13 Waiver of Notice. Whenever notice is required to be given to
any director or member of a committee of directors under any provision of the
General Corporation Law or of the Certificate of Incorporation or By-laws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
directors, or members of a committee of directors, need be specified in any
written waiver of notice.
3.14 Organization. At each meeting of the Board, the Chairman or in
the absence of the Chairman, a chairman chosen by the majority of the directors
present, shall preside. The
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Secretary shall act as secretary at each meeting of the Board. In case the
Secretary shall be absent from any meeting of the Board, an Assistant Secretary
shall perform the duties of secretary at such meeting; and in the absence from
any such meeting of the Secretary and Assistant Secretaries, the person
presiding at the meeting may appoint any person to act as secretary of the
meeting.
3.15 Quorum of Directors. One-third of the total number of directors
but not less than three shall constitute a quorum for the transaction of
business or of any specified item of business at any meeting of the Board.
3.16 Action by the Board. All corporate action taken by the Board or
any committee thereof shall be taken at a meeting of the Board, or of such
committee, as the case may be, except that any action required or permitted to
be taken at any meeting of the Board, or of any committee thereof, may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of the proceedings of the Board or committee. Members of the Board, or
any committee designated by the Board, may participate in a meeting of the
Board, or of such committee, as the case may be, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section 3.16 shall constitute presence in person at such
meeting. Except as otherwise provided by the Certificate
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of Incorporation or by law, the vote of a majority of the directors present
(including those who participate by means of conference telephone or similar
communications equipment) at the time of the vote, if a quorum (including those
who so participate) is present at such time, shall be the act of the Board.
ARTICLE 4
COMMITTEES OF THE BOARD
The Board may, by resolution passed by a majority of the whole
Board, designate one or more committees, each committee to consist of one or
more of the directors of the corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the Board, shall
have and may exercise all the powers and authority of the Board in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recom-
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mending to the stockholders the sale, lease or exchange of all or substantially
all of the Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending the
By-laws of the Corporation; and, unless the resolution designating it expressly
so provides, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
ARTICLE 5
OFFICERS
5.1 Officers. The Board shall elect a Chairman, a President, a
Secretary and a Treasurer, and may elect or appoint one or more Vice Presidents,
a Comptroller, one or more Associate Treasurers, one or more Assistant
Treasurers and such other officers as it may determine. The Board may designate
one or more Vice Presidents and Executive Vice Presidents, Group Vice Presidents
or Senior Vice Presidents, and may use descriptive words or phrases to designate
the standing, seniority or area of special competence of the Vice Presidents
elected or appointed by it. Each officer shall hold his office until his
successor is elected and qualified or until his earlier death, resignation or
removal in the manner provided in Section 5.2 of the By-laws. Any two or more
offices may be held by the same person. The Board may require any officer to
give a bond or other security for the faithful performance of his duties, in
such amount and with such sureties as the Board may determine. All officers as
between themselves and
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the Corporation shall have such authority and perform such duties in the
management of the Corporation as may be provided in the By-laws or as the Board
may from time to time determine.
5.2 Removal of Officers. Any officer elected or appointed by the
Board may be removed by the Board with or without cause. The removal of an
officer without cause shall be without prejudice to his contract rights, if any.
The election or appointment of an officer shall not of itself create contract
rights.
5.3 Resignations. Any officer may resign at any time in writing by
notifying the Chairman of the Board or the President or the Secretary. Such
resignation shall take effect at the date of receipt of such notice or at such
later date as is therein specified, and, unless otherwise specified, the
acceptance of such resignation shall not be necessary to make it effective. The
resignation of an officer shall be without prejudice to the contract rights of
the Corporation, if any.
5.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause may be filled for the
unexpired portion of the term in the manner prescribed in the By-laws for the
regular election or appointment to such office.
5.5 Compensation. Salaries or other compensation of the officers may
be fixed from time to time by the Board. No officer shall be prevented from
receiving a salary or other compensation by reason of the fact that he is also a
director.
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5.6 Chairman of the Board. The Chairman of the Board shall be
appointed by the Board of Directors. The Chairman of the Board shall preside at
all meetings of shareholders and the Board of Directors.
5.7 President. The President shall be the chief executive officer of
the Corporation and shall report directly to the Board. The President shall have
general supervision over the business of the Corporation, subject, however, to
the control of the Board and of any duly authorized committee of directors. He
may, with the Secretary or the Treasurer or an Assistant Secretary or an
Assistant Treasurer, sign certificates for shares of capital stock of the
Corporation; may sign and execute in the name of the Corporation deeds,
mortgages, bonds, contracts or other instruments authorized by the Board, except
in cases where the signing and execution thereof shall be expressly delegated by
the Board or by the By-laws to some other officer or agent of the Corporation,
or shall be required by law otherwise to be signed or executed; and, in general,
he shall perform all duties incident to the office of the President and chief
executive officer, and such other duties consistent therewith as from time to
time may be assigned to him by the Board.
5.8 Vice Presidents. At the request of the President (or in the
President's absence, at the request of the Board), the Vice President shall (in
such order as may be designated by the President or the Board or in the absence
of any such designation in
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order of seniority based on age) perform all of the duties of the President and
so acting shall have all the powers of and be subject to all restrictions upon
the President. Any Vice President may also, with the Secretary or the Treasurer
or an Assistant Secretary or an Assistant Treasurer, sign certificates for
shares of capital stock of the Corporation; may sign and execute in the name of
the Corporation deeds, mortgages, bonds, contracts or other instruments
authorized by the Board, except in cases where the signing and execution thereof
shall be expressly delegated by the Board or by the By-laws to some other
officer or agent of the Corporation, or shall be required by law otherwise to be
signed or executed; and shall perform such other duties as from time to time may
be assigned to him by the Board or by the President.
5.9 Secretary. The Secretary, if present, shall act as secretary of
all meetings of the stockholders and of the Board, and shall keep the minutes
thereof in the proper book or books to be provided for that purpose; he shall
see that all notices required to be given by the Corporation are duly given and
served; he may, with the President or a Vice President, sign certificates for
shares of capital stock of the Corporation; he shall be custodian of the seal of
the Corporation and may seal with the seal of the Corporation, or a facsimile
thereof, all certificates for shares of capital stock of the Corporation and all
documents the execution of which on behalf of the Corporation under its
corporate seal is authorized in accordance with the provisions of the By-laws;
he
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shall have charge of the stock ledger and also of the other books, records and
papers of the Corporation relating to its organization and management as a
Corporation, and shall see that the reports, statements and other documents
required by law are properly kept and filed; and shall, in general, perform all
the duties incident to the office of Secretary and such other duties as from
time to time may be assigned to him by the Board or by the President.
5.10 Treasurer. The Treasurer shall have charge and custody of, and
be responsible for, all funds, securities and notes of the Corporation; receive
and give receipts for monies due and payable to the Corporation from any sources
whatsoever; deposit all such monies in the name of the Corporation in such
banks, trust companies or other depositaries as shall be selected in accordance
with these By-laws; against proper vouchers, cause such funds to be disbursed by
checks or drafts on the authorized depositaries of the Corporation signed in
such manner as shall be determined in accordance with any provisions of the
By-laws, and be responsible for the accuracy of the amounts of all monies so
disbursed; regularly enter or cause to be entered in books to be kept by him or
under his direction full and adequate account of all monies received or paid by
him for the account of the Corporation; have the right to require, from time to
time, reports or statements giving such information as he may desire with
respect to any and all financial transactions of the Corporation from the
officers or agents transacting the same; render to the President or the Board,
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whenever the President or the Board, respectively, shall require him so to do,
an account of the financial condition of the Corporation and of all his
transactions as Treasurer; exhibit at all reasonable times his books of account
and other records to any of the directors upon application at the office of the
Corporation where such books and records are kept; and in general, perform all
the duties incident to the office of treasurer and such other duties as from
time to time may be assigned to him by the Board or by the President; and he may
sign with the President or a Vice President certificates for shares of capital
stock of the Corporation.
5.11 Assistant Secretaries, Associate Treasurers and Assistant
Treasurers. Assistant Secrtaries, Associate Treasurers and Assistant Treasurers
shall perform such duties as shall be assigned to them by the Secretary or by
the Treasurer, respectively, or by the Board or by the President. Assistant
Secretaries, Associate Treasurers and Assistant Treasurers may, with the
President or a Vice President, sign certificates for shares of capital stock of
the Corporation.
5.12 Comptroller. The Comptroller shall be responsible for the
maintenance of adequate accounting records of all assets, liabilities and
transactions of the Corporation. The Comptroller shall prepare and render such
balance sheets, budgets and other financial reports as the Board or the
President may require, and shall perform such other duties as may be prescribed
in these
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By-laws or assigned to him by the Board or the President and all other acts
incident to the position of Comptroller. Assistant Comptrollers shall perform
such duties as from time to time may be assigned to them by the Comptroller or
by the Board or the President. In the event of the absence of the Comptroller or
of his incapacity or inability to act, then any Assistant Comptroller may
perform any of the duties and may exercise any of the powers of the Comptroller.
ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
6.1 Execution of Contracts. The Board may authorize any officer,
employee or agent, in the name and on behalf of the Corporation, to enter into
any contract or execute and satisfy any instrument, and any such authority may
be general or confined to specific instances, or otherwise limited.
6.2 Loans. The President or any other officer, employee or agent
authorized by the By-laws or by the Board may effect loans and advances at any
time for the Corporation from any bank, trust company or other institutions or
from any firm, corporation or individual and for such loans and advances may
make, execute and deliver promissory notes, bonds or other certificates or
evidences of indebtedness of the Corporation, and when authorized so to do may
pledge and hypothecate or transfer any securities or other property of the
Corporation as security for any such loans or advances. Such authority conferred
by the Board may be general or confined to specific instances or otherwise
limited.
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6.3 Checks, Drafts, Etc. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation and all notes or other
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by
resolution of the Board.
6.4 Deposits. The funds of the Corporation not otherwise employed
shall be deposited from time to time to the order of the Corporation in such
banks, trust companies or other depositaries as the Board may select or as may
be selected by an officer, employee or agent of the Corporation to whom such
power may from time to time be delegated by the Board.
ARTICLE 7
STOCK AND DIVIDENDS
7.1 Certificates Representing Shares. The shares of capital stock of
the Corporation shall be represented by certificates in such form (consistent
with the provisions of Section 158 of the General Corporation Law) as shall be
approved by the Board. Such certificates shall be signed by the President or a
Vice President and by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer, and may be sealed with the seal of the Corporation or
a facsimile thereof. The signatures of the officers upon a certificate may be
facsimiles, if the certificate is countersigned by a transfer agent or registrar
other than the Corporation itself or its employee. In case any officer, transfer
agent or registrar who has signed or whose facsimile
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signature has been placed upon any certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, such
certificate may, unless otherwise ordered by the Board, be issued by the
Corporation with the same effect as if such person were such officer, transfer
agent or registrar at the date of issue.
7.2 Transfer of Shares. Transfers of shares of capital stock of the
Corporation shall be made only on the books of the Corporation by the holder
thereof or by his duly authorized attorney appointed by a power of attorney duly
executed and filed with the Secretary or a transfer agent of the Corporation,
and on surrender of the certificate or certificates representing such shares of
capital stock properly endorsed for transfer and upon payment of all necessary
transfer taxes. Every certificate exchanged, returned or surrendered to the
Corporation shall be marked "Cancelled," with the date of cancellation, by the
Secretary or an Assistant Secretary or the transfer agent of the Corporation. A
person in whose name shares of capital stock shall stand on the books of the
Corporation shall be deemed the owner thereof to receive dividends, to vote as
such owner and for all other purposes as respects the Corporation. No transfer
of shares of capital stock shall be valid as against the Corporation, its
stockholders and creditors for any purpose, except to render the transferee
liable for the debts of the Corporation to the extent provided by law, until
such transfer shall have been entered on the
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books of the Corporation by an entry showing from and to whom transferred.
7.3 Transfer and Registry Agents. The Corporation may from time to
time maintain one or more transfer offices or agents at such place or places as
may be determined from time to time by the Board.
7.4 Lost, Destroyed, Stolen and Mutilated Certificates. The holder
of any shares of capital stock of the Corporation shall immediately notify the
Corporation of any loss, destruction, theft or mutilation of the certificate
representing such shares, and the Corporation may issue a new certificate to
replace the certificate alleged to have been lost, destroyed, stolen or
mutilated. The Board may, in its discretion, as a condition to the issue of any
such new certificate, require the owner of the lost, destroyed, stolen or
mutilated certificate, or his legal representatives, to make proof satisfactory
to the Board of such loss, destruction, theft or mutilation and to advertise
such fact in such manner as the Board may require, and to give the Corporation
and its transfer agents and registrars, or such of them as the Board may
require, a bond in such form, in such sums and with such surety or sureties as
the Board may direct, to indemnify the Corporation and its transfer agents and
registrars against any claim that may be made against
7.6 Restriction on Transfer of Stock.
7.6.1. A written restriction on the transfer or registration of
transfer of capital stock of the Corporation, if
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permitted by Section 202 of the General Corporation Law and noted conspicuosly
on the certificate representing such capital stock, may be enforced against the
holder of the restricted capital stock or any successor or transferee of the
holder including an executor, administrator, trustee, guardian or other
fiduciary entrusted with like responsibility for the person or estate of the
holder. Unless noted conspicuously on the certificate representing such capital
stock, a restriction, even though permitted by Section 202 of the General
Corporation Law shall be ineffective except against a person with actual
knowledge of the restriction. A restriction on the transfer or registration of
transfer of capital stock of the Corporation may be imposed either by the
Certificate of Incorporation or by the by-laws or by an agreement among any
number of stockholders or among such stockholders and the Corporation. No
restriction so imposed shall be binding with respect to capital stock issued
prior to the adoption of the restriction unless the holders of such capital
stock are parties to an agreement or voted in favor of the restriction.
7.6.2. No stockholder may dispose of or transfer any share or shares
of stock for any person without the prior authorization of the Board of
Directors. Any stockholder desiring to dispose of or transfer any share or
shares shall give notice in writing of such desire to the Corporation which
notice shall specify the number of shares to be disposed of or transferred the
identity of the prospective purchaser or transferee and the
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consideration, if anny, to be received for such disposal or transfer. The Board
of Directors shall within one month of the receipt of such notice, inform the
stockholder in writing whether or not the Board of Directors authorizes the
disposal or transfer of shares. The Board of Directors may in its absolute
discretion and without assigning any reason therefor, refuse to authorize any
disposal or transfer of shares.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification of Officers and Directors. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was a director or an officer of the Corporation, against expenses
(including attorneys' fees) judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding to the fullest extent and in the manner set forth in and permitted by
the General Corporation Law, and any other applicable law, as from time to time
in effect. Such right of indemnification shall not be deemed exclusive of any
other rights to which such director of officer may be entitled apart from the
foregoing provisions. The foregoinng provisions of this Section 8.1 shall be
deemed to be a contract between the Corporation and each director and officer
who serves in
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such capacity at any time while this Article 8 and the relevant provisions of
the General Corporation Law and other applicable law, if any, are in effect, and
any repeal thereof or modification thereof shall not affect any rights or
obligations then existing with respect to any state of facts then or theretofore
existing or any action, suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts.
8.2 Indemnification of Other Persons. The Corporation may indemnify
and person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was an employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding to the extent and in the manner set forth in and
permitted by the General Corporation Law, and any other applicable law, as from
time to time in effect. Such right of indemnification shall not be deemed
exclusive of any other rights to which any such person may be entitled apart
from the foregoing provisions.
ARTICLE 9
BOOKS AND RECORDS
9.1 Books and Records. The Corporation shall keep
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correct and complete books and records of account and shall keep minutes of the
proceedings of the stockholders, the Board and any committee of the Board. The
Corporation shall keep at the office designated in the Certificate of
Incorporation or at the office of the transfer agent or registrar of the
Corporation in Delaware, a record containing the names and addresses of all
stockholders, the number and class of shares held by each and the dates when
they respectively became the owners of record thereof.
9.2 Form of Records. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device, provided that the records so kept can be converted into clearly legible
written form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
9.3 Inspection of Books and Records. Except as otherwise provided by
law, the Board shall determine from time to time whether, and, if allowed, when
and under what conditions and regulations, the accounts, books, minutes and
other records of the Corporation, or any of them, shall be open to the
inspection of the stockholders.
9.4 Reliance on Books and Records. Each officer, director or member
of any committee designated by the Board of
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Directors shall, in the performance of his duties, be fully protected in relying
in good faith upon the books of account of or reports made to the Corporation by
any of its officers or by any independent public accountant or by an appraiser
selected with reasonable care by the Board of Directors or by any such committee
and in relying in good faith upon other books and records of the Corporation.
ARTICLE 10
SEAL
The Board may adopt a corporate seal which shall be in the form of a
circle and shall bear the full name of the Corporation, the year of its
incorporation and the word "Delaware".
ARTICLE 11
FISCAL YEAR
The fiscal year of the Corporation shall be determined, and may be
changed, by resolution of the Board.
ARTICLE 12
VOTING OF SHARES HELD
Unless otherwise provided by resolution of the Board, the Chairman
may, from time to time, appoint one or more attorneys or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the votes
which the Corporation may be entitled to cast as a stockholder or otherwise in
any other corporation, any of whose shares or securities may be held by the
Corporation, at meetings of the holders of stock or other securites
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of such other corporation, or to consent in writing to any action by any such
other corporation and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause to
be executed on behalf of the Corporation and under its corporate seal, or
otherwise, such written proxies, consents, waivers or other instruments as he
may deem necessary or proper in the premises; or the Chairman may himself attend
any meeting of the holders of the stock or other securities of any such other
corporation and thereat vote or exercise any or all other powers of the
Corporation as the holder of such stock or other securities of such other
corporation.
ARTICLE 13
AMENDMENTS
The By-laws may be altered, amended, supplemented or repealed, or
new By-laws may be adopted, by vote of the holders of the shares entitled to
vote in the election of directors. The By-laws may be altered, amended,
supplemented, repealed, or new By-laws may be adopted, by the Board, provided
that the vote of a majority of the entire Board shall be required to change the
number of authorized directors. Any By-laws adopted, altered, amended, or
supplemented by the Board may be altered, amended, supplemented or repealed by
the stockholders entitled to vote thereon.
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Exhibit 3.55
BY-LAWS
OF
AVIS ASIA AND PACIFIC, LIMITED
(A Delaware Corporation)
ARTICLE I
DEFINITIONS
As used in these By-laws unless the context otherwise requires, the
term:
1.1 "Assistant Secretary" means an Assistant Secretary of the
Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the
Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "By-laws" means the initial by-laws of the Corporation, as
amended from time to time.
1.5 "Certificate of Incorporation" means the initial certificate of
incorporation of the Corporation, as amended, supplemented or restated from time
to time.
1.6 "Comptroller" means the Comptroller of the Corporation.
1.7 "Corporation" means AVIS ASIA AND PACIFIC, LIMITED.
<PAGE>
1.8 "Chairman of the Board" means the Chairman of the Board of
Directors.
1.9 "Directors" means directors of the Corporation.
1.10 "General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended from time to time.
1.11 "Office of the Corporation" means the executive office of the
Corporation, anything in Section 131 of the General Corporation Law to the
contrary notwithstanding.
1.12 "President" means the President of the Corporation.
1.13 "Secretary" means the Secretary of the Corporation.
1.14 "Stockholder" means stockholders of the Corporation.
1.15 "Treasurer" means the Treasurer of the Corporation.
1.16 "Vice President" means a Vice President of the Corporation.
ARTICLE 2
STOCKHOLDERS
2.1 Place of Meetings. Every meeting of the stockholders shall be
held at the office of the Corporation or at such other place within or without
the State of Delaware as shall be specified or fixed in the notice of such
meeting or in the waiver of notice thereof.
2.2 Annual Meeting. A meeting of stockholders shall be held annually
for the election of directors and the transaction of
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other business at such hour as may be designated in the notice of meeting on the
fourth Wednesday in May in each year or, if such date falls on a legal holiday,
on the first business day thereafter which is not a Saturday, Sunday or legal
holiday.
2.3 Deferred Meeting for Election of Directors, Etc. If the annual
meeting of stockholders for the election of directors and the transaction of
other business is not held on the date fixed in Section 2.2, the Board shall
call a meeting of stockholders for the election of directors and the transaction
of other business as soon thereafter as convenient.
2.4 Other Special Meetings. A special meeting of stockholders (other
than a special meeting for the election of directors), or a special meeting of
any class or series thereof, unless otherwise prescribed by statute, may be
called at any time by the Board or by the President or by the Secretary, and
shall be called by the President or by the Secretary on the written request of
holders of twenty percentum (20%) or more of the shares of capital stock of the
Corporation entitled to vote in an election of directors, which written request
shall state the purpose or purposes of such meeting. At any special meeting of
stockholders only such business may be transacted which is related to the
purpose or purposes of such meeting set forth in the notice thereof given
pursuant to Section 2.6 of the By-laws or in any waiver of notice thereof given
pursuant to Section 2.7 of the By-laws.
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2.5 Fixing Record Date. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or for the purpose of determining stockholders entitled to
receive payment of any dividend or the allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board may fix, in advance, a
date as the record date for any such determination of stockholders. Such date
shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. If no such record
date is fixed:
2.5.1 The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice
is given, or, if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held;
2.5.2 The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting,
when no prior action by the Board is necessary, shall be the day on
which the first written consent is expressed;
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2.5.3 The record date for determining stockholders for any
purpose other than that specified in Sections 2.5.1 and 2.5.2 shall
be at the close of business on the day on which the Board adopts the
resolution relating thereto.
When a determination of stockholders entitled to notice of or to vote at any
meeting of stockholders has been made as provided in this Section 2.5 such
determination shall apply to any adjournment thereof, unless the Board fixes a
new record date for the adjourned meeting.
2.6 Notice of Meetings of Stockholders. Except as otherwise provided
in Sections 2.5 and 2.7 of the By-laws, whenever under the General Corporation
Law or the Certificate of Incorporation or the By-laws, stockholders are
required or permitted to take any action at a meeting, written notice shall be
given stating the place, date and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. A copy
of the notice of any meeting shall be given, personally or by mail, not less
than ten nor more than fifty days before the date of the meeting, to each
stockholder entitled to notice of or to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
with postage prepaid, directed to the stockholder at his address as it appears
on the records of the Corporation. An affidavit of the Secretary or an Assistant
Secretary or of the transfer agent of the
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Corporation that the notice required by this section has been given shall, in
the absence of fraud, be prima facie evidence of the facts stated therein. When
a meeting is adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced at the meeting at
which the adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted at the meeting as originally called.
If, however, the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
2.7 Waivers of Notice. Whenever notice is required to be given to
any stockholder under any provision of the General Corporation Law or of the
Certificate of Incorporation or the By-laws, a written waiver thereof, signed by
the stockholder entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a stockholder at a
meeting shall constitute a waiver of notice of such meeting, except when the
stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
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2.8 List of Stockholders. The Secretary shall prepare and make, or
cause to be prepared and made, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
2.9 Quorum of Stockholders; Adjournment. The holders of one-third of
the shares of stock entitled to vote at any meeting of stockholders, present in
person or represented by proxy, shall constitute a quorum for the transaction of
any business at such meeting. When a quorum is once present to organize a
meeting of stockholders, it is not broken by the subsequent withdrawal of any
stockholders. The holders of a majority of the shares of stock present in person
or represented by proxy at any meeting of stockholders, including an adjourned
meeting, whether or not a quorum is present, may adjourn such meeting to another
time and place.
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2.10 Voting; Proxies. Unless otherwise provided in the Certificate
of Incorporation every stockholder of record shall be entitled at every meeting
of stockholders to one vote for each share of capital stock standing in his name
on the record of stockholders determined in accordance with Section 2.5 of the
By-laws. If the Certificate of Incorporation provides for more or less than one
vote for any share, on any matter, every reference in the By-laws or the General
Corporation Law to a majority or other proportion of stock shall refer to such
majority or other proportion of the votes of such stock. The provisions of
Sections 212 and 217 of the General Corporation Law shall apply in determining
whether any shares of capital stock may be voted and the persons, if any,
entitled to vote such shares; but the Corporation shall be protected in treating
the persons in whose names shares of capital stock stand on the record of
stockholders as owners thereof for all purposes. At any meeting of stockholders,
a quorum being present, all matters, except as otherwise provided by law or by
the Certificate of Incorporation or by the By-laws, shall be decided by a
majority of the votes cast at such meeting by the holders of shares present in
person or represented by proxy and entitled to vote thereon. All elections of
directors shall be by written ballot unless otherwise provided in the
Certificate of Incorporation. In voting on any other question on which a vote by
ballot is required by law or is demanded by any stockholder entitled to vote,
the voting shall be
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by ballot. Each ballot shall be signed by the stockholder voting or by his
proxy, and shall state the number of shares voted. On all other questions, the
voting may be viva voce. Every stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent without a meeting may authorize
another person or persons to act for him by proxy. The validity and
enforceability of any proxy shall be determined in accordance with Section 212
of the General Corporation Law.
2.11 Selection and Duties of Inspectors at Meetings of Stockholders.
The Board, in advance of any meeting of stockholders, may appoint one or more
inspectors to act at the meeting or any adjournment thereof. If inspectors are
not so appointed, the person presiding at such meeting may, and on the request
of any stockholder entitled to vote thereat shall, appoint one or more
inspectors. In case any person appointed fails to appear or act, the vacancy may
be filled by appointment made by the Board in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, before entering upon
the discharge of his duties, shall take and sign an oath faithfully to execute
the duties of inspector at such meeting with strict impartiality and according
to the best of his ability. The inspector or inspectors shall determine the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and
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determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the person presiding at the meeting or any
stockholder entitled to vote thereat, the inspector or inspectors shall make a
report in writing of any challenge, question or matter determined by him or them
and execute a certificate of any fact found by him or them. Any report or
certificate made by the inspector in inspectors shall be prima facie evidence of
the facts stated and of the vote as certified by him or them.
2.12 Organization. At every meeting of stockholders, the Chairman or
in the absence of the Chairman, the President and in the absence of the
President, the Vice President, and in case more than one Vice President shall be
present, that Vice President designated by the Board (or in the absence of any
such designation, the most senior Vice President, based on age, present), shall
act as chairman of the meeting. In case none of the officers above designated to
act as chairman of the meeting shall be present, a chairman of the meeting shall
be chosen by a majority of the votes cast at such meeting by the holders of
shares of capital stock present in person or represented by proxy and entitled
to vote at the meeting. The Secretary, or in his absence one of the Assistant
Secretaries, shall act as secretary of the meeting. In the absence of the
Secretary and any Assistant Secretary, the Chairman of the meeting shall appoint
a person to act as secretary of the meeting.
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2.13 Order of Business. The order of business at all meetings of
stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present may
be changed by a majority of the votes cast at such meeting by the holders of
shares of capital stock present in person or represented by proxy and entitled
to vote at the meeting.
2.14 Written Consent of Stockholders Without a Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required by
the General Corporation Law to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE 3
DIRECTORS
3.1 General Powers. Except as otherwise provided in the Certificate
of Incorporation or by applicable law, the business and
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affairs of the Corporation shall be managed by the Board. The Board may adopt
such rules and regulations, not inconsistent with the Certificate of
Incorporation or the By-laws or applicable laws, as it may deem proper for the
conduct of its meetings and the management of the Corporation. In addition to
the powers expressly conferred by the By-laws, the Board may exercise all powers
and perform all acts which are not required, by the By-laws or the Certificate
of Incorporation or by law, to be exercised and performed by the stockholders.
3.2 Number; Qualification; Term of Office. The Board shall consist
of one or more members. The number of directors shall be fixed initially by the
incorporator and may thereafter be changed from time to time by action of the
stockholders or of the Board. Directors need not be stockholders. Each director
shall hold office until his successor is elected and qualified or until his
earlier death, resignation or removal.
3.3 Election. Directors shall, except as otherwise required by law
or by the Certificate of Incorporation, be elected by a plurality of the votes
cast at a meeting of stockholders by the holders of shares entitled to vote in
the election.
3.4 Newly Created Directorships and Vacancies. Unless otherwise
provided in the Certificate of Incorporation, newly created directorships
resulting from an increase in the number of directors and vacancies occurring in
the Board for any reason, including the removal of directors without cause, may
be filled by
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vote of a majority of the directors then in office, although less than a quorum,
or by a sole remaining director, at any meeting of the Board or may be elected
by a plurality of the votes cast by the holders of shares of capital stock
entitled to vote in the election at a special meeting of stockholders called for
that purpose. A director elected to fill a vacancy shall be elected to hold
office until his successor is elected and qualified, or until his earlier death,
resignation or removal.
3.5 Resignations. Any director may resign at any time by written
notice to the Corporation. Such resignation shall take effect at the time
therein specified, and, unless otherwise specified, the acceptance of such
resignation shall not be necessary to make it effective.
3.6 Removal of Directors. Any or all of the directors may be removed
(i) for cause, by vote of the stockholders or by action of the Board, and (ii)
without cause, by vote of the stockholders.
3.7 Compensation. Each director, in consideration of his service as
such, shall be entitled to receive from the Corporation such amount per annum or
such fees for attendance at directors' meetings, or both, as the Board may from
time to time determine, together with reimbursement for the reasonable expenses
incurred by him in connection with the performance of his duties. Each director
who shall serve as a member of any committee of
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directors in consideration of his serving as such shall be entitled to such
additional amount per annum or such fees for attendance at committee meetings,
or both, as the Board may from time to time determine, together with
reimbursement for the reasonable expenses incurred by him in the performance of
his duties. Nothing in this section contained shall preclude any director from
serving the Corporation or its subsidiaries in any other capacity and receiving
proper compensation therefor.
3.8 Place and Time of Meetings of the Board. Meetings of the Board,
regular or special, may be held at any place within or without the State of
Delaware. The times and places for holding meetings of the Board may be fixed
from time to time by resolution of the Board or (unless contrary to resolution
of the Board) in the notice of the meeting.
3.9 Annual Meetings. On the day when and at the place where the
annual meeting of stockholders for the election of directors is held, and as
soon as practicable thereafter, the Board may hold its annual meeting, without
notice of such meeting, for the purposes of organization, the election of
officers and the transaction of other business. The annual meeting of the Board
may be held at any other time and place specified in a notice given as provided
in Section 3.11 of the By-laws for special meetings of the Board or in a waiver
of notice thereof.
3.10 Regular Meetings. Regular meetings of the Board may be held at
such times and places as may be fixed from time to
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time by the Board. Unless otherwise required by the Board, regular meetings of
the Board may be held without notice. If any day fixed for a regular meeting of
the Board shall be a Saturday or Sunday or a legal holiday at the place where
such meeting is to be held, then such meeting shall be held at the same hour at
the same place on the first business day thereafter which is not a Saturday,
Sunday or legal holiday.
3.11 Special Meetings. Special meetings of the Board shall be held
whenever called by the Chairman or the President or by any two or more
directors. Notice of each special meeting of the Board shall, if mailed, be
addressed to each director at the address designated by him for that purpose or,
if none is designated, at his last known address at least two days before the
date on which the meeting is to be held; or such notice shall be sent to each
director at such address by telegraph, cable or wireless, or be delivered to him
personally, not later than the day before the date on which such meeting is to
be held. Every such notice shall state the time and place of the meeting but
need not state the purposes of the meeting, except to the extent required by
law. If mailed, each notice shall be deemed given when deposited, with postage
thereon prepaid, in a post office or official depository under the exclusive
care and custody of the United States post office department. Such mailing shall
be by first class mail.
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3.12 Adjourned Meetings. A majority of the directors present at any
meeting of the Board, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. Notice of any
adjourned meeting of the Board need not be given to any director whether or not
present at the time of the adjournment. Any business may be transacted at any
adjourned meeting that might have been transacted at the meeting as originally
called.
3.13 Waiver of Notice. Whenever notice is required to be given to
any director or member of a committee of directors under any provision of the
General Corporation Law or of the Certificate of Incorporation or By-laws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
directors, or members of a committee of directors, need be specified in any
written waiver of notice.
3.14 Organization. At each meeting of the Board, the Chairman or in
the absence of the Chairman, a chairman chosen by the majority of the directors
present, shall preside. The
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Secretary shall act as secretary at each meeting of the Board. In case the
Secretary shall be absent from any meeting of the Board, an Assistant Secretary
shall perform the duties of secretary at such meeting; and in the absence from
any such meeting of the Secretary and Assistant Secretaries, the person
presiding at the meeting may appoint any person to act as secretary of the
meeting.
3.15 Quorum of Directors. One-third of the total number of directors
but not less than three shall constitute a quorum for the transaction of
business or of any specified item of business at any meeting of the Board.
3.16 Action by the Board. All corporate action taken by the Board or
any committee thereof shall be taken at a meeting of the Board, or of such
committee, as the case may be, except that any action required or permitted to
be taken at any meeting of the Board, or of any committee thereof, may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of the proceedings of the Board or committee. Members of the Board, or
any committee designated by the Board, may participate in a meeting of the
Board, or of such committee, as the case may be, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section 3.16 shall constitute presence in person at such
meeting. Except as otherwise provided by the Certificate
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of Incorporation or by law, the vote of a majority of the directors present
(including those who participate by means of conference telephone or similar
communications equipment) at the time of the vote, if a quorum (including those
who so participate) is present at such time, shall be the act of the Board.
ARTICLE 4
COMMITTEES OF THE BOARD
The Board may, by resolution passed by a majority of the whole
Board, designate one or more committees, each committee to consist of one or
more of the directors of the corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the Board, shall
have and may exercise all the powers and authority of the Board in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recom-
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mending to the stockholders the sale, lease or exchange of all or substantially
all of the Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending the
By-laws of the Corporation; and, unless the resolution designating it expressly
so provides, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
ARTICLE 5
OFFICERS
5.1 Officers. The Board shall elect a Chairman, a President, a
Secretary and a Treasurer, and may elect or appoint one or more Vice Presidents,
a Comptroller, one or more Associate Treasurers, one or more Assistant
Treasurers and such other officers as it may determine. The Board may designate
one or more Vice Presidents and Executive Vice Presidents, Group Vice Presidents
or Senior Vice Presidents, and may use descriptive words or phrases to designate
the standing, seniority or area of special co6petence of the Vice Presidents
elected or appointed by it. Each officer shall hold his office until his
successor is elected and qualified or until his earlier death, resignation or
removal in the manner provided in Section 5.2 of the By-laws. Any two or more
offices may be held by the same person. The Board may require any officer to
give a bond or other security for the faithful performance of his duties, in
such amount and with such sureties as the Board may determine. All officers as
between themselves and
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the Corporation shall have such authority and perform such duties in the
management of the Corporation as may be provided in the By-laws or as the Board
may from time to time determine.
5.2 Removal of Officers. Any officer elected or appointed by the
Board may be removed by the Board with or without cause. The removal of an
officer without cause shall be without prejudice to his contract rights, if any.
The election or appointment of an officer shall not of itself create contract
rights.
5.3 Resignations. Any officer may resign at any time in writing by
notifying the Chairman of the Board or the President or the Secretary. Such
resignation shall take effect at the date of receipt of such notice or at such
later date as is therein specified, and, unless otherwise specified, the
acceptance of such resignation shall not be necessary to make it effective. The
resignation of an officer shall be without prejudice to the contract rights of
the Corporation, if any.
5.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause may be filled for the
unexpired portion of the term in the manner prescribed in the By-laws for the
regular election or appointment to such office.
5.5 Compensation. Salaries or other compensation of the officers may
be fixed from time to time by the Board. No officer shall be prevented from
receiving a salary or other compensation by reason of the fact that he is also a
director.
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5.6 Chairman of the Board. The Chairman of the Board shall be
appointed by the Board of Directors. The Chairman of the Board shall preside at
all meetings of shareholders and the Board of Directors.
5.7 President. The President shall be the chief executive officer of
the Corporation and shall report directly to the Board. The President shall have
general supervision over the business of the Corporation, subject, however, to
the control of the Board and of any duly authorized committee of directors. He
may, with the Secretary or the Treasurer or an Assistant Secretary or an
Assistant Treasurer, sign certificates for shares of capital stock of the
Corporation; may sign and execute in the name of the Corporation deeds,
mortgages, bonds, contracts or other instruments authorized by the Board, except
in cases where the signing and execution thereof shall be expressly delegated by
the Board or by the By-laws to some other officer or agent of the Corporation,
or shall be required by law otherwise to be signed or executed; and, in general,
he shall perform all duties incident to the office of the President and chief
executive officer, and such other duties consistent therewith as from time to
time may be assigned to him by the Board.
5.8 Vice Presidents. At the request of the President (or in the
President's absence, at the request of the Board), the Vice President shall (in
such order as may be designated by the President or the Board or in the absence
of any such designation in
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order of seniority based on age) perform all of the duties of the President and
so acting shall have all the powers of and be subject to all restrictions upon
the President. Any Vice President may also, with the Secretary or the Treasurer
or an Assistant Secretary or an Assistant Treasurer, sign certificates for
shares of capital stock of the Corporation; may sign and execute in the name of
the Corporation deeds, mortgages, bonds, contracts or other instruments
authorized by the Board, except in cases where the signing and execution thereof
shall be expressly delegated by the Board or by the By-laws to some other
officer or agent of the Corporation, or shall be required by law otherwise to be
signed or executed; and shall perform such other duties as from time to time may
be assigned to him by the Board or by the President.
5.9 Secretary. The Secretary, if present, shall act as secretary of
all meetings of the stockholders and of the Board, and shall keep the minutes
thereof in the proper book or books to be provided for that purpose; he shall
see that all notices required to be given by the Corporation are duly given and
served; he may, with the President or a Vice President, sign certificates for
shares of capital stock of the Corporation; he shall be custodian of the seal of
the Corporation and may seal with the seal of the Corporation, or a facsimile
thereof, all certificates for shares of capital stock of the Corporation and all
documents the execution of which on behalf of the Corporation under its
corporate seal is authorized in accordance with the provisions of the By-laws;
he
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shall have charge of the stock ledger and also of the other books, records and
papers of the Corporation relating to its organization and management as a
Corporation, and shall see that the reports, statements and other documents
required by law are properly kept and filed; and shall, in general, perform all
the duties incident to the office of Secretary and such other duties as from
time to time may be assigned to him by the Board or by the President.
5.10 Treasurer. The Treasurer shall have charge and custody of, and
be responsible for, all funds, securities and notes of the Corporation; receive
and give receipts for monies due and payable to the Corporation from any sources
whatsoever; deposit all such monies in the name of the Corporation in such
banks, trust companies or other depositaries as shall be selected in accordance
with these By-laws; against proper vouchers, cause such funds to be disbursed by
checks or drafts on the authorized depositaries of the Corporation signed in
such manner as shall be determined in accordance with any provisions of the
By-laws, and be responsible for the accuracy of the amounts of all monies so
disbursed; regularly enter or cause to be entered in books to be kept by him or
under his direction full and adequate account of all monies received or paid by
him for the account of the Corporation; have the right to require, from time to
time, reports or statements giving such information as he may desire with
respect to any and all financial transactions of the Corporation from the
officers or agents transacting the same; render to the President or the Board,
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whenever the President or the Board, respectively, shall require him so to do,
an account of the financial condition of the Corporation and of all his
transactions as Treasurer; exhibit at all reasonable times his books of account
and other records to any of the directors upon application at the office of the
Corporation where such books and records are kept; and in general, perform all
the duties incident to the office of treasurer and such other duties as from
time to time may be assigned to him by the Board or by the President; and he may
sign with the President or a Vice President certificates for shares of capital
stock of the Corporation.
5.11 Assistant Secretaries, Associate Treasurers and Assistant
Treasurers. Assistant Secrtaries, Associate Treasurers and Assistant Treasurers
shall perform such duties as shall be assigned to them by the Secretary or by
the Treasurer, respectively, or by the Board or by the President. Assistant
Secretaries, Associate Treasurers and Assistant Treasurers may, with the
President or a Vice President, sign certificates for shares of capital stock of
the Corporation.
5.12 Comptroller. The Comptroller shall be responsible for the
maintenance of adequate accounting records of all assets, liabilities and
transactions of the Corporation. The Comptroller shall prepare and render such
balance sheets, budgets and other financial reports as the Board or the
President may require, and shall perform such other duties as may be prescribed
in these
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By-laws or assigned to him by the Board or the President and all other acts
incident to the position of Comptroller. Assistant Comptrollers shall perform
such duties as from time to time may be assigned to them by the Comptroller or
by the Board or the President. In the event of the absence of the Comptroller or
of his incapacity or inability to act, then any Assistant Comptroller may
perform any of the duties and may exercise any of the powers of the Comptroller.
ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
6.1 Execution of Contracts. The Board may authorize any officer,
employee or agent, in the name and on behalf of the Corporation, to enter into
any contract or execute and satisfy any instrument, and any such authority may
be general or confined to specific instances, or otherwise limited.
6.2 Loans. The President or any other officer, employee or agent
authorized by the By-laws or by the Board may effect loans and advances at any
time for the Corporation from any bank, trust company or other institutions or
from any firm, corporation or individual and for such loans and advances may
make, execute and deliver promissory notes, bonds or other certificates or
evidences of indebtedness of the Corporation, and when authorized so to do may
pledge and hypothecate or transfer any securities or other property of the
Corporation as security for any such loans or advances. Such authority conferred
by the Board may be general or confined to specific instances or otherwise
limited.
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6.3 Checks, Drafts, Etc. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation and all notes or other
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by
resolution of the Board.
6.4 Deposits. The funds of the Corporation not otherwise employed
shall be deposited from time to time to the order of the Corporation in such
banks, trust companies or other depositaries as the Board may select or as may
be selected by an officer, employee or agent of the Corporation to whom such
power may from time to time be delegated by the Board.
ARTICLE 7
STOCK AND DIVIDENDS
7.1 Certificates Representing Shares. The shares of capital stock of
the Corporation shall be represented by certificates in such form (consistent
with the provisions of Section 158 of the General Corporation Law) as shall be
approved by the Board. Such certificates shall be signed by the President or a
Vice President and by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer, and may be sealed with the seal of the Corporation or
a facsimile thereof. The signatures of the officers upon a certificate may be
facsimiles, if the certificate is countersigned by a transfer agent or registrar
other than the Corporation itself or its employee. In case any officer, transfer
agent or registrar who has signed or whose facsimile
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signature has been placed upon any certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, such
certificate may, unless otherwise ordered by the Board, be issued by the
Corporation with the same effect as if such person were such officer, transfer
agent or registrar at the date of issue.
7.2 Transfer of Shares. Transfers of shares of capital stock of the
Corporation shall be made only on the books of the Corporation by the holder
thereof or by his duly authorized attorney appointed by a power of attorney duly
executed and filed with the Secretary or a transfer agent of the Corporation,
and on surrender of the certificate or certificates representing such shares of
capital stock properly endorsed for transfer and upon payment of all necessary
transfer taxes. Every certificate exchanged, returned or surrendered to the
Corporation shall be marked "Cancelled," with the date of cancellation, by the
Secretary or an Assistant Secretary or the transfer agent of the Corporation. A
person in whose name shares of capital stock shall stand on the books of the
Corporation shall be deemed the owner thereof to receive dividends, to vote as
such owner and for all other purposes as respects the Corporation. No transfer
of shares of capital stock shall be valid as against the Corporation, its
stockholders and creditors for any purpose, except to render the transferee
liable for the debts of the Corporation to the extent provided by law, until
such transfer shall have been entered on the
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books of the Corporation by an entry showing from and to whom transferred.
7.3 Transfer and Registry Agents. The Corporation may from time to
time maintain one or more transfer offices or agents at such place or places as
may be determined from time to time by the Board.
7.4 Lost, Destroyed, Stolen and Mutilated Certificates. The holder
of any shares of capital stock of the Corporation shall immediately notify the
Corporation of any loss, destruction, theft or mutilation of the certificate
representing such shares, and the Corporation may issue a new certificate to
replace the certificate alleged to have been lost, destroyed, stolen or
mutilated. The Board may, in its discretion, as a condition to the issue of any
such new certificate, require the owner of the lost, destroyed, stolen or
mutilated certificate, or his legal representatives, to make proof satisfactory
to the Board of such loss, destruction, theft or mutilation and to advertise
such fact in such manner as the Board may require, and to give the Corporation
and its transfer agents and registrars, or such of them as the Board may
require, a bond in such form, in such sums and with such surety or sureties as
the Board may direct, to indemnify the Corporation and its transfer agents and
registrars against any claim that may be made against
7.6 Restriction on Transfer of Stock.
7.6.1. A written restriction on the transfer or registration of
transfer of capital stock of the Corporation, if
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permitted by Section 202 of the General Corporation Law and noted conspicuosly
on the certificate representing such capital stock, may be enforced against the
holder of the restricted capital stock or any successor or transferee of the
holder including an executor, administrator, trustee, guardian or other
fiduciary entrusted with like responsibility for the person or estate of the
holder. Unless noted conspicuously on the certificate representing such capital
stock, a restriction, even though permitted by Section 202 of the General
Corporation Law shall be ineffective except against a person with actual
knowledge of the restriction. A restriction on the transfer or registration of
transfer of capital stock of the Corporation may be imposed either by the
Certificate of Incorporation or by the by-laws or by an agreement among any
number of stockholders or among such stockholders and the Corporation. No
restriction so imposed shall be binding with respect to capital stock issued
prior to the adoption of the restriction unless the holders of such capital
stock are parties to an agreement or voted in favor of the restriction.
7.6.2. No stockholder may dispose of or transfer any share or shares
of stock for any person without the prior authorization of the Board of
Directors. Any stockholder desiring to dispose of or transfer any share or
shares shall give notice in writing of such desire to the Corporation which
notice shall specify the number of shares to be disposed of or transferred the
identity of the prospective purchaser or transferee and the
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consideration, if anny, to be received for such disposal or transfer. The Board
of Directors shall within one month of the receipt of such notice, inform the
stockholder in writing whether or not the Board of Directors authorizes the
disposal or transfer of shares. The Board of Directors may in its absolute
discretion and without assigning any reason therefor, refuse to authorize any
disposal or transfer of shares.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification of Officers and Directors. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was a director or an officer of the Corporation, against expenses
(including attorneys' fees) judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding to the fullest extent and in the manner set forth in and permitted by
the General Corporation Law, and any other applicable law, as from time to time
in effect. Such right of indemnification shall not be deemed exclusive of any
other rights to which such director of officer may be entitled apart from the
foregoing provisions. The foregoinng provisions of this Section 8.1 shall be
deemed to be a contract between the Corporation and each director and officer
who serves in
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such capacity at any time while this Article 8 and the relevant provisions of
the General Corporation Law and other applicable law, if any, are in effect, and
any repeal thereof or modification thereof shall not affect any rights or
obligations then existing with respect to any state of facts then or theretofore
existing or any action, suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts.
8.2 Indemnification of Other Persons. The Corporation may indemnify
and person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was an employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding to the extent and in the manner set forth in and
permitted by the General Corporation Law, and any other applicable law, as from
time to time in effect. Such right of indemnification shall not be deemed
exclusive of any other rights to which any such person may be entitled apart
from the foregoing provisions.
ARTICLE 9
BOOKS AND RECORDS
9.1 Books and Records. The Corporation shall keep
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correct and complete books and records of account and shall keep minutes of the
proceedings of the stockholders, the Board and any committee of the Board. The
Corporation shall keep at the office designated in the Certificate of
Incorporation or at the office of the transfer agent or registrar of the
Corporation in Delaware, a record containing the names and addresses of all
stockholders, the number and class of shares held by each and the dates when
they respectively became the owners of record thereof.
9.2 Form of Records. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device, provided that the records so kept can be converted into clearly legible
written form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
9.3 Inspection of Books and Records. Except as otherwise provided by
law, the Board shall determine from time to time whether, and, if allowed, when
and under what conditions and regulations, the accounts, books, minutes and
other records of the Corporation, or any of them, shall be open to the
inspection of the stockholders.
9.4 Reliance on Books and Records. Each officer, director or member
of any committee designated by the Board of
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Directors shall, in the performance of his duties, be fully protected in relying
in good faith upon the books of account of or reports made to the Corporation by
any of its officers or by any independent public accountant or by an appraiser
selected with reasonable care by the Board of Directors or by any such committee
and in relying in good faith upon other books and records of the Corporation.
ARTICLE 10
SEAL
The Board may adopt a corporate seal which shall be in the form of a
circle and shall bear the full name of the Corporation, the year of its
incorporation and the word "Delaware".
ARTICLE 11
FISCAL YEAR
The fiscal year of the Corporation shall be determined, and may be
changed, by resolution of the Board.
ARTICLE 12
VOTING OF SHARES HELD
Unless otherwise provided by resolution of the Board, the Chairman
may, from time to time, appoint one or more attorneys or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the votes
which the Corporation may be entitled to cast as a stockholder or otherwise in
any other corporation, any of whose shares or securities may be held by the
Corporation, at meetings of the holders of stock or other securites
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of such other corporation, or to consent in writing to any action by any such
other corporation and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause to
be executed on behalf of the Corporation and under its corporate seal, or
otherwise, such written proxies, consents, waivers or other instruments as he
may deem necessary or proper in the premises; or the Chairman may himself attend
any meeting of the holders of the stock or other securities of any such other
corporation and thereat vote or exercise any or all other powers of the
Corporation as the holder of such stock or other securities of such other
corporation.
ARTICLE 13
AMENDMENTS
The By-laws may be altered, amended, supplemented or repealed, or
new By-laws may be adopted, by vote of the holders of the shares entitled to
vote in the election of directors. The By-laws may be altered, amended,
supplemented, repealed, or new By-laws may be adopted, by the Board, provided
that the vote of a majority of the entire Board shall be required to change the
number of authorized directors. Any By-laws adopted, altered, amended, or
supplemented by the Board may be altered, amended, supplemented or repealed by
the stockholders entitled to vote thereon.
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Exhibit 3.56
BY-LAWS
OF
AVIS ENTERPRISES, INC.
(herein called the "Corporation")
ARTICLE I
MEETINGS OF STOCKHOLDERS
1. Place of Meeting. All meetings of the stockholders shall be held
at such place, within or without the State of Delaware, as may be fixed from
time to time by the Board of Directors or as shall be designated in the notice
or waiver of notice of the meeting.
2. Annual Meetings. The annual meeting of the stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on the third Tuesday in November
in each year, at such hour as may be named in the notice of the meeting.
3. Special Meetings. A special meeting of the stockholders for any
purpose or purposes may be called at any time by the Chief Executive Officer, by
order of the Board of Directors, or by the holder or holders of record of at
least 25 percent of the stock of the Corporation entitled to vote at the
meeting.
4. Notice of Meetings. Notice of each meeting of the
stockholders, whether annual or special, shall be given (unless that notice
shall be waived or unless the meeting is to be dis-
<PAGE>
pensed with in accordance with the provisions of Section 228 of the General
Corporation Law of the State of Delaware) not less than ten nor more than sixty
days before the day on which the meeting is to be held to each stockholder of
record entitled to vote at such meeting by delivering a written or printed
notice thereof to him personally or by mail. Every notice shall state the place,
date and hour of the meeting and, except in the case of a special meeting, need
not state the purposes. Notice of any adjourned meeting of the stockholders
shall not be required if the time and place thereof are announced at the meeting
at which the adjournment was taken.
5. Organization. At every meeting of stockholders, the Chief
Executive Officer, or in his absence, the President or a Vice President shall
act as Chairman, and the Secretary, or, in his absence, an Assistant Secretary,
shall act as secretary.
6. Quorum. Except as otherwise provided by law, holders of 25
percent of the issued and outstanding stock of the Corporation entitled to vote
at each meeting of stockholders, present either in person or by proxy, shall
constitute a quorum for the transaction of business. If there be no quorum, the
holders of a majority of such shares present either in person or by proxy may
adjourn the meeting from time to time until a quorum shall have been obtained.
7. Voting. At each meeting of the stockholders, each holder of stock
entitled to vote thereat shall be entitled to one
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vote in person or by proxy for each share of stock of the Corporation entitled
to vote so registered in his name on the books of the Corporation.
8. Consent of Stockholders in Lieu of Meeting. Any action required
or permitted to be taken at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice shall be given to all stockholders of the taking of any corporate
action pursuant to the provisions of this section unless that action has been
consented to in writing by the holders of all of the stock that would have been
entitled to vote upon that action if a meeting were held.
ARTICLE II
DIRECTORS
1. General Powers. The property, affairs, and business of the
Corporation shall be managed by the Board of Directors.
2. Number, Qualification and Term of Office. The number of directors
shall be not less than three and not more
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than nine, the exact number within such limits to be fixed from time to time by
the Board of Directors by resolution. Directors need not be stockholders. The
directors shall be elected annually in the manner provided in these by-laws, and
each director shall hold office until the annual meeting held next after his
election and until his successor shall have been elected and shall qualify, or
until his death or until he shall resign. If the number of directors be
increased, the additional directors may be elected by a majority of the
directors in office at time of the increase or if not so elected prior to the
next annual meeting of stockholders, they shall be elected by the stockholders
at such annual meeting.
3. Election of Directors. At each meeting of the stockholders for
the election of directors, at which a quorum is present, the persons receiving
the greatest number of votes shall be the directors.
4. Place of Meeting, etc. The Board of Directors may hold its
meetings and have one or more offices at such place or places within or outside
the State of Delaware, as the Board may from time to time determine, or, in the
case of meetings, as shall be specified or fixed in the respective notices or
waivers of notice thereof.
5. First Meeting. The Board of Directors shall meet for the
purpose of organization, the election of officers and the transaction of
other business, as soon as practicable after each
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annual election of directors at the same place at which regular meetings of the
Board are held and notice of such meeting need not be given; each meeting,
however, may be held at any other time or place which shall be specified in a
notice given as hereinafter provided for special meetings of the Board of
Directors or in a consent and waiver of notice thereof signed by all of the
directors.
6. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such places and at such times as the Board shall from time to
time by resolution determine and no notice thereof shall be necessary.
7. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the Chief Executive Officer, the President, or
by two of the directors. Unless waived, notice of each such meeting shall be
mailed to each director, addressed to him at his residence or usual place of
business, at least 2 days before the day on which the meeting is to be held, or
shall be directed to him at such place by telegraph, or be delivered personally
not later than the day before the day on which the meeting is to be held. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail so addressed, with postage prepaid. If notice is given by telegram,
such notice shall be deemed to be delivered when the telegram is delivered to
the telegraph company. Every such notice shall state the time and place of the
meeting but need not state the purpose thereof.
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8. Organization. At each meeting of the Board of Directors, the
Chief Executive Officer, or in his absence, the President or a director chosen
by a majority of the directors present, shall act as Chairman. The Secretary,
or, in his absence, an Assistant Secretary, or, in the absence of both the
Secretary and Assistant Secretaries, any person appointed by the Chairman shall
act as secretary of the meeting.
9. Quorum and Manner of Acting. One-third of the total number of
directors shall constitute a quorum for the transaction of business at any
meeting, and the act of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the Board of Directors.
10. Resignation. Any director of the Corporation may resign at any
time by mailing or delivering, or transmitting by telegraph, written notice to
the Chief Executive Officer or to the President or the Secretary of the
Corporation. The resignation of any director shall take effect from the time of
its receipt by the Corporation, unless some time be fixed in the resignation,
and then from that time.
11. Vacancies. Any vacancy in the Board of Directors caused by the
death, resignation, removal, disqualification, an increase in the number of
directors, or for any other cause, may be filled by the majority vote of the
remaining directors, though less than a quorum, then in office, at the next
regular or any special meeting called for the purpose, or by the stockholders of
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the Corporation at the next annual meeting or any special meeting called for the
purpose, and each director so elected shall, except as otherwise provided herein
or in the Certificate of Incorporation or by statute, hold office for a term to
expire at the next annual election of directors and until his successor shall be
duly elected and qualified, or until his death or until he shall resign or be
removed.
12. Removal. A director may be removed, either with or without
cause, by the affirmative vote of a majority of the voting stock of the
Corporation then outstanding, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed.
13. Fees. The directors for their services as such shall receive
such compensation as the Board of Directors may from time to time determine.
14. Consent of Board of Directors in Lieu of Meeting. Any action
required or permitted to be taken at any meeting of the Board of Directors may
be taken without a meeting if all the members of the Board consent thereto in
writing and such written consent is filed with the minutes of the Board.
ARTICLE III
OFFICERS
1. Number. The officers of the Corporation shall be a Chief
Executive Officer, a President, one or more Vice Presidents, any of whom may
be designated Executive Vice President or
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Senior Vice President, a Secretary, a Treasurer and a Controller, and such other
officers as may be appointed in accordance with the provisions of Section 3 of
this Article.
2. Election and Term of Office. The officers shall be elected
annually by the Board of Directors at the meeting held after the annual meeting
of stockholders. Each elected officer shall hold office until his successor
shall have been duly elected and qualified in his stead, or until his death or
until he shall have resigned or shall have been removed in the manner
hereinafter provided.
3. Other Officers. The Board of Directors, the Chief Executive
Officer, or the President may from time to time appoint such other officers as
it or he may deem necessary and may also appoint such agents and employees of
the Corporation as may be deemed proper. Such officers, agents and employees
shall hold office for such period, have such authority, and perform such duties
as in these by-laws provided or as the Board of Directors, the Chief Executive
Officer or the President may from time to time prescribe. The Board of Directors
may from time to time authorize any officer to appoint and remove agents and
employees and to prescribe the powers and duties thereof.
4. Removal. Any officer, agent or employee elected or appointed may
be removed, either with or without cause, by the Board of Directors, or, except
in case of any officer elected by the Board of Directors, by the Chief Executive
Officer, the Pre-
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sident or any officer upon whom the power of removal may be conferred by the
Board of Directors, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed.
5. Resignations. Any officer may resign at any time by giving notice
to the Board of Directors. Any such resignation shall take effect from the time
of its receipt by the Corporation or at any later time specified therein and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
6. Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled for the unexpired
portion of the term in the manner prescribed in these by-laws for regular
election or appointment to such office.
7. Chief Executive Officer. The Chief Executive Officer shall have
general supervision of the policies of the Corporation, subject to the Board of
Directors. He may execute all contracts, deeds, bonds, mortgages, notes and
other documents on behalf of the Corporation as authorized by the Board of
Directors or which are generally authorized as within the ordinary scope of the
business of the Corporation.
8. The President. The President shall be the chief operating officer
of the Corporation, and subject to the Board of Directors and the Chief
Executive Officer, shall have general supervision of the operations of the
Corporation. He may execute
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all contracts, deeds, bonds, mortgages, notes and other documents on behalf of
the Corporation as authorized by the Board of Directors or which are generally
authorized as within the ordinary scope of the business of the Corporation.
9. Vice Presidents. Each Vice President shall perform such duties
and have such powers as may from time to time be assigned to him by the Board of
Directors, the Chief Executive Officer or by the President. One or more Vice
Presidents may be designated Executive Vice President or Senior Vice President
as shall be determined by the Board of Directors. Vice Presidents shall have
authority to sign contracts and other documents on behalf of the Corporation as
authorized by the Board of Directors or which are generally authorized as within
the ordinary scope of the business of the Corporation.
10. The Secretary. The Secretary shall perform all duties incident
to the office of Secretary and such other duties as may from time to time be
assigned to him by the Board of Directors, the Chief Executive Officer, or the
President.
11. Assistant Secretaries. At the request of the Secretary, or in
his absence or disability, any Assistant Secretary shall have power to perform
all the duties of the Secretary, and, when so acting, shall have all the powers
of, and be subject to all restrictions upon, the Secretary. The Assistant
Secretaries shall perform such other duties as from time to time may be assigned
to them by the Board of Directors, the Chief Executive Officer, or by the
President.
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12. The Treasurer. The Treasurer shall give such bond for the
faithful performance of his duties as the Board of Directors shall require. He
shall, in general, perform all the duties incident to the office of the
Treasurer and such other duties as from time to time may be assigned to him by
the Board of Directors, the Chief Executive Officer, or by the President.
13. Assistant Treasurers. At the request of the Treasurer, or in his
absence or disability, any Assistant Treasurer shall have power to perform all
the duties of the Treasurer, and, when so acting, shall have all the powers of,
and be subject to all restrictions upon, the Treasurer. The Assistant Treasurers
shall perform such other duties as from time to time may be assigned to them by
the Board of Directors, the Chief Executive Officer, or by the President.
14. Controller. The Controller shall be the chief accounting officer
of the Corporation. He shall perform all duties incident to the office of
Controller and such other duties as may from time to time be assigned to him by
the Board of Directors, the Chief Executive Officer, or by the President.
15. Divisional Officers. The Board of Directors, the Chief Executive
Officer, or the President may appoint one or more divisional directors for the
general supervision and management of the affairs of the division of the
Corporation over which he is appointed. The director of each division shall have
such authority with respect to the business and affairs of the division as may
be granted from time to time by the Board of Direc-
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tors and, with respect to the affairs of such division and in the regular course
of business of such division, may sign contracts and other documents in the name
of the division, provided, however, that in no case shall the director of one
division have authority to bind any other division of the Corporation or to bind
the Corporation, except as to the normal and usual business and affairs of the
division of which he is director.
16. Salaries. The Board of Directors shall fix the compensation of
the Chief Executive Officer and the President and shall fix, or authorize a
committee appointed by the Board to fix, the compensation of any and all other
officers. No officer shall be prevented from receiving any such salary by reason
of the fact that he is also a director of the Corporation.
ARTICLE IV
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
1. Contracts, etc. The Board of Directors may authorize any officer
or officers or agent or agents of the Corporation to enter into any contract or
execute and deliver any instrument in the name of and behalf of the Corporation,
and such authority may be general or confined to specific instances, and, unless
so authorized by the Board of Directors or by these bylaws, no officer, agent or
employee shall have any power or authority to bind the Corporation by any
contracts or engagement or to pledge its credit or to render it liable
pecuniarily for any purpose or to any amount.
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2. Loans. No loan shall be contracted on behalf of the Corporation,
and no negotiable paper shall be issued in its name, unless authorized by the
Board of Directors.
3. General and Special Bank Accounts. The Board of Directors may
from time to time authorize the opening and keeping, with such banks, trust
companies or other depositories as it may designate, of general and special bank
accounts, and may make such special rules and regulations with respect thereto
as it may deem expedient.
ARTICLE V
LIMITATION OF LIABILITY
AND
INDEMNIFICATION
1. Limitation of Liability. No person shall be liable to the
Corporation for any loss or damage suffered by it on account of any action taken
or omitted to be taken by him as a director, officer, employee or agent of the
Corporation in good faith, if such person (a) exercised or used the same degree
of care and skill as a prudent man would have exercised or used under the
circumstances in the conduct of his own affairs, or (b) took or omitted to take
such action in reliance upon advice of counsel for the Corporation or upon
statements made or information furnished by officers or employees of the
Corporation which he had reasonable grounds to believe. The standards of care
set forth in this section shall not be in derogation of any standard of care set
forth in the General Corporation Law of the State of Delaware.
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2. Indemnification. The Corporation shall indemnify others as set
forth in the following paragraphs.
(a) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceedings, had reasonable cause to believe that his conduct was unlawful.
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(b) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interest of the Corporation and except that no indemnification shall be
made in respect to any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or
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otherwise in defense of any action, suit or proceeding referred to in paragraphs
(a) and (b), or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under paragraphs (a) and (b) (unless ordered
by a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (a) and (b). Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceedings, or (2) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
(e) Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding as authorized by the Board of Directors in
the specific case upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article.
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3. Non-Exclusive Provision. The indemnification provided by this
Article shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
4. Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article.
ARTICLE VI
MISCELLANEOUS
1. Seal. The Board of Directors shall provide a corporate seal,
which shall be in the form of a circle and shall have inscribed thereon the
name of the Corporation, the year of
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its incorporation and the words "Corporate Seal, Delaware". Said seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
other manner reproduced.
2. Fiscal Year. The fiscal year of the Corporation shall begin on
the first day of July in each year.
3. Voting Securities Owned by the Corporation. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the President or any Vice President and any such
officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and powers incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
4. Waiver of Notice. Whenever any notice whatever is required to be
given under the provisions of the General Corporation Law of the State of
Delaware, of the Certificate of Incorporation of the Corporation, or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said
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notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders, directors, or members of
a committee of directors need be specified in any written waiver of notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
5. Amendments. All by-laws of the Corporation shall be subject to
alteration or repeal, and new by-laws not inconsistent with any provisions of
the Certificate of Incorporation or any provision of law may be made, either by
the affirmative vote of the holders of record of a majority of the outstanding
stock of the Corporation entitled to vote in respect thereof, given at an annual
meeting or at any special meeting, at which notice of the proposed amendment has
been stated in the notice of the meeting, or by the affirmative vote of a
majority of the Board of Directors at any regular or special meeting. By-Laws
made or altered by the Board of Directors shall be subject to alteration or
repeal by the stockholders or by the Board.
6. Headings. Article and section headings used in these by-laws are
for convenience only and do not define, limit or otherwise affect the meaning of
any section.
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Exhibit 3.57
BY-LAWS
OF
AVIS SERVICE, INC.
(a Delaware Corporation)
ARTICLE I
MEETINGS OF STOCKHOLDERS
1. Place of Meeting. All meetings of the stockholders shall be held at
such place, within or without the State of Delaware, as may be fixed from time
to time by the Board of Directors or as shall be designated in the notice or
waiver of notice of the meeting.
2. Annual Meetings. The annual meeting of the stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on the third Tuesday in November
in each year, at such hour as may be named in the notice of the meeting.
3. Special Meetings. A special meeting of the stockholders for any purpose
or purposes may be called at any time by the Chief Executive Officer, the
President or the Secretary by order of the Board of Directors, or by the holder
or holders of record of at least 25 percent of the stock of the Corporation
entitled to vote at the meeting.
4. Notice of Meetings. Notice of each meeting of the stockholders, whether
annual or special, shall be given (unless
<PAGE>
that notice shall be waived or unless the meeting is to be dispensed with in
accordance with the provisions of Section 228 of the General Corporation Law of
the State of Delaware) not less than ten nor more than sixty days before the day
on which the meeting is to be held to each stockholder of record entitled to
vote at such meeting by delivering a written or printed notice thereof to him
personally or by mail. Every notice shall state the place, date and hour of the
meeting and, except in the case of a special meeting, need not state the
purposes. Notice of any adjourned meeting of the stockholders shall not be
required if the time and place thereof are announced at the meeting at which the
adjournment was taken.
5. Organization. At every meeting of stockholders, the Chief Executive
Officer, or in the absence of the Chief Executive Officer, the President or a
Vice President shall act as Chairman, and the Secretary, or, in the absence of
the Secretary, an Assistant Secretary, shall act as secretary.
6. Quorum. Except as otherwise provided by law, holders of 25 percent of
the issued and outstanding stock of the Corporation entitled to vote at each
meeting of stockholders, present either in person or by proxy, shall constitute
a quorum for the transaction of business. If there be no quorum, the holders of
a majority of such shares present either in person or by proxy may adjourn the
meeting from time to time until a quorum shall have been obtained.
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7. Voting. At each meeting of the stockholders, each holder of stock
entitled to vote thereat shall be entitled to one vote in person or by proxy for
each share of stock of the Corporation entitled to vote so registered in his
name on the books of the Corporation.
8. Consent of Stockholders in Lieu of Meeting. Any action required or
permitted to be taken at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice shall be given to all stockholders of the taking of any corporate
action pursuant to the provisions of this section unless that action has been
consented to in writing by the holders of all of the stock that would have been
entitled to vote upon that action if a meeting were held.
ARTICLE II
DIRECTORS
1. General Powers. The property, affairs, and business of the Corporation
shall be managed by the Board of Directors.
2. Number, Qualification and Term of Office. The number of directors shall
be not less than three and not more than nine, the
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exact number within such limits to be fixed from time to time by the Board of
Directors by resolution. Directors need not be stockholders. The directors shall
be elected annually in the manner provided in these by-laws, and each director
shall hold office until the annual meeting held next after his election and
until his successor shall have been elected and shall qualify, or until his
death or until he shall resign. If the number of directors be increased, the
additional directors may be elected by a majority of the directors in office at
time of the increase or if not so elected prior to the next annual meeting of
stockholders, they shall be elected by the stockholders at such annual meeting.
3. Election of Directors. At each meeting of the stockholders for the
election of directors, at which a quorum is present, the persons receiving the
greatest number of votes shall be the directors.
4. Place of Meeting, etc. The Board of Directors may hold its meetings and
have one or more offices at such place or places within or outside the State of
Delaware, as the Board may from time to time determine, or, in the case of
meetings, as shall be specified or fixed in the respective notices or waivers of
notice thereof.
5. First Meeting. The Board of Directors shall meet for the purpose of
organization, the election of officers and the transaction of other business, as
soon as practicable after each annual election of directors at the same place at
which regular
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meetings of the Board are held and notice of such meeting need not be given;
each meeting, however, may be held at any other time or place which shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors or in a consent and waiver of notice thereof signed by all of
the directors.
6. Regular Meetings. Regular meetings of the Board of Directors shall be
held at such places and at such times as the Board shall from time to time by
resolution determine and no notice thereof shall be necessary.
7. Special Meetings. Special meetings of the Board of Directors shall be
held whenever called by the Chief Executive Officer or the President or by any
two of the directors. Unless waived, notice of each such meeting shall be mailed
to each director, addressed to him at his residence or usual place of business,
at least two days before the day on which the meeting is to be held, or shall be
directed to him at such place by telegraph, or be delivered personally not later
than the day before the day on which the meeting is to be held. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
so addressed, with postage prepaid. If notice is given by telegram, such notice
shall be deemed to be delivered when the telegram is delivered to the telegraph
company. Every such notice shall state the time and place of the meeting but
need not state the purpose thereof.
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8. Organization. At each meeting of the Board of Directors, the Chief
Executive Officer, or in the absence of the Chief Executive Officer, the
President or a director chosen by a majority of the directors present, shall act
as Chairman. The Secretary, or, in the absence of the Secretary, an Assistant
Secretary, or, in the absence of both the Secretary and Assistant Secretaries,
any person appointed by the Chairman shall act as secretary of the meeting.
9. Quorum and Manner of Acting. One-third of the total number of directors
shall constitute a quorum for the transaction of business at any meeting, and
the act of a majority of the directors present at any meeting at which a quorum
is present shall be the act of the Board of Directors.
10. Resignation. Any director of the Corporation may resign at any time by
mailing or delivering, or transmitting by telegraph, written notice to the Chief
Executive Officer, the President or to the Secretary of the Corporation. The
resignation of any director shall take effect from the time of its receipt by
the Corporation, unless some time be fixed in the resignation, and then from
that time.
11. Vacancies. Any vacancy in the Board of Directors caused by the death,
resignation, removal, disqualification, an increase in the number of directors,
or for any other cause, may be filled by the majority vote of the remaining
directors, through less than a quorum, then in office, at the next regular or
any special
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meeting called for the purpose, or by the stockholders of the Corporation at the
next annual meeting or any special meeting called for the purpose, and each
director so elected shall, except as otherwise provided herein or in the
Certificate of Incorporation or by statute, hold office for a term to expire at
the next annual election of directors and until his successor shall be duly
elected and qualified, or until his death or until he shall resign or be
removed.
12. Removal. A director may be removed, either with or without cause, by
the affirmative vote of a majority of the voting stock of the Corporation then
outstanding, but such removal shall be without prejudice to the contract rights,
if any, of the person so removed.
13. Fees. The directors for their services as such shall receive such
compensation as the Board of Directors may from time to time determine.
14. Consent of Board of Directors in Lieu of Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all the members of the Board consent thereto in writing and
such written consent is filed with the minutes of the Board.
15. Committees of the Board. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more
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directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the Board shall have
and may exercise all the powers and authority of the Board in the management of
the business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the By-laws of the Corporation; and, unless the resolution
designating it expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.
ARTICLE III
OFFICERS
1. Number. The officers of the Corporation shall be a
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Chief Executive Officer, a President, one or more Vice Presidents, any of whom
may be designated Executive Vice President or Senior Vice President, a
Secretary, and a Treasurer, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article.
2. Election and Term of Office. The officers shall be elected annually by
the Board of Directors at the meeting held after the annual meeting of
stockholders. Each elected officer shall hold office until his successor shall
have been duly elected and qualified in his stead, or until his death or until
he shall have resigned or shall have been removed in the manner hereinafter
provided.
3. Other Officers. The Board of Directors, the Chief Executive Officer, or
the President may from time to time appoint such other officers as it or he may
deem necessary and may also appoint such agents and employees of the Corporation
as may be deemed proper. Such officers, agents and employees shall hold office
for such period, have such authority, and perform such duties as in these
by-laws provided or as the Board of Directors, the Chief Executive Officer or
the President may from time to time prescribe. The Board of Directors may from
time to time authorize any officer to appoint and remove agents and employees
and to prescribe the powers and duties thereof.
4. Removal. Any officer, agent or employee elected or appointed may be
removed, either with or without cause, by the
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Board of Directors, or, except in case of any officer elected by the Board of
Directors, by the Chief Executive Officer, the President or any officer upon
whom the power of removal may be conferred by the Board of Directors, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.
5. Resignations. Any officer may resign at any time by giving notice to
the Board of Directors. Any such resignation shall take effect from the time of
its receipt by the Corporation or at any later time specified therein and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
6. Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled for the unexpired
portion of the term in the manner prescribed in these by-laws for regular
election or appointment to such office.
7. Chief Executive Officer. The Chief Executive Officer who shall be a
director, shall have general supervision of the policies of the Corporation,
subject to the Board of Directors. He may execute all contracts, deeds, bonds,
mortgages, notes and other documents on behalf of the Corporation as authorized
by the Board of Directors or which are generally authorized as within the
ordinary scope of the business of the Corporation. The Chief Executive Officer
shall preside at all meetings of shareholders and the Board of Directors.
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8. The President. The President shall be the chief operating officer of
the Corporation, and subject to the Board of Directors and the Chief Executive
Officer, shall have general supervision of the operations of the Corporation. He
may execute all contracts, deeds, bonds, mortgages, notes and other documents on
behalf of the Corporation as authorized by the Board of Directors or which are
generally authorized as within the ordinary scope of the business of the
Corporation. In the absence of the Chief Executive Officer, the President shall
preside at all meetings of shareholders and the Board of Directors.
9. Vice Presidents. Each Vice President shall perform such duties and have
such powers as may from time to time be assigned to him by the Board of
Directors, the Chief Executive Officer or by the President. One or more Vice
Presidents may be designated Executive Vice President or Senior Vice President
as shall be determined by the Board of Directors. Vice Presidents shall have
authority to sign contracts and other documents on behalf of the Corporation as
authorized by the Board of Directors or which are generally authorized as within
the ordinary scope of the business of the Corporation.
10. The Secretary. The Secretary shall perform all duties incident to the
office of Secretary and such other duties as may from time to time be assigned
to him by the Board of Directors, the Chief Executive Officer, or the President.
11. Assistant Secretaries. At the request of the Secretary, or in his
absence or disability, any Assistant Secretary shall have
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the power to perform all the duties of the Secretary, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the Secretary.
The Assistant Secretaries shall perform such other duties as from time to time
may be assigned to them by the Board of Directors, the Chief Executive Officer,
or by the President.
12. The Treasurer. The Treasurer shall give such bond for the faithful
performance of his duties as the Board of Directors shall require. He shall, in
general, perform all the duties incident to the office of the Treasurer and such
other duties as from time to time may be assigned to him by the Board of
Directors, the Chief Executive Officer, or by the President.
13. Assistant Treasurers. At the request of the Treasurer, or in his
absence or disability, any Assistant Treasurer shall have power to perform all
the duties of the Treasurer, and, when so acting, shall have all the powers of,
and be subject to all restrictions upon, the Treasurer. The Assistant Treasurers
shall perform such other duties as from time to time may be assigned to them by
the Board of Directors, the Chief Executive Officer, or by the President.
14. Divisional Officers. The Board of Directors, the Chief Executive
Officer, or the President may appoint one or more divisional directors for the
general supervision and management of the affairs of the division of the
Corporation over which he is appointed. The director of each division shall have
such authority with respect to the business and affairs of the division as may
be
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granted from time to time by the Board of Directors and, with respect to the
affairs of such division and in the regular course of business of such division,
may sign contracts and other documents in the name of the division, provided,
however, that in no case shall the director of one division have authority to
bind any other division of the Corporation or to bind the Corporation, except as
to the normal and usual business and affairs of the division of which he is
director.
15. Salaries. The Board of Directors shall fix the compensation of the
Chief Executive Officer and the President and shall fix, or authorize a
committee appointed by the Board to fix, the compensation of any and all other
officers. No officer shall be prevented from receiving any such salary by reason
of the fact that he is also a director of the Corporation.
ARTICLE IV
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
1. Contracts, etc. The Board of Directors may authorize any officer or
officers or agent or agents of the Corporation to enter into any contract or
execute and deliver any instrument in the name of and behalf of the Corporation,
and such authority may be general or confined to specific instances, and, unless
so authorized by the Board of Directors or by these by-laws, no officer, agent
or employee shall have any power or authority to bind the Corporation by any
contracts or engagement or to pledge its credit or to render it liable
pecuniarily for any purpose or to any amount.
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2. Loans. No loan shall be contracted on behalf of the Corporation, and no
negotiable paper shall be issued in its name, unless authorized by the Board of
Directors.
3. General and Special Bank Accounts. The Board of Directors may from time
to time authorize the opening and keeping, with such banks, trust companies or
other depositories as it may designate, of general and special bank accounts,
and may make such special rules and regulations with respect thereto as it may
deem expedient.
ARTICLE V
LIMITATION OF LIABILITY
AND
INDEMNIFICATION
1. Limitation of Liability. No person shall be liable to the Corporation
for any loss or damage suffered by it on account of any action taken or omitted
to be taken by him as a director, officer, employee or agent of the Corporation
in good faith, if such person (a) exercised or used the same degree of care and
skill as a prudent man would have exercised or used under the circumstances in
the conduct of his own affairs, or (b) took or omitted to take such action in
reliance upon advice of counsel for the Corporation or upon statements made or
information furnished by officers or employees of the Corporation which he had
reasonable grounds to believe. The standards of care set forth in this section
shall not be in derogation of any standard of care set forth in the General
Corporation Law of the State of Delaware.
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2. Indemnification. The Corporation shall indemnify others as set forth in
the following paragraphs.
(a) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer or employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceedings, had reasonable cause to believe that his conduct was unlawful.
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(b) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
Corporation and except that no indemnification shall be made in respect to any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in
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paragraphs (a) and (b), or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under paragraphs (a) and (b) (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in paragraphs (a) and (b). Such determination shall be made
(1) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceedings, or (2) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article.
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3. Non-Exclusive Provision. The indemnification provided by this Article
shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
4. Insurance. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article.
ARTICLE VI
MISCELLANEOUS
1. Seal. The Board of Directors shall provide a corporate seal, which
shall be in the form of a circle and shall have inscribed thereon the name of
the Corporation, the year of its
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incorporation and the words "Corporate Seal, Delaware". Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced.
2. Fiscal Year. The fiscal year of the Corporation shall begin on the
first day of March in each year.
3. Voting Securities Owned by the Corporation. Powers of attorney,
proxies, waivers of notice or meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the President or any Vice President and any such
officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and powers incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
4. Waiver of Notice. Whenever any notice whatsoever is required to be
given under the provisions of the General Corporation Law of the State of
Delaware, of the Certificate of Incorporation of the Corporation, or of these
by-laws, a waiver, thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall
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be deemed equivalent thereto. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders, directors, or
member of a committee of directors need be specified in any written waiver of
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
5. Books and Records. The Corporation shall keep correct and complete
books and records of account and shall keep minutes of the proceedings of the
stockholders, the Board and any committee of the Board at its offices located at
900 Old Country Road, Garden City, New York.
6. Amendments. All by-laws of the Corporation shall be subject to
alteration or repeal, and new by-laws not inconsistent with any provisions of
the Certificate of Incorporation or any provision of law may be made, either by
the affirmative vote of the holders of record or a majority of the outstanding
stock of the Corporation entitled to vote in respect thereof, given at an annual
meeting or at any special meeting, at which notice of the proposed amendment has
been stated in the notice of the meeting, or by the affirmative vote of a
majority of the Board of Directors at any regular or special meeting. By-Laws
made or altered by the Board of Directors shall be subject to alteration or
repeal by the stockholders or by the Board.
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7. Headings. Article and section headings used in these by-laws are for
convenience only and do not define, limit or otherwise affect the meaning of any
section.
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Exhibit 3.58
BY-LAWS
OF
AVIS LUBE, INC.
(a Delaware Corporation)
ARTICLE I
MEETINGS OF STOCKHOLDERS
1. Place of Meeting. All meetings of the stockholders shall be held at
such place, within or without the State of Delaware, as may be fixed from time
to time by the Board of Directors or as shall be designated in the notice or
waiver of notice of the meeting.
2. Annual Meetings. The annual meeting of the stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on the third Tuesday in November
in each year, at such hour as may be named in the notice of the meeting.
3. Special Meetings. A special meeting of the stockholders for any purpose
or purposes may be called at any time by the Chief Executive Officer, the
President or the Secretary by order of the Board of Directors, or by the holder
or holders of record of at least 25 percent of the stock of the Corporation
entitled to vote at the meeting.
4. Notice of Meetings. Notice of each meeting of the stockholders, whether
annual or special, shall be given (unless
<PAGE>
that notice shall be waived or unless the meeting is to be dispensed with in
accordance with the provisions of Section 228 of the General Corporation Law of
the State of Delaware) not less than ten nor more than sixty days before the day
on which the meeting is to be held to each stockholder of record entitled to
vote at such meeting by delivering a written or printed notice thereof to him
personally or by mail. Every notice shall state the place, date and hour of the
meeting and, except in the case of a special meeting, need not state the
purposes. Notice of any adjourned meeting of the stockholders shall not be
required if the time and place thereof are announced at the meeting at which the
adjournment was taken.
5. Organization. At every meeting of stockholders, the Chief Executive
Officer, or in the absence of the Chief Executive Officer, the President or a
Vice President shall act as Chairman, and the Secretary, or, in the absence of
the Secretary, an Assistant Secretary, shall act as secretary.
6. Quorum. Except as otherwise provided by law, holders of 25 percent of
the issued and outstanding stock of the Corporation entitled to vote at each
meeting of stockholders, present either in person or by proxy, shall constitute
a quorum for the transaction of business. If there be no quorum, the holders of
a majority of such shares present either in person or by proxy may adjourn the
meeting from time to time until a quorum shall have been obtained.
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7. Voting. At each meeting of the stockholders, each holder of stock
entitled to vote thereat shall be entitled to one vote in person or by proxy for
each share of stock of the Corporation entitled to vote so registered in his
name on the books of the Corporation.
8. Consent of Stockholders in Lieu of Meeting. Any action required or
permitted to be taken at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice shall be given to all stockholders of the taking of any corporate
action pursuant to the provisions of this section unless that action has been
consented to in writing by the holders of all of the stock that would have been
entitled to vote upon that action if a meeting were held.
ARTICLE II
DIRECTORS
1. General Powers. The property, affairs, and business of the Corporation
shall be managed by the Board of Directors.
2. Number, Qualification and Term of Office. The number of directors shall
be not less than three and not more than nine, the
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exact number within such limits to be fixed from time to time by the Board of
Directors by resolution. Directors need not be stockholders. The directors shall
be elected annually in the manner provided in these by-laws, and each director
shall hold office until the annual meeting held next after his election and
until his successor shall have been elected and shall qualify, or until his
death or until he shall resign. If the number of directors be increased, the
additional directors may be elected by a majority of the directors in office at
time of the increase or if not so elected prior to the next annual meeting of
stockholders, they shall be elected by the stockholders at such annual meeting.
3. Election of Directors. At each meeting of the stockholders for the
election of directors, at which a quorum is present, the persons receiving the
greatest number of votes shall be the directors.
4. Place of Meeting, etc. The Board of Directors may hold its meetings and
have one or more offices at such place or places within or outside the State of
Delaware, as the Board may from time to time determine, or, in the case of
meetings, as shall be specified or fixed in the respective notices or waivers of
notice thereof.
5. First Meeting. The Board of Directors shall meet for the purpose of
organization, the election of officers and the transaction of other business, as
soon as practicable after each annual election of directors at the same place at
which regular
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meetings of the Board are held and notice of such meeting need not be given;
each meeting, however, may be held at any other time or place which shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors or in a consent and waiver of notice thereof signed by all of
the directors.
6. Regular Meetings. Regular meetings of the Board of Directors shall be
held at such places and at such times as the Board shall from time to time by
resolution determine and no notice thereof shall be necessary.
7. Special Meetings. Special meetings of the Board of Directors shall be
held whenever called by the Chief Executive Officer or the President or by any
two of the directors. Unless waived, notice of each such meeting shall be mailed
to each director, addressed to him at his residence or usual place of business,
at least two days before the day on which the meeting is to be held, or shall be
directed to him at such place by telegraph, or be delivered personally not later
than the day before the day on which the meeting is to be held. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
so addressed, with postage prepaid. If notice is given by telegram, such notice
shall be deemed to be delivered when the telegram is delivered to the telegraph
company. Every such notice shall state the time and place of the meeting but
need not state the purpose thereof.
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8. Organization. At each meeting of the Board of Directors, the Chief
Executive Officer, or in the absence of the Chief Executive Officer, the
President or a director chosen by a majority of the directors present, shall act
as Chairman. The Secretary, or, in the absence of the Secretary, an Assistant
Secretary, or, in the absence of both the Secretary and Assistant Secretaries,
any person appointed by the Chairman shall act as secretary of the meeting.
9. Quorum and Manner of Acting. One-third of the total number of directors
shall constitute a quorum for the transaction of business at any meeting, and
the act of a majority of the directors present at any meeting at which a quorum
is present shall be the act of the Board of Directors.
l0. Resignation. Any director of the Corporation may resign at any time by
mailing or delivering, or transmitting by telegraph, written notice to the Chief
Executive Officer, the President or to the Secretary of the Corporation. The
resignation of any director shall take effect from the time of its receipt by
the Corporation, unless some time be fixed in the resignation, and then from
that time.
11. Vacancies. Any vacancy in the Board of Directors caused by the death,
resignation, removal, disqualification, an increase in the number of directors,
or for any other cause, may be filled by the majority vote of the remaining
directors, through less than a quorum, then in office, at the next regular or
any special
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meeting called for the purpose, or by the stockholders of the Corporation at the
next annual meeting or any special meeting called for the purpose, and each
director so elected shall, except as otherwise provided herein or in the
Certificate of Incorporation or by statute, hold office for a term to expire at
the next annual election of directors and until his successor shall be duly
elected and qualified, or until his death or until he shall resign or be
removed.
12. Removal. A director may be removed, either with or without cause, by
the affirmative vote of a majority of the voting stock of the Corporation then
outstanding, but such removal shall be without prejudice to the contract rights,
if any, of the person so removed.
13. Fees. The directors for their services as such shall receive such
compensation as the Board of Directors may from time to time determine.
14. Consent of Board of Directors in Lieu of Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all the members of the Board consent thereto in writing and
such written consent is filed with the minutes of the Board.
15. Committees of the Board. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more
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directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the Board shall have
and may exercise all the powers and authority of the Board in the management of
the business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the By-laws of the Corporation; and, unless the resolution
designating it expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.
ARTICLE III
OFFICERS
1. Number. The officers of the Corporation shall be a
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Chief Executive Officer, a President, one or more Vice Presidents, any of whom
may be designated Executive Vice President or Senior Vice President, a
Secretary, and a Treasurer, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article.
2. Election and Term of Office. The officers shall be elected annually by
the Board of Directors at the meeting held after the annual meeting of
stockholders. Each elected officer shall hold office until his successor shall
have been duly elected and qualified in his stead, or until his death or until
he shall have resigned or shall have been removed in the manner hereinafter
provided.
3. Other Officers. The Board of Directors, the Chief Executive Officer, or
the President may from time to time appoint such other officers as it or he may
deem necessary and may also appoint such agents and employees of the Corporation
as may be deemed proper. Such officers, agents and employees shall hold office
for such period, have such authority, and perform such duties as in these
by-laws provided or as the Board of Directors, the Chief Executive Officer or
the President may from time to time prescribe. The Board of Directors may from
time to time authorize any officer to appoint and remove agents and employees
and to prescribe the powers and duties thereof.
4. Removal. Any officer, agent or employee elected or appointed may be
removed, either with or without cause, by the
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Board of Directors, or, except in case of any officer elected by the Board of
Directors, by the Chief Executive Officer, the President or any officer upon
whom the power of removal may be conferred by the Board of Directors, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.
5. Resignations. Any officer may resign at any time by giving notice to
the Board of Directors. Any such resignation shall take effect from the time of
its receipt by the Corporation or at any later time specified therein and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
6. Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled for the unexpired
portion of the term in the manner prescribed in these by-laws for regular
election or appointment to such office.
7. Chief Executive Officer. The Chief Executive Officer who shall be a
director, shall have general supervision of the policies of the Corporation,
subject to the Board of Directors. He may execute all contracts, deeds, bonds,
mortgages, notes and other documents on behalf of the Corporation as authorized
by the Board of Directors or which are generally authorized as within the
ordinary scope of the business of the Corporation. The Chief Executive Officer
shall preside at all meetings of shareholders and the Board of Directors.
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8. The President. The President shall be the chief operating officer of
the Corporation, and subject to the Board of Directors and the Chief Executive
Officer, shall have general supervision of the operations of the Corporation. He
may execute all contracts, deeds, bonds, mortgages, notes and other documents on
behalf of the Corporation as authorized by the Board of Directors or which are
generally authorized as within the ordinary scope of the business of the
Corporation. In the absence of the Chief Executive Officer, the President shall
preside at all meetings of shareholders and the Board of Directors.
9. Vice Presidents. Each Vice President shall perform such duties and have
such powers as may from time to time be assigned to him by the Board of
Directors, the Chief Executive Officer or by the President. One or more Vice
Presidents may be designated Executive Vice President or Senior Vice President
as shall be determined by the Board of Directors. Vice Presidents shall have
authority to sign contracts and other documents on behalf of the Corporation as
authorized by the Board of Directors or which are generally authorized as within
the ordinary scope of the business of the Corporation.
10. The Secretary. The Secretary shall perform all duties incident to the
office of Secretary and such other duties as may from time to time be assigned
to him by the Board of Directors, the Chief Executive Officer, or the President.
11. Assistant Secretaries. At the request of the Secretary, or in his
absence or disability, any Assistant Secretary shall have
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the power to perform all the duties of the Secretary, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the Secretary.
The Assistant Secretaries shall perform such other duties as from time to time
may be assigned to them by the Board of Directors, the Chief Executive Officer,
or by the President.
12. The Treasurer. The Treasurer shall give such bond for the faithful
performance of his duties as the Board of Directors shall require. He shall, in
general, perform all the duties incident to the office of the Treasurer and such
other duties as from time to time may be assigned to him by the Board of
Directors, the Chief Executive Officer, or by the President.
13. Assistant Treasurers. At the request of the Treasurer, or in his
absence or disability, any Assistant Treasurer shall have power to perform all
the duties of the Treasurer, and, when so acting, shall have all the powers of,
and be subject to all restrictions upon, the Treasurer. The Assistant Treasurers
shall perform such other duties as from time to time may be assigned to them by
the Board of Directors, the Chief Executive Officer, or by the President.
14. Divisional Officers. The Board of Directors, the Chief Executive
Officer, or the President may appoint one or more divisional directors for the
general supervision and management of the affairs of the division of the
Corporation over which he is appointed. The director of each division shall have
such authority with respect to the business and affairs of the division as may
be
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granted from time to time by the Board of Directors and, with respect to the
affairs of such division and in the regular course of business of such division,
may sign contracts and other documents in the name of the division, provided,
however, that in no case shall the director of one division have authority to
bind any other division of the Corporation or to bind the Corporation, except as
to the normal and usual business and affairs of the division of which he is
director.
15. Salaries. The Board of Directors shall fix the compensation of the
Chief Executive Officer and the President and shall fix, or authorize a
committee appointed by the Board to fix, the compensation of any and all other
officers. No officer shall be prevented from receiving any such salary by reason
of the fact that he is also a director of the Corporation.
ARTICLE IV
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
1. Contracts, etc. The Board of Directors may authorize any officer or
officers or agent or agents of the Corporation to enter into any contract or
execute and deliver any instrument in the name of and behalf of the Corporation,
and such authority may be general or confined to specific instances, and, unless
so authorized by the Board of Directors or by these by-laws, no officer, agent
or employee shall have any power or authority to bind the Corporation by any
contracts or engagement or to pledge its credit or to render it liable
pecuniarily for any purpose or to any amount.
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2. Loans. No loan shall be contracted on behalf of the Corporation, and no
negotiable paper shall be issued in its name, unless authorized by the Board of
Directors.
3. General and Special Bank Accounts. The Board of Directors may from time
to time authorize the opening and keeping, with such banks, trust companies or
other depositories as it may designate, of general and special bank accounts,
and may make such special rules and regulations with respect thereto as it may
deem expedient.
ARTICLE V
LIMITATION OF LIABILITY
AND
INDEMNIFICATION
1. Limitation of Liability. No person shall be liable to the Corporation
for any loss or damage suffered by it on account of any action taken or omitted
to be taken by him as a director, officer, employee or agent of the Corporation
in good faith, if such person (a) exercised or used the same degree of care and
skill as a prudent man would have exercised or used under the circumstances in
the conduct of his own affairs, or (b) took or omitted to take such action in
reliance upon advice of counsel for the Corporation or upon statements made or
information furnished by officers or employees of the Corporation which he had
reasonable grounds to believe. The standards of care set forth in this section
shall not be in derogation of any standard of care set forth in the General
Corporation Law of the State of Delaware.
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2. Indemnification. The Corporation shall indemnify others as set forth in
the following paragraphs.
(a) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer or employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceedings, had reasonable cause to believe that his conduct was unlawful.
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(b) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
Corporation and except that no indemnification shall be made in respect to any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in
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paragraphs (a) and (b), or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under paragraphs (a) and (b) (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in paragraphs (a) and (b). Such determination shall be made
(1) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceedings, or (2) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article.
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3. Non-Exclusive Provision. The indemnification provided by this Article
shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
4. Insurance. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article.
ARTICLE VI
MISCELLANEOUS
1. Seal. The Board of Directors shall provide a corporate seal, which
shall be in the form of a circle and shall have inscribed thereon the name of
the Corporation, the year of its
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incorporation and the words "Corporate Seal, Delaware". Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced.
2. Fiscal Year. The fiscal year of the Corporation shall begin on the
first day of March in each year.
3. Voting Securities Owned by the Corporation. Powers of attorney,
proxies, waivers of notice or meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the President or any Vice President and any such
officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and powers incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
4. Waiver of Notice. Whenever any notice whatsoever is required to be
given under the provisions of the General Corporation Law of the State of
Delaware, of the Certificate of Incorporation of the Corporation, or of these
by-laws, a waiver, thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall
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be deemed equivalent thereto. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders, directors, or
member of a committee of directors need be specified in any written waiver of
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
5. Books and Records. The Corporation shall keep correct and complete
books and records of account and shall keep minutes of the proceedings of the
stockholders, the Board and any committee of the Board at its offices located at
900 Old Country Road, Garden City, New York.
6. Amendments. All by-laws of the Corporation shall be subject to
alteration or repeal, and new by-laws not inconsistent with any provisions of
the Certificate of Incorporation or any provision of law may be made, either by
the affirmative vote of the holders of record or a majority of the outstanding
stock of the Corporation entitled to vote in respect thereof, given at an annual
meeting or at any special meeting, at which notice of the proposed amendment has
been stated in the notice of the meeting, or by the affirmative vote of a
majority of the Board of Directors at any regular or special meeting. By-Laws
made or altered by the Board of Directors shall be subject to alteration or
repeal by the stockholders or by the Board.
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7. Headings. Article and section headings used in these by-laws are for
convenience only and do not define, limit or otherwise affect the meaning of any
section.
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Exhibit 3.59
BY-LAWS
OF
AVIS LEASING CORPORATION
(a Delaware Corporation)
ARTICLE I
MEETINGS OF STOCKHOLDERS
1. Place of Meeting. All meetings of the stockholders shall be held at
such place, within or without the State of Delaware, as may be fixed from time
to time by the Board of Directors or as shall be designated in the notice or
waiver of notice of the meeting.
2. Annual Meetings. The annual meeting of the stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on the third Tuesday in November
in each year, at such hour as may be named in the notice of the meeting.
3. Special Meetings. A special meeting of the stockholders for any purpose
or purposes may be called at any time by the Chief Executive Officer, the
President or the Secretary by order of the Board of Directors, or by the holder
or holders of record of at least 25 percent of the stock of the Corporation
entitled to vote at the meeting.
4. Notice of Meetings. Notice of each meeting of the stockholders, whether
annual or special, shall be given (unless
<PAGE>
that notice shall be waived or unless the meeting is to be dispensed with in
accordance with the provisions of Section 228 of the General Corporation Law of
the State of Delaware) not less than ten nor more than sixty days before the day
on which the meeting is to be held to each stockholder of record entitled to
vote at such meeting by delivering a written or printed notice thereof to him
personally or by mail. Every notice shall state the place, date and hour of the
meeting and, except in the case of a special meeting, need not state the
purposes. Notice of any adjourned meeting of the stockholders shall not be
required if the time and place thereof are announced at the meeting at which the
adjournment was taken.
5. Organization. At every meeting of stockholders, the Chief Executive
Officer, or in the absence of the Chief Executive Officer, the President or a
Vice President shall act as Chairman, and the Secretary, or, in the absence of
the Secretary, an Assistant Secretary, shall act as secretary.
6. Quorum. Except as otherwise provided by law, holders of 25 percent of
the issued and outstanding stock of the Corporation entitled to vote at each
meeting of stockholders, present either in person or by proxy, shall constitute
a quorum for the transaction of business. If there be no quorum, the holders of
a majority of such shares present either in person or by proxy may adjourn the
meeting from time to time until a quorum shall have been obtained.
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7. Voting. At each meeting of the stockholders, each holder of stock
entitled to vote thereat shall be entitled to one vote in person or by proxy for
each share of stock of the Corporation entitled to vote so registered in his
name on the books of the Corporation.
8. Consent of Stockholders in Lieu of Meeting. Any action required or
permitted to be taken at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice shall be given to all stockholders of the taking of any corporate
action pursuant to the provisions of this section unless that action has been
consented to in writing by the holders of all of the stock that would have been
entitled to vote upon that action if a meeting were held.
ARTICLE II
DIRECTORS
1. General Powers. The property, affairs, and business of the Corporation
shall be managed by the Board of Directors.
2. Number, Qualification and Term of Office. The number of directors shall
be not less than three and not more than nine, the
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exact number within such limits to be fixed from time to time by the Board of
Directors by resolution. Directors need not be stockholders. The directors shall
be elected annually in the manner provided in these by-laws, and each director
shall hold office until the annual meeting held next after his election and
until his successor shall have been elected and shall quality, or until his
death or until he shall resign. If the number of directors be increased, the
additional directors may be elected by a majority of the directors in office at
time of the increase or if not so elected prior to the next annual meeting of
stockholders, they shall be elected by the stockholders at such annual meeting.
3. Election of Directors. At each meeting of the stockholders for the
election of directors, at which a quorum is present, the persons receiving the
greatest number of votes shall be the directors.
4. Place of Meeting, etc. The Board of Directors may hold its meetings and
have one or more offices at such place or places within or outside the State of
Delaware, as the Board may from time to time determine, or, in the case of
meetings, as shall be specified or fixed in the respective notices or waivers of
notice thereof.
5. First Meeting. The Board of Directors shall meet for the purpose of
organization, the election of officers and the transaction of other business, as
soon as practicable after each annual election of directors at the same place at
which regular
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meetings of the Board are held and notice of such meeting need not be given;
each meeting, however, may be held at any other time or place which shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors or in a consent and waiver of notice thereof signed by all of
the directors.
6. Regular Meetings. Regular meetings of the Board of Directors shall be
held at such places and at such times as the Board shall from time to time by
resolution determine and no notice thereof shall be necessary.
7. Special Meetings. Special meetings of the Board of Directors shall be
held whenever called by the Chief Executive Officer or the President or by any
two of the directors. Unless waived, notice of each such meeting shall be mailed
to each director, addressed to him at his residence or usual place of business,
at least two days before the day on which the meeting is to be held, or shall be
directed to him at such place by telegraph, or be delivered personally not later
than the day before the day on which the meeting is to be held. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
so addressed, with postage prepaid. If notice is given by telegram, such notice
shall be deemed to be delivered when the telegram is delivered to the telegraph
company. Every such notice shall state the time and place of the meeting but
need not state the purpose thereof.
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8. Organization. At each meeting of the Board of Directors, the Chief
Executive Officer, or in the absence of the Chief Executive Officer, the
President or a director chosen by a majority of the directors present, shall act
as Chairman. The Secretary, or, in the absence of the Secretary, an Assistant
Secretary, or, in the absence of both the Secretary and Assistant Secretaries,
any person appointed by the Chairman shall act as secretary of the meeting.
9. Quorum and Manner of Acting. One-third of the total number of directors
shall constitute a quorum for the transaction of business at any meeting, and
the act of a majority of the directors present at any meeting at which a quorum
is present shall be the act of the Board of Directors.
10. Resignation. Any director of the Corporation may resign at any time by
mailing or delivering, or transmitting by telegraph, written notice to the Chief
Executive Officer, the President or to the Secretary of the Corporation. The
resignation of any director shall take effect from the time of its receipt by
the Corporation, unless some time be fixed in the resignation, and then from
that time.
11. Vacancies. Any vacancy in the Board of Directors caused by the death,
resignation, removal, disqualification, an increase in the number of directors,
or for any other cause, may be filled by the majority vote of the remaining
directors, through less than a quorum, then in office, at the next regular or
any special
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meeting called for the purpose, or by the stockholders of the Corporation at the
next annual meeting or any special meeting called for the purpose, and each
director so elected shall, except as otherwise provided herein or in the
Certificate of Incorporation or by statute, hold office for a term to expire at
the next annual election of directors and until his successor shall be duly
elected and qualified, or until his death or until he shall resign or be
removed.
12. Removal. A director may be removed, either with or without cause, by
the affirmative vote of a majority of the voting stock of the Corporation then
outstanding, but such removal shall be without prejudice to the contract rights,
if any, of the person so removed.
13. Fees. The directors for their services as such shall receive such
compensation as the Board of Directors may from time to time determine.
14. Consent of Board of Directors in Lieu of Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all the members of the Board consent thereto in writing and
such written consent is filed with the minutes of the Board.
15. Committees of the Board. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more
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directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the Board shall have
and may exercise all the powers and authority of the Board in the management of
the business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the By-laws of the Corporation; and, unless the resolution
designating it expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.
ARTICLE III
OFFICERS
1. Number. The officers of the Corporation shall be a
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Chief Executive Officer, a President, one or more Vice Presidents, any of whom
may be designated Executive Vice President or Senior Vice President, a
Secretary, and a Treasurer, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article.
2. Election and Term of Office. The officers shall be elected annually by
the Board of Directors at the meeting held after the annual meeting of
stockholders. Each elected officer shall hold office until his successor shall
have been duly elected and qualified in his stead, or until his death or until
he shall have resigned or shall have been removed in the manner hereinafter
provided.
3. Other Officers. The Board of Directors, the Chief Executive Officer, or
the President may from time to time appoint such other officers as it or he may
deem necessary and may also appoint such agents and employees of the Corporation
as may be deemed proper. Such officers, agents and employees shall hold office
for such period, have such authority, and perform such duties as in these
by-laws provided or as the Board of Directors, the Chief Executive Officer or
the President may from time to time prescribe. The Board of Directors may from
time to time authorize any officer to appoint and remove agents and employees
and to prescribe the powers and duties thereof.
4. Removal. Any officer, agent or employee elected or appointed may be
removed, either with or without cause, by the
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Board of Directors, or, except in case of any officer elected by the Board of
Directors, by the Chief Executive Officer, the President or any officer upon
whom the power of removal may be conferred by the Board of Directors, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.
5. Resignations. Any officer may resign at any time by giving notice to
the Board of Directors. Any such resignation shall take effect from the time of
its receipt by the Corporation or at any later time specified therein and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
6. Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled for the unexpired
portion of the term in the manner prescribed in these by-laws for regular
election or appointment to such office.
7. Chief Executive Officer. The Chief Executive Officer who shall be a
director, shall have general supervision of the policies of the Corporation,
subject to the Board of Directors. He may execute all contracts, deeds, bonds,
mortgages, notes and other documents on behalf of the Corporation as authorized
by the Board of Directors or which are generally authorized as within the
ordinary scope of the business of the Corporation. The Chief Executive Officer
shall preside at all meetings of shareholders and the Board of Directors.
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8. The President. The president shall be the chief operating officer of
the Corporation, and subject to the Board of Directors and the Chief Executive
Officer, shall have general supervision of the operations of the Corporation. He
may execute all contracts, deeds, bonds, mortgages, notes and other documents on
behalf of the Corporation as authorized by the Board of Directors or which are
generally authorized as within the ordinary scope of the business of the
Corporation. In the absence of the Chief Executive Officer, the President shall
preside at all meetings of shareholders and the Board of Directors.
9. Vice Presidents. Each Vice President shall perform such duties and have
such powers as may from time to time be assigned to him by the Board of
Directors, the Chief Executive Officer or by the President. One or more Vice
Presidents may be designated Executive Vice President or Senior Vice President
as shall be determined by the Board of Directors. Vice Presidents shall have
authority to sign contracts and other documents on behalf of the Corporation as
authorized by the Board of Directors or which are generally authorized as within
the ordinary scope of the business of the Corporation.
10. The Secretary. The Secretary shall perform all duties incident to the
office of Secretary and such other duties as may from time to time be assigned
to him by the Board of Directors, the Chief Executive Officer, or the President.
11. Assistant Secretaries. At the request of the Secretary, or in his
absence or disability, any Assistant Secretary shall have
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the power to perform all the duties of the Secretary, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the Secretary.
The Assistant Secretaries shall perform such other duties as from time to time
may be assigned to them by the Board of Directors, the Chief Executive Officer,
or by the President.
12. The Treasurer. The Treasurer shall give such bond for the faithful
performance of his duties as the Board of Directors shall require. He shall, in
general, perform all the duties incident to the office of the Treasurer and such
other duties as from time to time may be assigned to him by the Board of
Directors, the Chief Executive Officer, or by the President.
13. Assistant Treasurers. At the request of the Treasurer, or in his
absence or disability, any Assistant Treasurer shall have power to perform all
the duties of the Treasurer, and, when so acting, shall have all the powers of,
and be subject to all restrictions upon, the Treasurer. The Assistant Treasurers
shall perform such other duties as from time to time may be assigned to them by
the Board of Directors, the Chief Executive Officer, or by the President.
14. Divisional Officers. The Board of Directors, the Chief Executive
Officer, or the President may appoint one or more divisional directors for the
general supervision and management of the affairs of the division of the
Corporation over which he is appointed. The director of each division shall have
such authority with respect to the business and affairs of the division as may
be
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granted from time to time by the Board of Directors and, with respect to the
affairs of such division and in the regular course of business of such division,
may sign contracts and other documents in the name of the division, provided,
however, that in no case shall the director of one division have authority to
bind any other division of the Corporation or to bind the Corporation, except as
to the normal and usual business and affairs of the division of which he is
director.
15. Salaries. The Board of Directors shall fix the compensation of the
Chief Executive Officer and the President and shall fix, or authorize a
committee appointed by the Board to fix, the compensation of any and all other
officers. No officer shall be prevented from receiving any such salary by reason
of the fact that he is also a director of the Corporation.
ARTICLE IV
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
1. Contracts, etc. The Board of Directors may authorize any officer or
officers or agent or agents of the Corporation to enter into any contract or
execute and deliver any instrument in the name of and behalf of the Corporation,
and such authority may be general or confined to specific instances, and, unless
so authorized by the Board of Directors or by these by-laws, no officer, agent
or employee shall have any power or authority to bind the Corporation by any
contracts or engagement or to pledge its credit or to render it liable
pecuniarily for any purpose or to any amount.
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2. Loans. No loan shall be contracted on behalf of the Corporation, and no
negotiable paper shall be issued in its name, unless authorized by the Board of
Directors.
3. General and Special Bank Accounts. The Board of Directors may from time
to time authorize the opening and keeping, with such banks, trust companies or
other depositories as it may designate, of general and special bank accounts,
and may make such special rules and regulations with respect thereto as it may
deem expedient.
ARTICLE V
LIMITATION OF LIABILITY
AND
INDEMNIFICATION
1. Limitation of Liability. No person shall be liable to the Corporation
for any loss or damage suffered by it on account of any action taken or omitted
to be taken by him as a director, officer, employee or agent of the Corporation
in good faith, if such person (a) exercised or used the same degree of care and
skill as a prudent man would have exercised or used under the circumstances in
the conduct of his own affairs, or (b) took or omitted to take such action in
reliance upon advice of counsel for the Corporation or upon statements made or
information furnished by officers or employees of the Corporation which he had
reasonable grounds to believe. The standards of care set forth in this section
shall not be in derogation of any standard of care set forth in the General
Corporation Law of the State of Delaware.
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2. Indemnification. The Corporation shall indemnify others as set forth in
the following paragraphs.
(a) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer or employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceedings, had reasonable cause to believe that his conduct was unlawful.
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(b) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
Corporation and except that no indemnification shall be made in respect to any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in
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paragraphs (a) and (b), or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under paragraphs (a) and (b) (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in paragraphs (a) and (b). Such determination shall be made
(1) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceedings, or (2) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article.
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3. Non-Exclusive Provision. The indemnification provided by this Article
shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
4. Insurance. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article.
ARTICLE VI
MISCELLANEOUS
1. Seal. The Board of Directors shall provide a corporate seal, which
shall be in the form of a circle and shall have inscribed thereon the name of
the Corporation, the year of its
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incorporation and the words "Corporate Seal, Delaware". Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced.
2. Fiscal Year. The fiscal year of the Corporation shall begin on the
first day of March in each year.
3. Voting Securities Owned by the Corporation. Powers of attorney,
proxies, waivers of notice or meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the President or any Vice President and any such
officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and powers incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
4. Waiver of Notice. Whenever any notice whatsoever is required to be
given under the provisions of the General Corporation Law of the State of
Delaware, of the Certificate of Incorporation of the Corporation, or of these
by-laws, a waiver, thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall
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be deemed equivalent thereto. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders, directors, or
member of a committee of directors need be specified in any written waiver of
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
5. Books and Records. The Corporation shall keep correct and complete
books and records of account and shall keep minutes of the proceedings of the
stockholders, the Board and any committee of the Board at its offices located at
900 Old Country Road, Garden City, New York.
6. Amendments. All by-laws of the Corporation shall be subject to
alteration or repeal, and new by-laws not inconsistent with any provisions of
the Certificate of Incorporation or any provision of law may be made, either by
the affirmative vote of the holders of record or a majority of the outstanding
stock of the Corporation entitled to vote in respect thereof, given at an annual
meeting or at any special meeting, at which notice of the proposed amendment has
been stated in the notice of the meeting, or by the affirmative vote of a
majority of the Board of Directors at any regular or special meeting. By-Laws
made or altered by the Board of Directors shall be subject to alteration or
repeal by the stockholders or by the Board.
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7. Headings. Article and section headings used in these by-laws are for
convenience only and do not define, limit or otherwise affect the meaning of any
section.
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<PAGE>
Exhibit 3.60
BY-LAWS
OF
RENT-A-CAR COMPANY, INCORPORATED
ARTICLE I
Name and Location
A. The name of this corporation shall be RENT-A-CAR COMPANY,
INCORPORATED.
B. Its principal office shall be located in the City of Richmond,
Virginia.
ARTICLE II
Capital Stock
A. Amount of Capital Stock. The authorized capital stock of the
corporation shall be as set forth in the Charter of the corporation granted on
February 24, 1956, by Virginia State Corporation Commission.
B. Certificates of Stock. All certificates of stock shall be signed
by the President, or in his absence, by a Vice-President and by the Treasurer or
Secretary, and shall be sealed with the corporate seal.
C. Treasury Stock. Treasury Stock shall be held by the corporation
subject to disposal by the Board of Directors and shall neither vote nor
participate in dividends.
D. Transfers of Stock. Transfers of stock shall be made only on the
books of the corporation, and the old certificate, properly endorsed, shall be
surrendered and cancelled before a new certificate is issued.
<PAGE>
E. Duplicate Certificates. In case of loss or destruction of a
certificate of stock, no new certificate shall be issued in lieu thereof except
upon satisfactory proof to the Board of Directors of such loss or destruction,
and upon giving satisfactory security by bond or otherwise against loss to the
corporation. Any such new certificate shall be plainly marked "duplicate" on its
face.
ARTICLE III
Stockholders
A. Annual Meeting. An annual meeting of the stockholders shall be
held on the first Monday in February of each year at the principal office of the
corporation in Richmond, Virginia, or elsewhere within the State of Virginia,
the first annual meeting to be held on February 4, 1957, provided, however, that
whenever such date shall fall upon a legal holiday, the meeting shall be held on
the next succeeding business day. At such meeting the stockholders shall elect
directors to serve for the ensuing year or until their successor shall be
elected and qualified.
B. Special Meetings. A special meeting of the stockholders may be
called at any time by the President or by a majority of the Board of Directors.
It shall be the duty of the Directors or the President to call such a meeting
whenever so requested by stockholders holding thirty per cent (30%) or more of
the entire voting strength of the then outstanding capital stock.
C. Notices. Notice of the time and place of all annual and special
meetings shall be mailed or given otherwise as provided by law by the Secretary
to each stockholder ten (10) days before the date thereof, but the presence of a
stockholder at any meeting in person or by proxy shall be deemed to waive all
requirements as to notice of the meeting.
<PAGE>
D. Quorum. A quorum at any meeting of the stockholders shall consist
of a majority of the issued and outstanding voting stock of the corporation,
represented in person or by proxy. If at the time and place of meeting there be
present less than quorum, those present may adjourn from time to time until a
quorum be secured.
E. Proxies. Stock may be represented by proxy, and no special form
of proxy shall be necessary, but the written authorization of proxy over
signature of the stockholder shall be sufficient.
F. Voting. Each share of stock present at any meeting, either in
person or by proxy, and having voting power, shall be entitled to one vote on
all matters coming before the meeting.
G. Presiding Officer. Every meeting of stockholders, whether annual
or special, shall be presided over by a chairman elected by the stockholders for
that purpose. The Secretary of the corporation shall act as Secretary of every
such meeting, or in his absence, a secretary shall be appointed by the chairman
of such meeting.
H. Removal of Directors or Officers. The stockholders shall have
power at any meeting of the stockholders to remove any director or officer with
or without cause by a vote of the majority in amount of all the outstanding
stock of the corporation entitled to vote in said meeting.
ARTICLE IV
Board of Directors
A. Authority. The business and property of the corporation shall be
managed by a Board of Directors consisting of not fewer than three (3) nor more
than nine (9) directors.
<PAGE>
B. Quorum. A majority of all of the directors of the corporation
shall be necessary to constitute a quorum for the transaction of business at all
meetings of the said Board, and a majority of said quorum shall decide any
question that may come before said meeting; but less than a quorum may adjourn
any meeting from time to time.
C. Meetings. Regular meetings of the Board of Directors shall be
held at the principal office of the corporation in the City of Richmond,
Virginia, or at such other place within or without this State as from time to
time shall be determined by the said Board and named in the notice of said
meeting. Special meetings may be called at the discretion of the President of
the corporation, or upon request of a majority of the members of the Board. A
regular meeting of the Board of Directors shall be held immediately following
the annual election of Directors, for the election of Officers and transaction
of such other business as may come before said meeting, of which no notice need
be given except as herein contained.
D. Notice of meetings. Notice of all special meetings and the place,
date and hour for holding such meetings, excepting only the regular meeting held
immediately following the annual election of directors, for which no notice
other than these by-laws is necessary, shall be given to each director by mail,
telegraph or telephone, by the Secretary at least forty-eight (48) hours
previous to the time fixed for the meeting. All notices of special meetings
shall state the purpose thereof.
E. Vacancies. Any vacancy in said Board, occurring through death or
resignation, may be filled for the remainder of the term by the remaining
members of the Board.
<PAGE>
F. Officers Elected by the Board. The Board of Directors shall elect
and fix the salaries or compensation of the officers provided for by Section A
of ARTICLE V of these by-laws, and shall have the power by majority vote of all
of the Directors of the corporation, to remove any incumbent, with or without
cause, when in the judgment of the said Board the best interests of the
corporation demand such removal; and to fill the vacancy thus created. The Board
of Directors shall also have the power to appoint such other officers as may be
necessary for the conduct of the business of this corporation, and to employ
from time to time such special officers, agents and attorneys as it may deem
necessary for the proper conduct of the corporation's business, and to fix their
compensation.
G. The Board of Directors shall have the power by resolution to
appoint three (3) of its members as an Executive Committee at any time when
there shall be five (5) or more directors of the corporation. This committee
between meetings of the Board of Directors shall manage the business of the
corporation and have and exercise the powers and authority of the Board of
Directors as provided in the preceding section.
ARTICLE V
Officers and their Duties
A. Officers. The officers of the corporation shall consist of a
President, a Secretary and a Treasurer, and such other officers as the Board of
Directors shall from time to time determine. All officers shall be elected
annually by the Board of Directors and shall serve for one (1) year, or until
their successors are elected and qualified, unless removed by the Board of
Directors as provided in ARTICLE IV, Section F., of these By-laws.
<PAGE>
At the discretion of the Board of Directors any two (2) or more
offices, other than the office of President and Secretary, may be held by the
same person. Any officers of the corporation may be required from time to time
at the discretion of the Board of Directors to give such bond with such security
as the Board of Directors may prescribe.
B. President. It shall be the duty of the President to preside at
all meetings of the Board of Directors at which he is present; to call special
meetings of the said Board whenever he may think such meetings necessary, or as
requested so to do in accordance with these by-laws; to sign all certificates of
stock, contracts, leases, mortgages, deeds, conveyances and other documents of
the corporation, all to be countersigned, when required, by the Secretary or the
Treasurer, and he shall have the seal of the corporation affixed to such as
require this attested by the Secretary. He shall see that all officers of the
corporation perform their duties faithfully, and shall have general supervision
and direction of the affairs of the corporation. He shall make to the annual
meeting of the stockholders of the corporation a report covering the operation
of the corporation for the preceding fiscal year, together with such suggestions
as he may deem proper.
C. Vice-President. In the absence or disability of the President, a
Vice-President shall perform any or all of the duties of the President.
D. Secretary. The Secretary shall have the powers granted him under
these by-laws, and shall sign and issue all the calls for the stockholders' and
directors' meetings when properly authorized; shall
<PAGE>
give notice of such meetings to each stockholder or director as provided above
in these by-laws and as required by law; shall have published all notices of the
same required by law to be published; shall keep full and accurate minutes of
the proceedings of all stockholders' and directors' meetings and shall attest
the same after the approval of the presiding officer. He shall have charge of
the seal of the corporation and shall sign such instruments as require his
signature, and he shall make such reports and perform such other duties as are
incident to his office, or may be required of him by the Board of Directors.
E. Treasurer. The Treasurer shall have the custody of all moneys and
securities of the corporation and shall deposit the same in the name and to the
credit of the corporation in such depositories as may be designated by the
officers of the corporation. He shall keep a full and accurate account of the
receipts and disbursements in books belonging to the corporation, and shall
disburse the funds of the corporation by check or other warrant to be signed as
provided in Section B of ARTICLE V[ILLEGIBLE] of these by-laws, or any amendment
thereof. He shall render such reports to the President and Board of Directors as
may be required of him and shall perform such other duties as may be incident to
his office, or may be required of him by the Board of Directors.
ARTICLE VI
Liability and Indemnification of
Officers and Directors
During his term of office and thereafter, no officer or director of
this corporation or his estate, personal representatives or heirs, shall be
liable to the corporation or to any one claiming under, through or in the right
of the corporation by reason of any action taken or omitted by him in good faith
in his capacity as such officer
<PAGE>
or director. The foregoing provision shall not exclude other defenses or rights
such officer or director may be entitled to as a matter of law or equity.
If, during his term of office or thereafter, any officer or director
of this corporation, or his estate, personal representatives or heirs, shall
reasonably incur expenses or liabilities in resisting a claim or litigation, by
whomsoever asserted, arising out of or in connection with any action taken or
omitted in good faith as such officer or director, the corporation shall
indemnify him or them against such expenses or liabilities. For the purposes of
this paragraph, (a) the term "expenses or liabilities" shall include, but not be
limited to, attorney's fees, court costs, judgments and the costs of reasonable
settlements, and (b) the term "reasonable settlements" shall include, but not be
limited to, settlements or compromises approved by the Board of Directors or by
counsel for the corporation in a written opinion to the President that the
settlement or compromise is in the interests of the corporation and falls within
these provisions of the by-laws. The foregoing right of indemnification shall
not be exclusive of other rights to which such officer or director may be
entitled as a matter of law or equity.
For the purposes of the foregoing provisions of these by-laws, the
good faith of an officer or director of this corporation shall not be questioned
on the ground that action was taken or omitted by him in reliance upon the
correctness of information supplied by other officers or employees in the course
of their duties or in reliance upon the advice of counsel for the corporation.
<PAGE>
The corporation, its directors, officers, employees and agents shall
be fully protected in making any determination as to the existence or absence of
liability, in making or refusing to make any payment on the basis of such
determination, and in taking any other action under these provisions of the
by-laws in reliance upon the advice of counsel.
ARTICLE VII
Dividends and Finance
A. Dividends. Dividends shall be declared only from the surplus
earnings or profits of the corporation at such time or times as the Board shall
direct, and no dividend shall be declared that will impair the capital stock of
the corporation.
B. Deposits and Withdrawals. Checks of the corporation shall be
signed by any persons authorized by resolution of the Board so to do, notes,
bonds and other instruments may be signed by any officer or officers who have
been authorized so to sign by resolution of the Board of Directors.
ARTICLE VIII
SEAL
The seal of the corporation shall consist of a circular design with
the words RENT-A-CAR COMPANY, INCORPORATED, around the top margin thereof;
RICHMOND, VA., around the lower margin thereof; and the word, SEAL, in the
center thereof, as shown in the impression on the margin hereof, and the same is
hereby adopted as the corporate seal of the corporation.
<PAGE>
ARTICLE IX
Amendments
These by-laws, or any hereafter adopted, may be amended, repealed or
altered, in whole or in part, by a majority vote of the entire Board of
Directors at any meeting of the Directors, or at any special meeting where such
action has been announced in the call and notice for such meeting; provided,
however, that amendments to these by-laws may also be made by a vote of the
stockholders representing a majority of all of the voting stock issued and
outstanding at any annual stockholders' meeting, or at any special stockholders'
meeting when the proposed amendments have been set out in the notice for such
meeting.
<PAGE>
Exhibit 3.61
BY-LAWS
OF
RESERVE CLAIMS MANAGEMENT CO. f/k/a
AVIS LEASING INTERNATIONAL, LTD.
(A Delaware Corporation)
ARTICLE 1
DEFINITIONS
As used in these By-laws, unless the context otherwise requires, the
term:
1.1 "Assistant Secretary" means an Assistant Secretary of the
Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer, of the
Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "By-laws" means the initial by-laws of the Corporation, as
amended from time to time.
1.5 "Certificate of Incorporation" means the initial certificate of
incorporation of the Corporation, as amended, supplemented or restated from time
to time.
1.6 "Comptroller" means the Comptroller of the Corporation.
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1.7 "Corporation" means AVIS CANADA, INC.
1.8 "Directors" means directors of the Corporation.
1.9 "General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended from time to time.
1.10 "Office of the Corporation" means the executive office of the
Corporation, anything in Section 131 of the General Corporation Law to the
contrary notwithstanding.
1.11 "President" means the President of the Corporation.
1.12 "Secretary" means the Secretary of the Corporation.
1.13 "Stockholders" means stockholders of the Corporation.
1.14 "Treasurer" means the Treasurer of the Corporation.
1.15 "Vice President" means a Vice President of the Corporation.
ARTICLE 2
STOCKHOLDERS
2.1 Place of Meetings. Every meeting of the stockholders shall be
held at the office of the Corporation or at such other place within or without
the State of Delaware as shall be specified or fixed in the notice of such
meeting or in the waiver of notice thereof.
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2.2 Annual Meeting. A meeting of stockholders shall be held annually
for the election of directors and the transaction of other business at such hour
as may be designated in the notice of meeting on the fourth Wednesday in May in
each year or, if such date falls on a legal holiday, on the first business day
thereafter which is not a Saturday, Sunday or legal holiday.
2.3 Deferred Meeting for Election of Directors, Etc. If the annual
meeting of stockholders for the election of directors and the transaction of
other business is not held on the date fixed in Section 2.2, the Board shall
call a meeting of stockholders for the election of directors and the transaction
of other business as soon thereafter as convenient.
2.4 Other-Special Meetings. A special meeting of stockholders (other
than a special meeting for the election of directors), or a special meeting of
any class or series thereof, unless otherwise prescribed by statute, may be
called at any time by the Board or by the President or by the Secretary, and
shall be called by the President or by the Secretary on the written request of
holders of twenty percentum (20%) or more of the shares of capital stock of the
Corporation entitled to vote in an election of directors, which written request
shall state the purpose or purposes of such meeting. At any special meeting of
stockholders only such business may be transacted which is related to the
purpose or purposes of such meeting set forth
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4
in the notice thereof given pursuant to Section 2.6 of the By-laws or in any
waiver of notice thereof given pursuant to Section 2.7 of the By-laws.
2.5 Fixing Record Date. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or for the purpose of determining stockholders entitled to
receive payment of any dividend or the allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board may fix, in advance, a
date as the record date for any such determination of stockholders. Such date
shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. If no such record
date is fixed:
2.5.1 The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice
is given, or, if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held;
2.5.2 The record date for determining stockholders entitled to
express consent to corporate action
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5
in writing without a meeting, when no prior action by the Board is
necessary, shall be the day on which the first written consent is
expressed;
2.5.3 The record date for determining stockholders for any
purpose other than that specified in Sections 2.5.1 and 2.5.2 shall
be at the close of business on the day on which the Board adopts the
resolution relating thereto.
When a determination of stockholders entitled to notice of or to vote at any
meeting of stockholders has been made as provided in this Section 2.5 such
determination shall apply to any adjournment thereof, unless the Board fixes a
new record date for the adjourned meeting.
2.6 Notice of Meetings of Stockholders. Except as otherwise provided
in Sections 2.5 and 2.7 of the By-laws, whenever under the General Corporation
Law or the Certificate of Incorporation or the By-laws, stockholders are
required or permitted to take any action at a meeting, written notice shall be
given stating the place, date and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. A copy
of the notice of any meeting shall be given, personally or by mail, not less
than ten nor more than fifty days before the date of the meeting, to each
stockholder entitled to notice of or to vote at such
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6
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, with postage prepaid, directed to the stockholder at his
address as it appears on the records of the Corporation. An affidavit of the
Secretary or an Assistant Secretary or of the transfer agent of the Corporation
that the notice required by this section has been given shall, in the absence of
fraud, be prima facie evidence of the facts stated therein. When a meeting is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted at the meeting as originally called.
If, however, the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
2.7 Waivers of Notice. Whenever notice is required to be given to
any stockholder under any provision of the General Corporation Law or of the
Certificate of Incorporation or the By-laws, a written waiver thereof, signed by
the stockholder entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a stockholder at a
meeting shall constitute a waiver of notice
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7
of such meeting, except when the stockholder attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice.
2.8 List of Stockholders. The Secretary shall prepare and make, or
cause to be prepared and made, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any, stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
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2.9 Quorum of Stockholders; Adjournment. The holders of one-third of
the shares of stock entitled to vote at any meeting of stockholders, present in
person or represented by proxy, shall constitute a quorum for the transaction of
any business at such meeting. When a quorum is once present to organize a
meeting of stockholders, it is not broken by the subsequent withdrawal of any
stockholders. The holders of a majority of the shares of stock present in person
or represented by proxy at any meeting of stockholders, including an adjourned
meeting, whether or not a quorum is present, may adjourn such meeting to another
time and place.
2.10 Voting; Proxies. Unless otherwise provided in the Certificate
of Incorporation every stockholder of record shall be entitled at every meeting
of stockholders to one vote for each share of capital stock standing in his name
on the record of stockholders determined in accordance with Section 2.5 of the
By-laws. If the Certificate of Incorporation provides for more or less than one
vote for any share, on any matter, every reference in the By-laws or the General
Corporation Law to a majority or other proportion of stock shall refer to such
majority or other proportion of the votes of such stock. The provisions of
Sections 212 and 217 of the General Corporation Law shall apply in determining
whether any shares of capital stock may be voted and the persons, if any,
entitled to vote such shares; but the Corporation shall be protected in treating
the persons in whose names shares of capital stock stand on the record of
stockholders as owners thereof for
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9
all purposes. At any meeting of stockholders, a quorum being present, all
matters, except as otherwise provided by law or by the Certificate of
Incorporation or by the By-laws, shall be decided by a majority of the votes
cast at such meeting by the holders of shares present in person or represented
by proxy and entitled to vote thereon. All elections of directors shall be by
written ballot unless otherwise provided in the Certificate of Incorporation. In
voting on any other question on which a vote by ballot is required by law or is
demanded by any stockholder entitled to vote, the voting shall be by ballot.
Each ballot shall be signed by the stockholder voting or by his proxy, and shall
state the number of shares voted. On all other questions, the voting may be viva
voce. Every stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent without a meeting may authorize another person or
persons to act for him by proxy. The validity and enforceability of any proxy
shall be determined in accordance with Section 212 of the General Corporation
Law.
2.11 Selection and Duties of Inspectors at Meetings of Stockholders.
The Board, in advance of any meeting of stockholders, may appoint one or more
inspectors to act at the meeting or any adjournment thereof. If inspectors are
not so appointed, the person presiding at such meeting may, and on the request
of any stockholder entitled to vote thereat shall, appoint one or more
inspectors. In case any person
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10
appointed fails to appear or act, the vacancy may be filled by appointment made
by the Board in advance of the meeting or at the meeting by the person presiding
thereat. Each inspector, before entering upon the discharge of his duties, shall
take and sign an oath faithfully to execute the duties of inspector at such
meeting with strict impartiality and according to the best of his ability. The
inspector or inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting or any stockholder entitled to vote thereat, the inspector or
inspectors shall make a report in writing of any challenge, question or matter
determined by him or them and execute a certificate of any fact found by him or
them. Any report or certificate made by the inspector or inspectors shall be
prima facie evidence of the facts stated and of the vote as certified by him or
them.
2.12 Organization. At every meeting of stockholders, the President,
or in the absence of the President a Vice Presi-
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11
dent, and in case more than one Vice President shall be present, that Vice
President designated by the Board (or in the absence of any such designation,
the most senior Vice President, based on age, present), shall act as chairman of
of the meeting. In case none of the officers above designated to act as chairman
of the meeting shall be present, a chairman of the meeting shall be chosen by a
majority of the votes cast at such meeting by the holders of shares of capital
stock present in person or represented by proxy and entitled to vote at the
meeting. The Secretary, or in his absence one of the Assistant Secretaries,
shall act as secretary of the meeting. In the absence of the Secretary and any
Assistant Secretary, the Chairman of the meeting shall appoint a person to act
as secretary of the meeting.
2.13 Order of Business. The order of business at all meetings of
stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present may
be changed by a majority of the votes cast at such meeting by the holders of
shares of capital stock present in person or represented by proxy and entitled
to vote at the meeting.
2.14 Written Consent of Stockholders Without a Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required by
the General Corporation Law to be taken at any annual or special meeting of
stockholders
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12
of the Corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE 3
DIRECTORS
3.1 General Powers. Except as otherwise provided in the Certificate
of Incorporation or by applicable law, the business and affairs of the
Corporation shall be managed by the Board. The Board may adopt such rules and
regulations, not inconsistent with the Certificate of Incorporation or the
By-laws or applicable laws, as it may deem proper for the conduct of its
meetings and the management of the Corporation. In addition to the powers
expressly conferred by the By-laws, the Board may exercise all powers and
perform all acts which are not required, by the By-laws or the Certificate of
Incorporation or by law, to be exercised and performed by the stockholders.
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3.2 Number; Qualification; Term of Office. The Board shall consist
of one or more members. The number of directors shall be fixed initially by the
incorporator and may thereafter be changed from time to time by action of the
stockholders or of the Board. Directors need not be stockholders. Each director
shall hold office until his successor is elected and qualified or until his
earlier death, resignation or removal.
3.3 Election. Directors shall, except as otherwise required by law
or by the Certificate of Incorporation, be elected by a plurality of the votes
cast at a meeting of stockholders by the holders of shares entitled to vote in
the election.
3.4 Newly Created Directorships and Vacancies. Unless otherwise
provided in the Certificate of Incorporation, newly created directorships
resulting from an increase in the number of directors and vacancies occurring in
the Board for any reason, including the removal of directors without cause, may
be filled by vote of a majority of the directors then in office, although less
than a quorum, or by a sole remaining director, at any meeting of the Board or
may be elected by a plurality of the votes cast by the holders of shares of
capital stock entitled to vote in the election at a special meeting of
stockholders called for that purpose. A director elected to fill a vacancy shall
be elected to hold
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14
office until his successor is elected and qualified, or until his earlier death,
resignation or removal.
3.5 Resignations. Any director may resign at any time by written
notice to the Corporation. Such resignation shall take effect at the time
therein specified, and, unless otherwise specified, the acceptance of such
resignation shall not be necessary to make it effective.
3.6 Removal of Directors. Any or all of the directors may be removed
(i) for cause, by vote of the stockholders or by action of the Board, and (ii)
without cause, by vote of the stockholders.
3.7 Compensation. Each director, in consideration of his service as
such, shall be entitled to receive from the Corporation such amount per annum or
such fees for attendance at directors' meetings, or both, as the Board may from
time to time determine, together with reimbursement for the reasonable expenses
incurred by him in connection with the performance of his duties. Each director
who shall serve as a member of any committee of directors in consideration of
his serving as such shall be entitled to such additional amount per annum or
such fees for attendance at committee meetings, or both, as the Board may from
time to time determine, together with reimbursement for the reasonable expenses
incurred by him in the performance of his duties. Nothing in this section
contained shall preclude any director from serving the Corporation or its
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15
subsidiaries in any other capacity and receiving proper compensation therefor.
3.8 Place and Time of Meetings of the Board. Meetings of the Board,
regular or special, may be held at any place within or without the State of
Delaware. The times and places for holding meetings of the Board may be fixed
from time to time by resolution of the Board or (unless contrary to resolution
of the Board) in the notice of the meeting.
3.9 Annual Meetings. On the day when and at the place where the
annual meeting of stockholders for the election of directors is held, and as
soon as practicable thereafter, the Board may hold its annual meeting, without
notice of such meeting, for the purposes of organization, the election of
officers and the transaction of other business. The annual meeting of the Board
may be held at any other time and place specified in a notice given as provided
in Section 3.11 of the By-laws for special meetings of the Board or in a waiver
of notice thereof.
3.10 Regular Meetings. Regular meetings of the Board may be held at
such times and places as may be fixed front time to time by the Board. Unless
otherwise required by the Board, regular meetings of the Board may be held
without notice. If any day fixed for a regular meeting of the Board shall be a
Saturday or Sunday or a legal holiday at the
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place where such meeting is to be held, then such meeting shall be held at the
same hour at the same place on the first business day thereafter which is not a
Saturday, Sunday or legal holiday.
3.11 Special Meetings. Special meetings of the Board shall be held
whenever called by the President or the Secretary or by any two or more
directors. Notice of each special meeting of the Board shall, if mailed, be
addressed to each director at the address designated by him for that purpose or,
if none is designated, at his last known address at least two days before the
date on which the meeting is to be held; or such notice shall be sent to each
director at such address by telegraph, cable or wireless, or be delivered to him
personally, not later than the day before the date on which such meeting is to
be held. Every such notice shall state the time and place of the meeting but
need not state the purposes of the meeting, except to the extent required by
law. If mailed, each notice shall be deemed given when deposited, with postage
thereon prepaid, in a post office or official depository under the exclusive
care and custody of the United States post office department. Such mailing shall
be by first class mail.
3.12 Adjourned Meetings. A majority of the directors present at any
meeting of the Board, including an adjourned meeting, whether or not a quorum is
present, may
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adjourn such meeting to another time and place. Notice of any adjourned meeting
of the Board need not be given to any director whether or not present at the
time of the adjournment. Any business may be transacted at any adjourned meeting
that might have been transacted at the meeting as originally called.
3.13 Waiver of Notice. Whenever notice is required to be given to
any director or member of a committee of directors under any provision of the
General Corporation Law or of the Certificate of Incorporation or By-laws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
directors, or members of a committee of directors, need be specified in any
written waiver of notice.
3.14 Organization. At each meeting of the Board, the President, or
in the absence of the President, a chairman chosen by the majority of the
directors present, shall preside. The Secretary shall act as secretary at each
meeting of the
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Board. In case the Secretary shall be absent from any meeting of the Board, an
Assistant Secretary shall perform the duties of secretary at such meeting; and
in the absence from any such meeting of the Secretary and Assistant Secretaries,
the person presiding at the meeting may appoint any person to act as secretary
of the meeting.
3.15 Quorum of Directors. A majority of the total number of
directors shall constitute a quorum for the transaction of business or of any
specified item of business at any meeting of the Board.
3.16 Action by the Board. All corporate action taken by the Board or
any committee thereof shall be taken at a meeting of the Board, or of such
committee, as the case may be, except that any action required or permitted to
be taken at any meeting of the Board, or of any committee thereof, may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee. Members of the Board, or any
committee designated by the Board, may participate in a meeting of the Board, or
of such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
Section 3.16 shall constitute presence in
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person at such meeting. Except as otherwise provided by the Certificate of
Incorporation or by law, the vote of a majority of the directors present
(including those who participate by means of conference telephone or similar
communications equipment) at the time of the vote, if a quorum (including those
who so participate) is present at such time, shall be the act of the Board.
ARTICLE 4
COMMITTEES OF THE BOARD
The Board may, by resolution passed by a majority of the whole
Board, designate one or more committees, each committee to consist of one or
more of the directors of the corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the Board, shall
have and may exercise all the powers and authority of the Board in the
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management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the By-laws of the Corporation; and, unless the resolution
designating it expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.
ARTICLE 5
OFFICERS
5.1 Officers. The Board shall elect a President, a Secretary and a
Treasurer, and may elect or appoint one or more Vice Presidents, a Comptroller,
one or more Associate Treasurers, one or more Assistant Treasurers and such
other officers as it may determine. The Board may designate one or more Vice
Presidents as Executive Vice Presidents, Group Vice Presidents or Senior Vice
Presidents, and may use de-
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21
scriptive words or phrases to designate the standing, seniority or area of
special competence of the Vice Presidents elected or appointed by it. Each
officer shall hold his office until his successor is elected and qualified or
until his earlier death, resignation or removal in the manner provided in
Section 5.2 of the By-laws. Any two or more offices may be held by the same
person. The Board may require any officer to give a bond or other security for
the faithful performance of his duties, in such amount and with such sureties as
the Board may determine. All officers as between themselves and the Corporation
shall have such authority and perform such duties in the management of the
Corporation as may be provided in the By-laws or as the Board may from time to
time determine.
5.2 Removal of Officers. Any officer elected or appointed by the
Board may be removed by the Board with or without cause. The removal of an
officer without cause shall be without prejudice to his contract rights, if any.
The election or appointment of an officer shall not of itself create contract
rights.
5.3 Resignations. Any officer may resign at any time in writing by
notifying the Board or the President or the Secretary. Such resignation shall
take effect at the
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22
date of receipt of such notice or at such later time as is therein specified,
and, unless otherwise specified, the acceptance of such resignation shall not be
necessary to make it effective. The resignation of an officer shall be without
prejudice to the contract rights of the Corporation, if any.
5.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause may be filled for the
unexpired portion of the term in the manner prescribed in the By-laws for the
regular election or appointment to such office.
5.5 Compensation. Salaries or other compensation of the officers may
be fixed from time to time by the Board. No officer shall be prevented from
receiving a salary or other compensation by reason of the fact that he is also a
director.
5.6 President. The President shall be the chief executive officer of
the Corporation and shall report directly to the Board. The President shall have
general supervision over the business of the Corporation, subject, however, to
the control of the Board and of any duly authorized committee of directors. The
President shall preside at meetings of the stockholders and at meetings of the
Board. He may, with the Secretary or the Treasurer or an Assistant Secretary or
an Assistant Treasurer, sign certificates for shares of capital
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23
stock of the Corporation. He may sign and execute in the name of the Corporation
deeds, mortgages, bonds, contracts and other instruments, except in cases where
the signing and execution thereof shall be expressly delegated by the Board or
by the By-laws to some other officer or agent of the Corporation, or shall be
required by law otherwise to be signed or executed; and, in general, he shall
perform all duties incident to the office of the President and chief executive
officer and such other duties consistent therewith as from time to time may be
assigned to him by the Board.
5.7 Vice Presidents. At the request of the President (or in the
President's absence, at the request of the Board), the Vice President shall (in
such order as may be designated by the President or the Board or in the absence
of any such designation in order of seniority based on age perform all of the
duties of the President and so acting shall have all the powers of and be
subject to all restrictions upon the President. Any Vice President may also,
with the Secretary or the Treasurer or an Assistant Secretary or an Assistant
Treasurer, sign certificates for shares of capital stock of the Corporation; may
sign and execute in the name of the Corporation deeds, mortgages, bonds,
contracts or other
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24
instruments authorized by the Board, except in cases where the signing and
execution thereof shall be expressly delegated by the Board or by the By-laws to
some other officer or agent of the Corporation, or shall be required by law
otherwise to be signed or executed; and shall perform such other duties as from
time to time may be assigned to him by the Board or by the President.
5.8 Secretary. The Secretary, if present, shall act as secretary of
all meetings of the stockholders and of the Board, and shall keep the minutes
thereof in the proper book or books to be provided for that purpose; he shall
see that all notices required to be given by the Corporation are duly given and
served; he may, with the President or a Vice President, sign certificates for
shares of capital stock of the Corporation; he shall be custodian of the seal of
the Corporation and may seal with the seal of the Corporation, or a facsimile
thereof, all certificates for shares of capital stock of the Corporation and all
documents the execution of which on behalf of the Corporation under its
corporate seal is authorized in accordance with the provisions of the By-laws;
he shall have charge of the stock ledger and also of the other books, records
and papers of the Corporation relating to its organization and management as a
Corporation, and shall see
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that the reports, statements and other documents required by law are properly
kept and filed; and shall, in general, perform all the duties incident to the
office of Secretary and such other duties as from time to time may be assigned
to him by the Board or by the President.
5.9 Treasurer. The Treasurer shall have charge and custody of, and
be responsible for, all funds, securities and notes of the Corporation; receive
and give receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys in the name of the Corporation in such
banks, trust companies or other depositaries as shall be selected in accordance
with these By-laws; against proper vouchers, cause such funds to be disbursed by
checks or drafts on the authorized depositaries of the Corporation signed in
such manner as shall be determined in accordance with any provisions of the
By-laws, and be responsible for the accuracy of the amounts of all moneys so
disbursed; regularly enter or cause to be entered in books to be kept by him or
under his direction full and adequate account of all moneys received or paid by
him for the account of the Corporation; have the right to require, from time to
time, reports or statements giving such information as he may desire with
respect to any and all financial transactions of the Corporation from the
officers
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26
or agents transacting the same; render to the President or the Board, whenever
the President or the Board, respectively, shall require him so to do, an account
of the financial condition of the Corporation and of all his transactions as
Treasurer; exhibit at all reasonable times his books of account and other
records to any of the directors upon application at the office of the
Corporation where such books and records are kept; and in general, perform all
the duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the Board or by the President; and he may
sign with the President or a Vice President certificates for shares of capital
stock of the Corporation.
5.10 Assistant Secretaries, Associate Treasurers and Assistant
Treasurers. Assistant Secretaries, Associate Treasurers and Assistant Treasurers
shall perform such duties as shall be assigned to them by the Secretary or by
the Treasurer, respectively, or by the Board or by the President. Assistant
Secretaries, Associate Treasurers and Assistant Treasurers may, with the
President or a Vice President, sign certificates for shares of capital stock of
the Corporation.
5.11 Comptroller. The Comptroller shall be responsible for the
maintenance of adequate accounting records of all assets, liabilities and
transactions of the Corporation. The Comptroller shall prepare and render such
balance sheets, budgets and other financial reports as the Board or the
President
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27
may require, and shall perform such other duties as may be prescribed in these
By-laws or assigned to him by the Board or the President and all other acts
incident to the position of Comptroller. Assistant Comptrollers shall perform
such duties as from time to time may be assigned to them by the Comptroller or
by the Board or the President. In the event of the absence of the Comptroller or
of his incapacity or inability to act, then any Assistant Comptroller may
perform any of the duties and may exercise any of the powers of the Comptroller.
ARTICLE 5
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
6.1 Execution of Contracts. The Board may authorize any officer,
employee or agent, in the name and on behalf of the Corporation, to enter into
any contract or execute and satisfy any instrument, and any such authority may
be general or confined to specific instances, or otherwise limited.
6.2 Loans. The President or any other officer, employee or agent
authorized by the By-laws or by the Board may effect loans and advances at any
time time for the Corporation from any bank, trust company or other institutions
or from any firm, corporation or individual and for such loans and advances may
make, execute and deliver promissory notes, bonds or other certificates or
evidences of indebtedness of the Corporation,
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28
and when authorized so to do may pledge and hypothecate or transfer any
securities or other property of the Corporation as security for any such loans
or advances. Such authority conferred by the Board may be general or confined to
specific instances or otherwise limited.
6.3 Checks, Drafts, Etc. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation and all notes or other
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by
resolution of the Board.
6.4 Deposits. The funds of the Corporation not otherwise employed
shall be deposited from time to time to the order of the Corporation in such
banks, trust companies or other depositaries as the Board may select or as may
be selected by an officer, employee or agent of the Corporation to whom such
power may from time to time be delegated by the Board.
ARTICLE 7
STOCK AND DIVIDENDS
7.1 Certificates Representing Shares. The shares of capital stock of
the Corporation shall be represented by certificates in such form (consistent
with the provisions of Section 158 of the General Corporation Law) as shall be
approved by the
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29
Board. Such certificates shall be signed by the President or a Vice President
and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer, and may be sealed with the seal of the Corporation or a facsimile
thereof. The signatures of the officers upon a certificate may be facsimiles, if
the certificate is countersigned by a transfer agent or registrar other than the
Corporation itself or its employee. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon any
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, such certificate may, unless otherwise
ordered by the Board, be issued by the Corporation with the same effect as if
such person were such officer, transfer agent or registrar at the date of issue.
7.2 Transfer of Shares. Transfers of shares of capital stock of the
Corporation shall be made only on the books of the Corporation by the holder
thereof or by his duly authorized attorney appointed by a power of attorney duly
executed and filed with the Secretary or a transfer agent of the Corporation,
and on surrender of the certificate or certificates representing such shares of
capital stock properly endorsed for transfer and upon payment of all necessary
transfer taxes. Every certificate exchanged, returned or surrendered to the
Corporation shall be marked
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30
"Cancelled," with the date of cancellation, by the Secretary or an Assistant
Secretary or the transfer agent of the Corporation. A person in whose name
shares of capital stock shall stand on the books of the Corporation shall be
deemed the owner thereof to receive dividends, to vote as such owner and for all
other purposes as respects the Corporation. No transfer of shares of capital
stock shall be valid as against the Corporation, its stockholders and creditors
for any purpose, except to render the transferee liable for the debts of the
Corporation to the extent provided by law, until such transfer shall have been
entered on the books of the Corporation by an entry showing from and to whom
transferred.
7.3 Transfer and Registry Agents. The Corporation may from time to
time maintain one or more transfer offices or agents and registry offices or
agents at such place or places as may be determined from time to time by the
Board.
7.4 Lost, Destroyed, Stolen and Mutilated Certificates. The holder
of any shares of capital stock of the Corporation shall immediately notify the
Corporation of any loss, destruction, theft or mutilation of the certificate
representing such shares, and the Corporation may issue a new certificate to
replace the certificate alleged to have been lost, destroyed, stolen or
mutilated. The Board may, in its discretion, as a condition to the issue of any
such new certificate, require the owner of the lost, destroyed, stolen
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31
or mutilated certificate, or his legal representatives, to make proof
satisfactory to the Board of such loss, destruction, theft or mutilation and to
advertise such fact in such manner as the Board may require, and to give the
Corporation and its transfer agents and registrars, or such of them as the Board
may require, a bond in such form, in such sums and with such surety or sureties
as the Board may direct, to indemnify the Corporation and its transfer agents
and registrars against any claim that may be made against any of them on account
of the continued existence of any such certificate so alleged to have been lost,
destroyed, stolen or mutilated and against any expense in connection with such
claim.
7.5 Regulations. The Board may make such rules and regulations as it
may deem expedient, not inconsistent with the By-laws or with the Certificate of
Incorporation, concerning the issue, transfer and registration of certificates
representing shares of its capital stock.
7.6 Restriction on Transfer of Stock. A written restriction on the
transfer or registration of transfer of capital stock of the Corporation, if
permitted by Section 202 of the General Corporation Law and noted conspicuously
on the certificate representing such capital stock, may be enforced against the
holder of the restricted capital stock or any successor or transferee of the
holder including an executor, administrator, trustee, guardian or other
fiduciary entrusted with like
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32
responsibility for the person or estate of the holder. Unless noted
conspicuously on the certificate representing such capital a stock, a
restriction, even though permitted by Section 202 of the General Corporation Law
shall be ineffective except against a person with actual knowledge of the
restriction. A restriction on the transfer or registration of transfer of
capital stock of the Corporation may be imposed either by the Certificate of
Incorporation or by an agreement among any number of stockholders or among such
stockholders and the Corporation. No restriction so imposed shall be binding
with respect to capital stock issued prior to the adoption of the restriction
unless the holders of such capital stock are parties to an agreement or voted in
favor of the restriction.
7.7 Dividends, Surplus, Etc. Subject to the provisions of the
Certificate of Incorporation and of law, the Board:
7.7.1 May declare and pay dividends or make other
distributions on the outstanding shares of capital stock in such amounts
and at such time or times as, in its discretion, the condition of the
affairs of the Corporation shall render advisable;
7.7.2 May use and apply, in its discretion, any of the surplus
of the Corporation in purchasing or acquiring any shares of capital stock
of the Corporation, or purchase warrants therefor, in accordance
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33
with law, or any of its bonds, debentures, notes, scrip or other
securities or evidences of indebtedness;
7.7.3 May set aside from time to time out of such surplus or
net profits such sum or sums as, in its discretion, it may think proper,
as a reserve fund to meet contingencies, or for equalizing dividends or
for the purpose of maintaining or increasing the property or business of
the Corporation, or for any purpose it may think conducive to the best
interests of the Corporation.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification of Officers and Directors. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was a director or an officer of the Corporation, against expenses
(including attorneys' fees) judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding to the fullest extent and in the manner set forth in and permitted by
the General Corporation Law, and any other applicable law, as
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34
from time to time in effect. Such right of indemnification shall not be deemed
exclusive of any other rights to which such director or officer may be entitled
apart from the foregoing provisions. The foregoing provisions of this Section
8.1 shall be deemed to be a contract between the Corporation and each director
and officer who serves in such capacity at any time while this Article 8 and the
relevant provisions of the General Corporation Law and other applicable law, if
any, are in effect, and any repeal or modification thereof shall not affect any
rights or obligations then existing with respect to any state of facts then or
theretofore existing or any action, suit or proceeding theretofore or thereafter
brought or threatened based in whole or in part upon any such state of facts.
8.2 Indemnification of Other Persons. The Corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative by reason of the fact that he
is or was an employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in
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35
connection with such action, suit or proceeding to the extent and in the manner
set forth in and permitted by the General Corporation Law, and any other
applicable law, as from time to time in effect. Such right of indemnification
shall not be deemed exclusive of any other rights to which any such person may
be entitled apart from the foregoing provisions.
ARTICLE 9
BOOKS AND RECORDS
9.1 Books and Records. The Corporation shall keep correct and
complete books and records of account and shall keep minutes of the proceedings
of the stockholders, the Board and any committee of the Board. The Corporation
shall keep at the office designated in the Certificate of Incorporation or at
the office of the transfer agent or registrar of the Corporation in Delaware, a
record containing the names and addresses of all stockholders, the number and
class of shares held by each and the dates when they respectively became the
owners of record thereof.
9.2 Form of Records. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device, provided that the records so kept can be converted into
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36
clearly legible written form within a reasonable time. The Corporation shall so
convert any records so kept upon the request of any person entitled to inspect
the same.
9.3 Inspection of Books and Records. Except as otherwise provided by
law, the Board shall determine from time to time whether, and, if allowed, when
and under what conditions and regulations, the accounts, books, minutes and
other records of the Corporation, or any of them, shall be open to the
inspection of the stockholders.
9.4 Reliance on Books and Records. Each officer, director or member
of any committee designated by the Board of Directors shall, in the performance
of his duties, be fully protected in relying in good faith upon the books of
account of or reports made to the Corporation by any of its officers or by an
independent public accountant or by an appraiser selected with reasonable care
by the Board of Directors or by any such committee and in relying in good faith
upon other books and records of the Corporation.
ARTICLE 10
SEAL
The Board may adopt a corporate seal which shall be in the form of a
circle and shall bear the full name of the Corporation, the year of its
incorporation and the word "Delaware."
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37
ARTICLE 11
FISCAL YEAR
The fiscal year of the Corporation shall be determined, and may be
changed, by resolution of the Board.
ARTICLE 12
VOTING OF SHARES HELD
Unless otherwise provided by resolution of the Board, the President
may, from time to time, appoint one or more attorneys or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the votes
which the Corporation may be entitled to cast as a stockholder or otherwise in
any other corporation, any of whose shares or securities may be held by the
Corporation, at meetings of the holders of stock or other securities of such
other corporation, or to consent in writing to any action by any such other
corporation, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause to
be executed on behalf of the Corporation and under its corporate seal, or
otherwise, such written proxies, consents, waivers or other instruments as he
may deem necessary or proper in the premises; or the President may himself
attend any meeting of the holders of the stock or other securities of any such
other corporation and thereat vote or exercise any or all other
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38
powers of the Corporation as the holder of such stock or other securities of
such other corporation.
ARTICLE 13
AMENDMENTS
The By-laws may be altered, amended, supplemented or repealed, or
new By-laws may be adopted, by vote of the holders of the shares entitled to
vote in the election of directors. The By-laws may be altered, amended,
supplemented, repealed, or new By-laws may be adopted, by the Board, provided
that the vote of a majority of the entire Board shall be required to change the
number of authorized directors. Any By-laws adopted, altered, amended, or
supplemented by the Board may be altered, amended, supplemented or repealed by
the stockholders entitled to vote thereon.
<PAGE>
Exhibit 3.62
BY-LAWS
OF
AVIS FLEET LEASING AND MANAGEMENT CORPORATION
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Dallas, State of Texas.
Section 2. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Texas as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Texas as shall be designated from
time to time by the Board of Directors and stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The Annual Meetings of Stockholders
shall be held on such date and at such time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting, at which
meetings the stockholders shall elect by a plurality vote a Board of Directors,
and transact such other business as may properly be brought before the meeting.
Written notice of the Annual Meeting stating the place, date and hour of the
<PAGE>
meeting shall be given to each stockholder entitled to vote at such meeting not
less than ten nor more than sixty days before the date of the meeting.
Section 3. Special Meetings. Unless otherwise prescribed by law or
by the Certificate of Incorporation, Special Meetings of Stockholders, for any
purpose or purposes, may be called by either (i) the Chairman, if there be one,
or (ii) the President, (iii) any Vice President, if there be one, (iv) the
Secretary or (v) any Assistant Secretary, if there be one, and shall be called
by any such officer at the request in writing of a majority of the Board of
Directors or at the request in writing of stockholders owning a majority of the
capital stock of the Corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting.
Written notice of a Special Meeting stating the place, date and hour of the
meeting and the purpose or purposes for which the meeting is called shall be
given not less than ten nor more than sixty days before the date of the meeting
to each stockholder entitled to vote at such meeting.
Section 4. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is
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fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder entitled to vote at the meeting.
Section 5. Voting. Unless otherwise required by law, the Certificate
of Incorporation or these By-Laws, any question brought before any meeting of
stockholders shall be decided by the vote of the holders of a majority of the
stock represented and entitled to vote thereat. Each stockholder represented at
a meeting of stockholders shall be entitled to cast one vote for each share of
the capital stock entitled to vote thereat held by such stockholder. Such votes
may be cast in person or by proxy but no proxy shall be voted on or after three
years from its date, unless such proxy provides for a longer period. The Board
of Directors, in its discretion, or the officer of the Corporation presiding at
a meeting of stockholders, in his discretion, may require that any votes cast at
such meeting shall be cast by written ballot.
Section 6. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
Section 7. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the
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meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder of the
Corporation who is present.
Section 8. Stock Ledger. The stock ledger of the Corporation shall
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 7 of this Article II or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The Board of Directors
shall consist of not less than one nor more than fifteen members, the exact
number of which shall initially be fixed by the Incorporator and thereafter from
time to time by the Board of Directors. Except as provided in Section 2 of this
Article, directors shall be elected by a plurality of the votes cast at Annual
meetings of Stockholders, and each director so elected shall hold office until
the next Annual Meeting and until his successor is duly elected and qualified,
or until his earlier resignation or removal. Any director may resign at any time
upon notice to the Corporation. Directors need not be stockholders.
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Section 2. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
qualified, or until their earlier resignation or removal.
Section 3. Duties and Powers. The business of the Corporation shall
be managed by or under the direction of the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done by the stockholders.
Section 4. Meetings. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State of
Texas. Regular meetings of the Board of Directors may be held without notice at
such time and at such place as may from time to time be determined by the Board
of Directors. Special meetings of the Board of Directors may be called by the
Chairman, if there be one, the President, or any directors. Notice thereof
stating the place, date and hour of the meeting shall be given to each director
either by mail not less than forty-eight (48) hours before the date of the
meeting, by telephone or telegram on twenty-four (24) hours' notice, or on such
shorter notice as the person or persons calling such meeting may deem necessary
or appropriate in the circumstances.
Section 5. Quorum. Except as may be otherwise specifically provided
by law, the Certificate of Incorporation or these By-Laws, at all meetings of
the Board of Directors, a majority of the entire Board of Directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall
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be the act of the Board of Directors. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 6. Actions of Board. Unless otherwise provided by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 7. Meetings by Means of Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these By-Laws, members
of the Board of Directors of the Corporation, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors or
such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 7 shall
constitute presence in person at such meeting.
Section 8. Committees. The Board of Directors may designate one or
more committees, each committee to consist of one or more of the directors of
the Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or
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not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any committee, to the extent allowed by law and provided in
the resolution establishing such committee, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation. Each committee shall keep regular minutes and
report to the Board of Directors when required.
Section 9. Compensation. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Section 10. Interested Directors. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the
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material facts as to his or their relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or (iii) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or
ratified, by the Board of Directors, a committee thereof or the stockholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, may also choose a Chairman of the
Board of Directors (who must be a director) and one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers and other officers. Any number of
offices may be held by the same person, unless otherwise prohibited by law, the
Certificate of Incorporation or these By-Laws. The officers of the Corporation
need not be stockholders of the Corporation nor, except in the case of the
Chairman of the Board of Directors, need such officers be directors of the
Corporation.
Section 2. Election. The Board of Directors at its first meeting
held after each Annual Meeting of Stockholders shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors; and all officers of the Corporation shall hold office until
their successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the
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<PAGE>
affirmative vote of a majority of the Board of Directors. Any vacancy occurring
in any office of the Corporation shall be filled by the Board of Directors. The
salaries of all officers of the Corporation shall be fixed by the Board of
Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of
attorney, proxies waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice President and any
such officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and power incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of the
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. He shall be the Chief Executive
officer of the Corporation, and except where by law the signature of the
President is required, the Chairman of the Board of Directors shall possess the
same power as the President to sign all contracts, certificates and other
instruments of the Corporation which may be authorized by the Board of
Directors. During the absence or disability of the President, the Chairman of
the Board of Directors shall exercise all the powers and discharge all the
duties of the President. The Chairman of the Board of Directors shall also
perform such other duties and may exercise such other powers as from time to
time may be assigned to him by these By-Laws or by the Board of Directors.
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<PAGE>
Section 5. President. The President shall, subject to the control of
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. He shall execute all bonds, mortgages, contracts and other instruments
of the Corporation requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except that the other officers of the Corporation may sign and execute documents
when so authorized by these By-Laws, the Board of Directors or the President. In
the absence or disability of the Chairman of the Board of Directors, or if there
be none, the President shall preside at all meetings of the stockholders and the
Board of Directors. If there be no Chairman of the Board of Directors, the
President shall be the Chief Executive Officer of the Corporation. The President
shall also perform such other duties and may exercise such other powers as from
time to time may be assigned to him by these By-Laws or by the Board of
Directors.
Section 6. Vice Presidents. At the request of the President or in
his absence or in the event of his inability or refusal to act (and if there be
no Chairman of the Board of Directors), the Vice President or the Vice
Presidents if there is more than one (in the order designated by the Board of
Directors) shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. Each Vice President shall perform such other duties and have such
other powers as the Board of Directors from time to time may prescribe. If there
be no Chairman of the Board of Directors and no Vice President, the Board of
Directors shall designate the officer of the Corporation who, in the absence of
the President or in the event of the inability or refusal of the President to
act, shall perform the duties
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of the President, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the President.
Section 7. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
President, under whose supervision he shall be. If the Secretary shall be unable
or shall refuse to cause to be given notice of all meetings of the stockholders
and special meetings of the Board of Directors, and if there be no Assistant
Secretary, then either the Board of Directors or the President may choose
another officer to cause such notice to be given. The Secretary shall have
custody of the seal of the Corporation and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the signature
of the Secretary or by the signature of any such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the seal
of the Corporation and to attest the affixing by his signature. The Secretary
shall see that all books, reports, statements, certificates and other documents
and records required by law to be kept or filed are properly kept or filed, as
the case may be.
Section 8. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
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Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 9. Assistant Secretaries. Except as may be otherwise
provided in these By-Laws, Assistant Secretaries, if there be any, shall perform
such duties and have such powers as from time to time may be assigned to them by
the Board of Directors, the President, any Vice President, if there be one, or
the Secretary, and in the absence of the Secretary or in the event of his
disability or refusal to act, shall perform the duties of the Secretary, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the Secretary.
Section 10. Assistant Treasurers. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of his disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be
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satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 11. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President or a
Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the corporation, certifying the number of
shares owned by him in the Corporation.
Section 2. Signatures. Any or all of the signatures on a certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
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Section 3. Lost Certificates. The Board of Directors may direct a
new certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen or destroyed. When authorizing such issue of a new certificate,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be transferable
in the manner prescribed by law and in these By-Laws. Transfers of stock shall
be made on the books of the Corporation only by the person named in the
certificate or by his attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be canceled before a new
certificate shall be issued.
Section 5. Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or entitled to express consent to corporate action
in writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice
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of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at his address
as it appears on the records of the Corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Written notice may also be given personally
or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required by
law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed, by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto.
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ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property, or in shares of the capital
stock. Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Texas". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
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ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings other
Than Those by or in the Right of the Corporation. Subject to Section 3 of this
Article VIII, the Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director or officer of the Corporation,
or is or was a director or officer of the Corporation serving at the request of
the Corporation as a director or officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or
in the Right of the Corporation. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or
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completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director or
officer of the Corporation, or is or was a director or officer of the
Corporation serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against expenses (including attorney's
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standard of conduct set forth in Section 1 or
Section 2 of this Article VIII, as the case may be. Such determination shall be
made (i) by a majority vote of the directors who are not parties to such action,
suit or proceeding, even though less than a quorum, or (ii) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (iii) by the stockholders. To the extent, however, that a
director or officer of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding described above, or in
defense of any claim, issue or
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matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith, without
the necessity of authorization in the specific case.
Section 4. Good Faith Defined. For purposes of any determination
under Section 3 of this Article VIII, a person shall be deemed to have acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was unlawful,
if his action is based on the records or books of account of the Corporation or
another enterprise, or on information supplied to him by the officers of the
Corporation or another enterprise in the course of their duties, or on the
advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this Section 4 shall mean
any other corporation or any partnership, joint venture, trust, employee benefit
plan or other enterprise of which such person is or was serving at the request
of the Corporation as a director, officer, employee or agent. The provisions of
this Section 4 shall not be deemed to be exclusive or to limit in any way the
circumstances in which a person may be deemed to have met the applicable
standard of conduct set forth in Sections 1 or 2 of this Article VIII, as the
case may be.
Section 5. Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to any court of competent jurisdiction in the State of Texas
for indemnification to the extent otherwise
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permissible under Sections 1 and 2 of this Article VIII. The basis of such
indemnification by a court shall be a determination by such court that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standards of conduct set forth in Sections 1
or 2 of this Article VIII, as the case may be. Neither a contrary determination
in the specific case under Section 3 of this Article VIII nor the absence of any
determination thereunder shall be a defense to such application or create a
presumption that the director or officer seeking indemnification has not met any
applicable standard of conduct. Notice of any application for indemnification
pursuant to this Section 5 shall be given to the Corporation promptly upon the
filing of such application. If successful, in whole or in part, the director or
officer seeking indemnification shall also be entitled to be paid the expense of
prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses incurred by a
director or officer in defending or investigating a threatened or pending
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation as authorized in this Article VIII.
Section 7. Nonexclusivity of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by or granted
pursuant to this Article VIII shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under any By-Law, agreement, contract, vote of stockholders or
disinterested directors or pursuant to the direction (howsoever embodied) of any
court of competent jurisdiction or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, it
being the policy of the Corporation that
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indemnification of the persons specified in Sections 1 and 2 of this Article
VIII shall be made to the fullest extent permitted by law. The provisions of
this Article VIII shall not be deemed to preclude the indemnification of any
person who is not specified in Sections 1 or 2 of this Article VIII but whom the
Corporation has the power or obligation to indemnify under the provisions of the
Business Corporation Law of the State of Texas, or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power or the obligation to indemnify him against such
liability under the provisions of this Article VIII.
Section 9. Certain Definitions. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand in
the same position under the provisions of this Article VIII with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate
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existence had continued. For purposes of this Article VIII, references to
"fines" shall include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or agent
of the Corporation which imposes duties on, or involves services by, such
director or officer with respect to an employee benefit plan, its participants
or beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this Article
VIII.
Section 10. Survival of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VIII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
Section 11. Limitation on Indemnification. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 5 hereof),
the Corporation shall not be obligated to indemnify any director or officer in
connection with a proceeding (or part thereof) initiated by such person unless
such proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.
Section 12. Indemnification of Employees and Agents. The Corporation
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
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ARTICLE IX
AMENDMENTS
Section 1. Amendments. These By-Laws may be altered, amended or
repealed, in whole or in part, or new By-Laws may be adopted by the stockholders
or by the Board of Directors, provided, however, that notice of such alteration,
amendment, repeal or adoption of new By-Laws be contained in the notice of such
meeting of stockholders or Board of Directors as the case may be. All such
amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.
Section 2. Entire Board of Directors. As used in this Article IX and
in these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no vacancies.
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Exhibit 3.63
BY-LAWS
OF
DEALERS HOLDING, INC.
ARTICLE I. STOCKHOLDERS
Section 1. Annual Meetings
The annual meeting of the stockholders of the Corporation shall be held at
the principal office of the Corporation in the County of Baltimore, State of
Maryland on the fourth Monday in August of each year at 10:00 a.m. (or at such
other hour and/or place within the County of Baltimore, State of Maryland as may
be fixed by the Board of Directors) for the election of Directors and for the
transaction of general business. If the fourth Monday in August shall be a legal
holiday, the annual meeting of the stockholders shall be held on the first day
following which is not a legal holiday at the same hour. Such annual meeting
shall be general meetings, that is to say, open for the transaction of any
business within the powers of the Corporation without special notice of such
business, except in any case in which special notice is required by statute.
Section 2. Special Meetings
Special meetings of the stockholders of the Corporation may be called at
any time by the President or by a majority of the Board of Directors, either by
vote or in writing, or by a majority of the Executive Committee (if created
pursuant to the By-Laws) either by vote or in writing. Upon request in writing,
delivered to the Secretary or any Assistant Secretary, of the holders of a
majority of all the shares outstanding and entitled to vote, it shall be the
duty of the said Secretary or Assistant Secretary to call forthwith a meeting of
stockholders, at the expense of the Corporation. Such request shall state the
purpose of the meeting and notice thereof shall be given as provided in Section
3 of this Article I. No business other than that stated in the notice of the
meeting shall be transacted at any special meeting of the stockholders, however
called. Special meetings of the stockholders shall be held at the principal
office of the Corporation, whether within or outside the State of Maryland, as
named in Section 1 of this Article I. Special meetings may also be called in
accordance with applicable provisions of law.
Section 3. Notice of Meetings
Not less than ten (10) days and not more than thirty (30) days written or
printed notice of every annual meeting and of every special meeting of the
stockholders (except of any meeting called by the stockholders as provided in
Section 2 of this Article I) shall be given to each holder of stock having
voting rights whose name appears as a holder of record upon the books of the
Corporation at the close of business on the date
<PAGE>
fixed by the Board of Directors for the determination of stockholders entitled
to notice of such meeting in accordance with the provisions of these By-Laws,
and, if no such date shall have been fixed by the Board for such purpose, then
to the holders of record on the date when such notice shall be given. Such
notices of annual or special meetings shall state the place, day and hour of
such meetings and, in the case of special meetings, shall also state the
business proposed to be transacted thereat. Such notice shall be given to each
stockholder by leaving the same with him or at his residence or usual place of
business, or by mailing it postage prepaid and addressed to him at his address
as it appears upon the books of the Corporation. No notice of the time, place or
purpose of any meeting of stockholders, whether prescribed by law, by the
Charter, or by these By-Laws, need be given to any stockholder who attends in
person, or by proxy, or who, in writing executed and filed with the records of
the meeting either before or after the holding thereof, waives such notice. No
notice of any meeting, regular or special, need be given to any stockholder who
is not entitled to vote thereat.
Section 4. Quorum
At any meeting of stockholders, the presence, in person or by proxy, of
the holders of a majority of all shares having voting rights at such meeting
shall be necessary and sufficient to constitute a quorum for the election of
Directors or for the transaction of other business; but in the absence of a
quorum, the stockholders entitled to vote who shall be present in person or by
proxy at any meeting (or adjournment thereof) may, by vote of a majority of
shares so present and entitled to vote, adjoin the meeting from time to time,
but not for a period of over thirty (30) days at any one time, by announcement
at the meeting until a quorum shall attend. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted at the meeting
as originally notified.
Section 5. Proxies
Stockholders may vote either in person or by proxy, but no proxy which is
dated more than eleven months before the meeting at which it is offered shall be
accepted unless such proxy shall on its face name a longer period for which it
is to remain in force. Every proxy shall be in writing subscribed by a
stockholder, or by his duly authorized attorney, and shall be dated; but need
not be sealed, witnessed or acknowledged.
Section 6. Voting
At every meeting of the stockholders, every stockholder of the Corporation
shall be entitled to one vote for each share of voting stock registered in his
name on the books of the Corporation on the date for the determination of voting
rights thereat; provided, however, that no share shall be voted by any
stockholder if any installment duly called thereon shall be
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overdue and unpaid. Upon demand of stockholders holding ten percent (10%) of the
shares present in person or by proxy and entitled to vote, the votes for
Directors, or upon any question before a meeting, shall be by ballot; and except
in cases in which it is by statute, by the Charter, or by these By-Laws
otherwise provided, a majority of the votes cast shall be sufficient to elect
and pass any measure.
Section 7. Inspectors
Two inspectors may be elected by the stockholders at any meeting, and if
so elected, such inspectors shall open and close the polls, shall receive and
take charge of the proxies and ballots and decide all questions as to the
qualifications of voters, the validity of proxies and the acceptance or
rejection of votes.
Section 8. List of Stockholders
Prior to each meeting of the stockholders, the Secretary or an Assistant
Secretary shall prepare a full, true and complete list in alphabetical order, of
all stockholders entitled to vote at such meeting, indicating the number of
shares held by each, and shall be responsible for the production of such list at
the meeting.
Section 9. Order of Business
At all meetings of stockholders, the order of business shall be as far as
applicable and practicable, as follows:
1. Organization;
2. Proof of notice of meeting or of waivers thereof. The Certificate of
the Secretary of the Corporation or the affidavit of any other person who mailed
the notice or caused the same to be mailed, shall be accepted as proof of
service of notice by mail, and the affidavit of the publisher of the notice
shall be accepted as proof in all instances in which the notice of a meeting is
given by advertisement;
3. Submission of an alphabetical list of stockholders entitled to vote
thereat;
4. At an annual meeting, or at a meeting called for that purpose, reading
of unapproved minutes of preceding meetings, and action thereon;
5. Reports;
6. At an annual meeting, the election of Directors;
7. Unfinished business;
8. New business;
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9. Adjournment.
ARTICLE II. BOARD OF DIRECTORS
Section 1. Election and Powers
The business and property of the Corporation, except as otherwise provided
by statute or by the Charters, or by these By-Laws, shall be conducted and
managed by its Board of Directors, which shall consist of not less than three
(3) members no more than seven (7) members provided that the tenure of office of
no Director shall be affected thereby. The number of Directors shall be fixed
from time to time by the vote of a majority of the entire Board of Directors.
The members of the Board of Directors shall be elected at an annual meeting of
stockholders by holders of stock present in person or by proxy at such meeting
and entitled to vote thereat. Each Director elected at any annual meeting shall
hold office until his successor shall have been elected and qualified or until
he shall die or resign, or shall have been removed. The Board of Directors shall
keep minutes of its meetings and a full account of its transactions.
Section 2. First Regular Meeting
After each meeting of stockholders at which a Board of Directors shall
have been elected, the Board of Directors so elected shall meet for the purpose
of organization and the transaction of other business, at such time and place as
may be designated by the stockholders at such meeting; or, in the absence of
such designation, shall meet as soon as practical at the principal business
office of the Corporation.
Section 3. Additional Regular Meetings
Regular meetings of the Board of Directors shall be held at the principal
business office of the Corporation, at such times as may be fixed by general
resolution of the Board, or at such other place as shall be specified by the
Board.
Section 4. Special Meetings
Special meetings of the Board of Directors shall be held by the President,
by a majority of the Directors, or by a majority of the Executive Committee, if
there shall be an Executive Committee, either in writing or by vote.
Section 5. Place of Meetings
Subject to the provisions of Section 2 of this Article II, the Board of
Directors may hold its regular and special meetings at such place or places
within or without the State of Maryland as it may from time to time determine.
In the absence of any such determination, regular and special meetings of the
Board of Directors shall be held at the principal business office of the
Corporation.
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Section 6. Notice of Meetings
Notice of the place, day and hour of every regular and special meeting
shall be given to each Director, either--
1. By notice in writing mailed to him postage prepaid not later than the
second day before the day set for the meeting and addressed to him at his last
known post office address according to the records of the Corporation; or
2. By notice in writing delivered to him personally or left at his
residence or usual place of business not later than the second day before the
day fixed for the meeting; or
3. By telegraph or telephone not later than the day before the day set for
the meeting.
PROVIDED HOWEVER: That, if at any meeting of stockholders at which a Board
of Directors shall be elected, the stockholders shall designate the time and
place of the first regular meeting of the Board, then no notice thereof need be
given to any Director. No notice of the time, place or purpose of any meeting
need be given to any Director who, in writing executed and filed with the
records of the meeting either before or after the holding thereof, waives such
notice. No notice of any adjourned meeting of the Board of Directors need be
given.
Section 7. Quorum
Two (2) members of the Board of Directors shall be necessary and
sufficient to constitute a quorum for the transaction of business at every
meeting of the Board of Directors.
Section 8. Removal
At any meeting of the stockholders called for the purpose, any Director
may, by the vote of a majority of all the shares of stock outstanding and
entitled to vote be removed from office, with or without cause, and another may
be appointed in the place of the person so removed, to serve for the remainder
of his term.
Section 9. Vacancies
If any Director shall die or resign, or if the stockholders shall remove
any Director without appointing another in his place, a majority of the
remaining Directors (although such a majority is less than a quorum) may elect a
successor to hold office for the unexpired portion of the term of the Director
whose place shall so become vacant, and until his successor shall have been duly
chosen and qualified. Vacancies in the Board of Directors created by an increase
in the number of Directors may be filled by the vote of a majority of the entire
Board as constituted prior to such increase, and the Directors so elected by the
Board to fill such vacancies shall hold
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office until the next succeeding annual meeting of the stockholders and
thereafter until their successor shall be elected and qualified.
Section 10. Compensation
Directors, as such, shall not receive any stated compensation for their
services, but by resolution of the Hoard of Directors a fixed sum and expenses
of attendance, if any, may be allowed for attendance at any regular or special
meeting thereof. Nothing in this Section shall be construed to preclude a
director from serving the corporation in any other capacity and receiving
compensation therefor.
ARTICLE III. OFFICERS
Section 1. Executive Officers
The Executive Officers of the Corporation shall be a President, a
Secretary and a Treasurer and such other officers as the Board may consider
necessary for the proper conduct of the business of the Corporation. The
Executive Officers and other officers shall be elected annually by the Board of
Directors at its first meeting following the annual meeting of stockholders.
Each such officer shall hold office at the pleasure of the Board of Directors.
Section 2. President
In general the President is the Chief Executive Officer of the Corporation
and is responsible to the Board of Directors for the operation and management of
the Corporation's business and for its operating profit. He shall have the
authority and responsibility for the general management and direction of the
Corporation and all of those powers ordinarily exercised by the President of a
corporation.
Section 3. Vice Presidents
There shall be one or more Vice Presidents who shall perform such duties
and shall have such authority and responsibilities as may be assigned to them
from time to time by the President or the Board of Directors.
Section 4. Secretary
The Secretary shall keep the minutes of the meetings of the stockholders,
of the Board of Directors and of the Executive Committee in books provided for
the purpose; he shall see that all notices are duly given in accordance with the
provisions of the By-Laws or as required by law; he shall be the custodian of
the records and of the corporate seal or seals or the Corporation; he shall see
that the corporate seal is affixed to all documents, the execution of which on
behalf of the Corporation under its seal is duly authorized, and when so affixed
may
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<PAGE>
attest the same; he may sign, with the President or a Vice President,
certificates of stock of the Corporation; and to general shall perform all the
duties ordinarily incident to the office of a Secretary of a Corporation and
such other duties as may be assigned to him by the Board of Directors or by the
President.
Section 5(a). Treasurer
The Treasurer shall have charge of and be responsible for all funds,
securities, receipts and disbursements of the Corporation, and shall deposit or
cause to be deposited, in the name of the Corporation, all monies or other
valuable effects in such banks, trust companies, or other depositories as shall
from time to time be selected by the Board of Directors; he shall render to the
President and to the Board of Directors, whenever requested, an account of the
financial condition of the Corporation; he may sign, with the President or a
Vice President, certificates of stock of the Corporation; and in general, shall
perform all the duties ordinarily incident to the office of a Treasurer of a
corporation, and such other duties as may be assigned to him by the Board of
Directors or by the President.
Section 6. Assistant Officers
The Board of Directors may elect one or more Assistant Secretaries, and
one or more Assistant Treasurers. Each such Assistant Secretary and Assistant
Treasurer shall hold office for such period and shall have such authority and
perform such duties as the Board of Directors may prescribe.
Section 7. Compensation
The Board of Directors shall have power to fix the compensation of all
officers of the Corporation. It may authorize any officer upon whom the power of
appointing subordinate officers may have been conferred to fix the compensation
of such subordinate officers.
Section 8. Officers Holding More Than One Office
Two or more offices (except that of President and Vice President) may be
held by the same person, but no officer shall execute, acknowledge or verity any
instrument in more than one capacity.
Section 9. Removal
The Board of Directors shall have power at any regular or special meeting
to remove any officer with or without cause, and such action shall be conclusive
on the officer so removed. The Board may authorize any officer to remove
subordinate officers.
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Section 10. Vacancies
The Board of Directors, at any regular or special meeting, shall have
power to fill a vacancy occurring in any office for the unexpired portion of the
term.
ARTICLE IV. COMMITTEES
Section 1. Executive Committee
The Board may create an executive committee of its own members and define
its duties, subject to the provisions of law. In the absence of any member, the
members thereof present at a meeting may appoint another member of the Board to
act in the place of such absent member.
Section 2. Other Committees
The Board may create such other committees as it deems advisable and
define their duties.
ARTICLE V. STOCK
Section 1. Certificates
Each stockholder shall be entitled to a stock certificate or certificates
certifying the number and kind of shares owned by him. Said certificate shall be
signed by the President or a Vice-President and by the Secretary or an
Assistant Secretary, or the Treasurer or an Assistant Treasurer, and shall
thereafter be sealed with the seal of the Corporation.
Section 2. Transfer of shares
Shares of stock shall be transferable only on the books of the Corporation
by the holder thereof in person or by his duly authorized attorney, and on
surrender of the certificate or certificates duly endorsed.
ARTICLE VI. SUNDRY PROVISIONS
Section 1. Dividends
Subject to the applicable provisions of law and of the Charter, the Board
of Directors may in its discretion declare what, if any, dividends shall be paid
from the surplus or from the net profits of the corporation, or upon any class
of such stock, the date when such dividends shall be payable, and the date for
the determination of holders of record to whom such dividends shall be payable.
Section 2. Negotiable instruments and other evidences of indebtedness
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<PAGE>
All checks, drafts or orders for the payment of money, notes and other
evidences of indebtedness, issued in the name of the corporation, shall be
signed by such officer or officers as may be designated from time to time by
resolution of the Board of Directors. No checks shall be signed in blank.
Section 3. Fiscal year.
The fiscal year of the corporation shall begin on the first day of May and
end on the thirtieth day of April of each and every year.
Section 4. Seal.
The seal of the Corporation shall be circular in form, with the name of
the Corporation and "Maryland" inscribed around the outer edge, and in the
center shall be inscribed the words "Incorporated" and the year of
incorporation.
Section 5. Amendments
Except as hereinafter provided, these By-Laws, or any of them, or any
additional or amended By-Laws, may be altered or repealed and new By-Laws may
be adopted by any regular meeting of the Board of Directors without notice, or
at any special meeting the notice of which shall set forth the term of the
proposed amendment, by the vote of a majority of the entire Board. This section
5 relating to amendments may, however, be amended only at a regular meeting of
stockholders without notice, or at a special meetings of stockholders the notice
of which shall set forth the terms of the proposed amendment, in either case by
the vote of a majority of the votes entitled to be cast in the aggregate by all
stockholders present in person or by proxy at such meeting.
I, Edwin F. Miller, Secretary of Dealers Holding, Inc. do hereby certify
that the foregoing is a true and complete copy of the By-Laws of said
Corporation.
WITNESS my hand and seal of the said Corporation, the 21st day of
December, 1982.
/s/ Edwin F. Miller
-----------------------------------
Edwin F. Miller, Secretary
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<PAGE>
Exhibit 3.64
BY-LAWS
0F
WILLIAMSBURG MOTORS, INC.
ARTICLE I. STOCKHOLDERS
Section 1. Annual Meetings
The annual meeting of the stockholders of the Corporation shall be held at
the principal office of the Corporation in the County of Baltimore, State of
Maryland on the fourth Monday in August of each year at 10:00 a.m. (or at such
other hour and/or place within the County of Baltimore, State of Maryland as may
be fixed by the Board of Directors) for the election of Directors and for the
transaction of general business. If the fourth Monday in August shall be a legal
holiday, the annual meeting of the stockholders shall be held on the first day
following which is not a legal holiday at the same hour. Such annual meeting
shall be general meetings, that is to say, open for the transaction of any
business within the powers of the Corporation without special notice of such
business, except in any case in which special notice is required by statute.
Section 2. Special Meetings
Special meetings of the stockholders of the Corporation may be called at
any time by the President or by a majority of the Board of Directors, either by
vote or in writing, or by a majority of the Executive Committee (if created
pursuant to the By-Laws) either by vote or in writing. Upon request in writing,
delivered to the Secretary or any Assistant Secretary, of the holders of a
majority of all the shares outstanding and entitled to vote, it shall be the
duty of the said Secretary or Assistant Secretary to call forthwith a meeting of
stockholders, at the expense of the Corporation. Such request shall state the
purpose of the meeting and notice thereof shall be given as provided in Section
3 of this Article I. No business other than that stated in the notice of the
meeting shall be transacted at any special meeting of the stockholders, however
called. Special meetings of the stockholders shall be held at the principal
office of the Corporation, whether within or outside the State of Maryland, as
named in Section 1 of this Article I. Special meetings may also be called in
accordance with applicable provisions of law.
Section 3. Notice of Meetings
Not less than ten (10) days and not more than thirty (30) days written or
printed notice of every annual meeting and of every special meeting of the
stockholders (except of any meeting called by the stockholders as provided in
Section 2 of this Article I) shall be given to each holder of stock having
voting rights whose name appears as a holder of record upon the books of the
Corporation at the close of business on the date
<PAGE>
fixed by the Board of Directors for the determination of stockholders entitled
to notice of such meeting in accordance with the provisions of these By-Laws,
and, if no such date shall have been fixed by the Board for such purpose, then
to the holders of record on the date when such notice shall be given. Such
notices of annual or special meetings shall state the place, day and hour of
such meetings and, in the case of special meetings, shall also state the
business proposed to be transacted thereat. Such notice shall be given to each
stockholder by leaving the same with him or at his residence or usual place of
business, or by mailing it postage prepaid and addressed to him at his address
as it appears upon the books of the Corporation. No notice of the time, place or
purpose of any meeting of stockholders, whether prescribed by law, by the
Charter, or by these By-Laws, need be given to any stockholder who attends in
person, or by proxy, or who, in writing executed and filed with the records of
the meeting either before or after the holding thereof, waives such notice. No
notice of any meeting, regular or special, need be given to any stockholder who
is not entitled to vote thereat.
Section 4. Quorum
At any meeting of stockholders, the presence, in person or by proxy, of
the holders of a majority of all shares having voting rights at such meeting
shall be necessary and sufficient to constitute a quorum for the election of
Directors or for the transaction of other business; but in the absence of a
quorum, the stockholders entitled to vote who shall be present in person or by
proxy at any meeting (or adjournment thereof) may, by vote of a majority of
shares so present and entitled to vote, adjoin the meeting from time to time,
but not for a period of over thirty (30) days at any one time, by announcement
at the meeting until a quorum shall attend. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted at the meeting
as originally notified.
Section 5. Proxies
Stockholders may vote either in person or by proxy, but no proxy which is
dated more than eleven months before the meeting at which it is offered shall be
accepted unless such proxy shall on its face name a longer period for which it
is to remain in force. Every proxy shall be in writing subscribed by a
stockholder, or by his duly authorized attorney, and shall be dated; but need
not be sealed, witnessed or acknowledged.
Section 6. Voting
At every meeting of the stockholders, every stockholder of the Corporation
shall be entitled to one vote for each share of voting stock registered in his
name on the books of the Corporation on the date for the determination of voting
rights thereat; provided, however, that no share shall be voted by any
stockholder if any installment duly called thereon shall be
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overdue and unpaid. Upon demand of stockholders holding ten percent (10%) of the
shares present in person or by proxy and entitled to vote, the votes for
Directors, or upon any question before a meeting, shall be by ballot; and except
in cases in which it is by statute, by the Charter, or by these By-Laws
otherwise provided, a majority of the votes cast shall be sufficient to elect
and pass any measure.
Section 7. Inspectors
Two inspectors may be elected by the stockholders at any meeting, and if
so elected, such inspectors shall open and close the polls, shall receive and
take charge of the proxies and ballots and decide all questions as to the
qualifications of voters, the validity of proxies and the acceptance or
rejection of votes.
Section 8. List of Stockholders
Prior to each meeting of the stockholders, the Secretary or an Assistant
Secretary shall prepare a full, true and complete list in alphabetical order, of
all stockholders entitled to vote at such meeting, indicating the number of
shares held by each, and shall be responsible for the production of such list at
the meeting.
Section 9. Order of Business
At all meetings of stockholders, the order of business shall be as far as
applicable and practicable, as follows:
1. Organization;
2. Proof of notice of meeting or of waivers thereof. The Certificate of
the Secretary of the Corporation or the affidavit of any other person who mailed
the notice or caused the same to be mailed, shall be accepted as proof of
service of notice by mail, and the affidavit of the publisher of the notice
shall be accepted as proof in all instances in which the notice of a meeting is
given by advertisement;
3. Submission of an alphabetical list of stockholders entitled to vote
thereat;
4. At an annual meeting, or at a meeting called for that purpose, reading
of unapproved minutes of preceding meetings, and action thereon;
5. Reports;
6. At an annual meeting, the election of Directors;
7. Unfinished business;
8. New business;
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9. Adjournment.
ARTICLE II. BOARD OF DIRECTORS
Section 1. Election and Powers
The business and property of the Corporation, except as otherwise provided
by statute or by the Charter, or by these By-Laws, shall be conducted and
managed by its Board of Directors, which shall consist of not less than three
(3) members no more than seven (7) members provided that the tenure of office of
no Director shall be affected thereby. The number of Directors shall be fixed
from time to time by the vote of a majority of the entire Board of Directors.
The members of the Board of Directors shall be elected at an annual meeting of
stockholders by holders of stock present in person or by proxy at such meeting
and entitled to vote thereat. Each Director elected at any annual meeting shall
hold office until his successor shall have been elected and qualified or until
he shall die or resign, or shall have been removed. The Board of Directors shall
keep minutes of its meetings and a full account of its transactions.
Section 2. First Regular Meeting
After each meeting of stockholders at which a Board of Directors shall
have been elected, the Board of Directors so elected shall meet for the purpose
of organization and the transaction of other business, at such time and place as
may be designated by the stockholders at such meeting; or, in the absence of
such designation, shall meet as soon as practical at the principal business
office of the Corporation.
Section 3. Additional Regular Meetings
Regular meetings of the Board of Directors shall be held at the principal
business office of the Corporation, at such times as may be fixed by general
resolution of the Board, or at such other place as shall be specified by the
Board.
Section 4. Special Meetings
Special meetings of the Board of Directors shall he held by the President,
by a majority of the Directors, or by a majority of the Executive Committee, if
there shall be an Executive Committee, either in writing or by vote.
Section 5. Place of Meetings
Subject to the provisions of Section 2 of this Article II, the Board of
Directors may hold its regular and special meetings at such place or places
within or without the State of Maryland as it may from time to time determine.
In the absence of any such determination, regular and special meetings of the
Board of Directors shall be held at the principal business office of the
Corporation.
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Section 6. Notice of Meetings
Notice of the place, day and hour of every regular and special meeting
shall be given to each Director, either--
1. By notice in writing mailed to him postage prepaid not later than the
second day before the day set for the meeting and addressed to him at his last
known post office address according to the records of the Corporation; or
2. By notice in writing delivered to him personally or left at his
residence or usual place of business not later than the second day before the
day fixed for the meeting; or
3. By telegraph or telephone not later than the day before the day set for
the meeting.
PROVIDED HOWEVER: That, if at any meeting of stockholders at which a Board
of Directors shall be elected, the stockholders shall designate the time and
place of the first regular meeting of the Board, then no notice thereof need be
given to any Director. No notice of the time, place or purpose of any meeting
need be given to any Director who, in writing executed and filed with the
records of the meeting either before or after the holding thereof, waives such
notice. No notice of any adjourned meeting of the Board of Directors need be
given.
Section 7. Quorum
Two (2) members of the Board of Directors shall be necessary and
sufficient to constitute a quorum for the transaction of business at every
meeting of the Board of Directors.
Section 8. Removal
At any meeting of the stockholders called for the purpose, any Director
may, by the vote of a majority of all the shares of stock outstanding and
entitled to vote be removed from office, with or without cause, and another may
be appointed in the place of the person so removed, to serve for the remainder
of his term.
Section 9. Vacancies
If any Director shall die or resign, or if the stockholders shall remove
any Director without appointing another in his place, a majority of the
remaining Directors (although such a majority is less than a quorum) may elect a
successor to hold office for the unexpired portion of the term of the Director
whose place shall so become vacant, and until his successor shall have been duly
chosen and qualified. Vacancies in the Board of Directors created by an increase
in the number of Directors may be filled by the vote of a majority of the entire
Board as constituted prior to such increase, and the Directors so elected by the
Board to fill such vacancies shall hold
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office until the next succeeding annual meeting of the stockholders and
thereafter until their successor shall be elected and qualified.
Section 10. Compensation
Directors, as such, shall not receive any stated compensation for their
services, but by resolution of the Board of Directors a fixed sum and expenses
of attendance, if any, may be allowed for attendance at any regular or special
meeting thereof. Nothing in this Section shall be construed to preclude a
director from serving the corporation in any other capacity and receiving
compensation therefor.
ARTICLE III. OFFICERS
Section 1. Executive Officers
The Executive Officers of the Corporation shall be a President, a
Secretary and a Treasurer and such other officers as the Board may consider
necessary for the proper conduct of the business of the Corporation. The
Executive Officers and other officers shall be elected annually by the Board of
Directors at its first meeting following the annual meeting of stockholders.
Each such officer shall hold office at the pleasure of the Board of Directors.
Section 2. President
In general the President is the Chief Executive Officer of the Corporation
and is responsible to the Board of Directors for the operation and management of
the Corporation's business and for its operating profit. He shall have the
authority and responsibility for the general management and direction of the
Corporation and all of those powers ordinarily exercised by the President of a
corporation.
Section 3. Vice Presidents
There shall be one or more Vice Presidents who shall perform such duties
and shall have such authority and responsibilities as may be assigned to them
from time to time by the President or the Board of Directors.
Section 4. Secretary
The Secretary shall keep the minutes of the meetings of the stockholders,
of the Board of Directors and of the Executive Committee in books provided for
the purpose; he shall see that all notices are duly given in accordance with the
provisions of the By-Laws or as required by law; he shall be the custodian of
the records and of the corporate seal or seals or the Corporation; he shall see
that the corporate seal is affixed to all documents, the execution of which on
behalf of the Corporation under its seal is duly authorized, and when so affixed
may
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attest the same; he may sign, with the President or a Vice President,
certificates of stock of the Corporation; and in general shall perform all the
duties ordinarily incident to the office of a Secretary of a Corporation and
such other duties as may be assigned to him by the Board of Directors or by the
President.
Section 5(a). Treasurer
The Treasurer shall have charge of and be responsible for all funds,
securities, receipts and disbursements of the Corporation, and shall deposit or
cause to be deposited, in the name of the Corporation, all monies or other
valuable effects in such banks, trust companies, or other depositories as shall
from time to time be selected by the Board of Directors; he shall render to the
President and to the Board of Directors, whenever requested, an account of the
financial condition of the Corporation; he may sign, with the President or a
Vice President, certificates of stock of the Corporation; and in general, shall
perform all the duties ordinarily incident to the office of a Treasurer of a
corporation, and such other duties as may be assigned to him by the Board of
Directors or by the President.
Section 6. Assistant Officers
The Board of Directors may elect one or more Assistant Secretaries, and
one or more Assistant Treasurers. Each such Assistant Secretary and Assistant
Treasurer shall hold office for such period and shall have such authority and
perform such duties as the Board of Directors may prescribe.
Section 7. Compensation
The Board of Directors shall have power to fix the compensation of all
officers of the Corporation. It may authorize any officer upon whom the power of
appointing subordinate officers may have been conferred to fix the compensation
of such subordinate officers.
Section 8. Officers Holding More Than One Office
Two or more offices (except that of President and Vice President) may be
held by the same person, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity.
Section 9. Removal
The Board of Directors shall have power at any regular or special meeting
to remove any officer with or without cause, and such action shall be conclusive
on the officer so removed. The Board may authorize any officer to remove
subordinate officers.
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Section 10. Vacancies
The Board of Directors, at any regular or special meeting, shall have
power to fill a vacancy occurring in any office for the unexpired portion of the
term.
ARTICLE IV. COMMITTEES
Section 1. Executive Committee
The Board may create an executive committee of its own members and define
its duties, subject to the provisions of law. In the absence of any member, the
members thereof present at a meeting may appoint another member of the Board to
act in the place of such absent member.
Section 2. Other Committees
The Board may create such other committees as it deems advisable and
define their duties.
ARTICLE V. STOCK
Section 1. Certificates
Each stockholder shall be entitled to a stock certificate or certificates
certifying the number and kind of shares owned by him. Said certificate shall be
signed by the President or a Vice-President and by the Secretary or an Assistant
Secretary, or the Treasurer or an Assistant Treasurer, and shall thereafter be
sealed with the seal of the Corporation.
Section 2. Transfer of shares
Shares of stock shall be transferable only on the books of the Corporation
by the holder thereof in person or by his duly authorized attorney, and on
surrender of the certificate or certificates duly endorsed.
ARTICLE VI. SUNDRY PROVISIONS
Section 1. Dividends
Subject to the applicable provisions at law and of the Charter, the Board
of Directors may in its discretion declare what, if any, dividends shall be paid
from the surplus or from the net profits at the corporation, or upon any class
of such stock, the date when such dividends shall be payable, and the date for
the determination of holders of record to whom such dividends shall be payable.
Section 2. Negotiable instruments and other evidences of indebtedness
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All checks, drafts or orders for the payment of money, notes and other
evidences of indebtedness, issued in the name of the corporation, shall be
signed by such officer or officers as may be designated from time to time by
resolution of the Board of Directors. No checks shall be signed in blank.
Section 3. Fiscal year.
The fiscal year of the corporation shall begin on the first day of May and
end on the thirtieth day of April of each and every year.
Section 4. Seal.
The seal of the Corporation shall be circular in form, with the name of
the Corporation and "Maryland" inscribed around the outer edge, and in the
center shall be inscribed the words "Incorporated" and the year of
incorporation.
Section 5. Amendments
Except as hereinafter provided, these By-Laws, or any of them, or any
additional or amended By-Laws, may be altered or repealed and new By-Laws may be
adopted by any regular meeting of the Board of Directors without notice, or at
any special meeting the notice of which shall set forth the term of the proposed
amendment, by the vote of a majority of the entire Board. This section 5
relating to amendments may, however, be amended only at a regular meeting of
stockholders without notice, or at a special meetings of stockholders the notice
of which shall set forth the terms of the proposed amendment, in either case by
the vote of a majority of the votes entitled to be cast in the aggregate by all
stockholders present in person or by proxy at such meeting.
I, Samuel H. Wright, Secretary of Williamsburg Motors, Inc. do hereby
certify that the foregoing is a true and complete copy of the By-Laws of said
Corporation.
WITNESS my hand and seal of the said Corporation, the 21st day of
December, 1982.
/s/ Samuel H. Wright
----------------------------------
Samuel H. Wright, Secretary
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<PAGE>
BY-LAWS
OF
PHH OMW LEASING, INC.
ARTICLE I. STOCKHOLDERS
Section 1. Annual Meetings
The annual meeting of the stockholders of the Corporation shall be held at
the principal office of the Corporation in the County of Baltimore, State of
Maryland on the fourth Monday in August of each year at 10:00 a.m. (or at such
other hour and/or place within the County of Baltimore, State of Maryland as may
be fixed by the Board of Directors) for the election of Directors and for the
transaction of general business. If the fourth Monday in August shall be a legal
holiday, the annual meeting of the stockholders shall be held on the first day
following which is not a legal holiday at the same hour. Such annual meeting
shall be general meetings, that is to say, open for the transaction of any
business within the powers of the Corporation without special notice of such
business, except in any case in which special notice is required by statute.
Section 2. Special Meetings
Special meetings of the stockholders of the Corporation may be called at
any time by the President or by a majority of the Board of Directors, either by
vote or in writing, or by a majority of the Executive Committee (if created
pursuant to the By-Laws) either by vote or in writing. Upon request in writing,
delivered to the Secretary or any Assistant Secretary, of the holders of a
majority of all the shares outstanding and entitled to vote, it shall be the
duty of the said Secretary or Assistant Secretary to call forthwith a meeting of
stockholders, at the expense of the Corporation. Such request shall state the
purpose of the meeting and notice thereof shall be given as provided in Section
3 of this Article I. No business other than that stated in the notice of the
meeting shall be transacted at any special meeting of the stockholders, however
called. Special meetings of the stockholders shall be held at the principal
office of the Corporation, whether within or outside the State of Maryland, as
named in Section 1 of this Article I. Special meetings may also be called in
accordance with applicable provisions of law.
Section 3. Notice of Meetings
Not less than ten (10) days and not more than sixty (60) days written or
printed notice of every annual meeting and of every special meeting of the
stockholders (except of any meeting called by the stockholders as provided in
Section 2 of this Article I) shall be given to each holder of stock having
voting rights whose name appears as a holder of record upon the books of the
Corporation at the close of business on the date
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fixed by the Board of Directors for the determination of stockholders entitled
to notice of such meeting in accordance with the provisions of these By-Laws,
and, if no such date shall have been fixed by the Board for such purpose, then
to the holders of record on the date when such notice shall be given. Such
notices of annual or special meetings shall state the place, day and hour of
such meetings and, in the case of special meetings, shall also state the
business proposed to be transacted thereat. Such notice shall be given to each
stockholder by leaving the same with him or at his residence or usual place of
business, or by mailing it postage prepaid and addressed to him at his address
as it appears upon the books of the Corporation. No notice of the time, place or
purpose of any meeting of stockholders, whether prescribed by law, by the
Charter, or by these By-Laws, need be given to any stockholder who attends in
person, or by proxy, or who, in writing executed and filed with the records of
the meeting either before or after the holding thereof, waives such notice. No
notice of any meeting, regular or special, need be given to any stockholder who
is not entitled to vote thereat.
Section 4. Quorum
At any meeting of stockholders, the presence, in person or by proxy, of
the holders of a majority of all shares having voting rights at such meeting
shall be necessary and sufficient to constitute a quorum for the election of
Directors or for the transaction of other business; but in the absence of a
quorum, the stockholders entitled to vote who shall be present in person or by
proxy at any meeting (or adjournment thereof) may, by vote of a majority of
shares so present and entitled to vote, adjourn the meeting from time to time,
but not for a period of over thirty (30) days at any one time, by announcement
at the meeting until a quorum shall attend. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted at the meeting
as originally notified.
Section 5. Proxies
Stockholders may vote either in person or by proxy, but no proxy which is
dated more than eleven months before the meeting at which it is offered shall be
accepted unless such proxy shall on its face name a longer period for which it
is to remain in force. Every proxy shall be in writing subscribed by a
stockholder, or by his duly authorized attorney, and shall be dated, but need
not be sealed, witnessed or acknowledged.
Section 6. Voting
At every meeting of the stockholders, every stockholder of the Corporation
shall be entitled to one vote for each share of voting stock registered in his
name on the books of the Corporation on the date for the determination of voting
rights thereat; provided, however, that no share shall be voted by any
stockholder if any installment duly called thereon shall be
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overdue and unpaid. Upon demand of stockholders holding ten percent (10%) of the
shares present in person or by proxy and entitled to vote, the votes for
Directors, or upon any question before a meeting, shall be by ballot; and except
in cases in which it is by statute, by the Charter, or by these By-Laws
otherwise provided, a majority of the votes cast shall be sufficient to elect
and pass any measure.
Section 7. Inspectors
Two inspectors may be elected by the stockholders at any meeting, and if
so elected, such inspectors shall open and close the polls, shall receive and
take charge of the proxies and ballots and decide all questions as to the
qualifications of voters, the validity of proxies and the acceptance or
rejection of votes.
Section 8. List of Stockholders
Prior to each meeting of the stockholders, the Secretary or an Assistant
Secretary shall prepare a full, true and complete list in alphabetical order, of
all stockholders entitled to vote at such meeting, indicating the number of
shares held by each, and shall be responsible for the production of such list at
the meeting.
Section 9. Order of Business
At all meetings of stockholders, the order of business shall be as far as
applicable and practicable; as follows:
1. Organization;
2. Proof of notice of meeting or of waivers thereof. The Certificate of
the Secretary of the Corporation or the affidavit of any other person who mailed
the notice or caused the same to be mailed, shall be accepted as proof of
service of notice by mail, and the affidavit of the publisher of the notice
shall be accepted as proof in all instances in which the notice of a meeting is
given by advertisement;
3. Submission of an alphabetical list of stockholders entitled to vote
thereat;
4. At an annual meeting, or at a meeting called for that purpose, reading
of unapproved minutes of preceding meetings, and action thereon;
5. Reports;
6. At an annual meeting, the election of Directors;
7. Unfinished business;
8. New business;
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9. Adjournment.
ARTICLE II. BOARD OF DIRECTORS
Section 1. Election and Powers
The business and property of the Corporation, except as otherwise provided
by statute or by the Charter, or by these By-Laws, shall be conducted and
managed by its Board of Directors, which shall consist of not less than three
(3) members and no more than seven (7) members provided that the tenure of
office of no Director shall be affected thereby. The number of Directors shall
be fixed from time to time by the vote of a majority of the entire Board of
Directors. The members of the Board of Directors shall be elected at an annual
meeting of stockholders by holders of stock present in person or by proxy at
such meeting and entitled to vote thereat. Each Director elected at any annual
meeting shall hold office until his successor shall have been elected and
qualified or until he shall die or resign, or shall have been removed. The Board
of Directors shall keep minutes of its meetings and a full account of its
transactions.
Section 2. First Regular Meeting
After each meeting of stockholders at which a Board of Directors shall
have been elected, the Board of Directors so elected shall meet for the purpose
of organization and the transaction of other business, at such tine and place as
may be designated by the stockholders at such meeting; or, in the absence of
such designation, shall meet as soon as practicable at the principal business
office of the Corporation.
Section 3. Additional Regular Meetings
Regular meetings of the Board of Directors shall be held at the principal
business office of the Corporation, at such times as may be fixed by general
resolution of the Board, or at such other place as shall be specified by the
Board.
Section 4. Special Meetings
Special meetings of the Board of Directors shall be held by the President,
by a majority of the Directors, or by a majority of the Executive Committee, if
there shall be an Executive Committee, either in writing or by vote.
Section 5. Place of Meetings
Subject to the provisions of Section 2 of this Article II, the Board of
Directors may hold its regular and special meetings at such place or places
within or without the State of Maryland as it may from time to time determine.
In the absence of any such determination, regular and special meetings of the
Board of Directors shall be held at the principal business office of the
Corporation.
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Section 6. Notice of Meetings
Notice of the place, day and hour of every regular and special meeting
shall be given to each Director, either-
1. By notice in writing mailed to him postage prepaid not later than the
second day before the day set for the meeting and addressed to him at his last
known post office address according to the records of the Corporation; or
2. By notice in writing delivered to him personally or left at his
residence or usual place of business not later than the second day before the
day fixed for the meeting; or
3. By telegraph or telephone not later than the day before the day set for
the meeting.
PROVIDED, HOWEVER: That, if at any meeting of stockholders at which a
Board of Directors shall be elected, the stockholders shall designate the time
and place of the first regular meeting of the Board, then no notice thereof need
be given to any Director. No notice of the time, place or purpose of any meeting
need be given to any Director who, in writing executed and filed with the
records of the meeting either before or after the holding thereof, waives such
notice. No notice of any adjourned meeting of the Board of Directors need be
given.
Section 7. Quorum
Two (2) members of the Board of Directors shall be necessary and
sufficient to constitute a quorum for the transaction of business at every
meeting of the Board of Directors.
Section 8. Removal
At any meeting of the stockholders called for the purpose, any Director
may, by the vote of a majority of all the shares of stock outstanding and
entitled to vote, be removed from office, with or without cause, and another may
be appointed in the place of the person so removed, to serve for the remainder
of his term.
Section 9. Vacancies
If any Director shall die or resign, or if the stockholders shall remove
any Director without appointing another in his place, a majority of the
remaining Directors (although such a majority is less than a quorum) may elect a
successor to hold office for the unexpired portion of the term of the Director
whose place shall so become vacant, and until his successor shall have been duly
chosen and qualified. Vacancies in the Board of Directors created by an increase
in the number of Directors may be filled by the vote of a majority of the entire
Board as constituted prior to such increase, and the Directors so elected by the
Board to fill such vacancies shall hold
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office until the next succeeding annual meeting of the stockholders and
thereafter until their successor shall be elected and qualified.
Section 10. Compensation
Directors, as such, shall not receive any stated compensation for their
services, but by resolution of the Board of Directors a fixed sum and expenses
of attendance, if any, may be allowed for attendance at any regular or special
meeting thereof. Nothing in this Section shall be construed to preclude a
director from serving the corporation in any other capacity and receiving
compensation therefor.
ARTICLE III. OFFICERS
Section 1. Executive Officers
The Executive Officers of the Corporation shall be a President, a
Secretary and a Treasurer and such other officers as the Board may consider
necessary for the proper conduct of the business of the Corporation. The
Executive Officers and other officers shall be elected annually by the Board of
Directors at its first meeting following the annual meeting of stockholders.
Each such officer shall hold office at the pleasure of the Board of Directors.
Section 2. President
In general the President is the Chief Executive Officer of the Corporation
and is responsible to the Board of Directors for the operation and management of
the Corporations business and for its operating profit. He shall have the
authority and responsibility for the general management and direction of the
Corporation and all of those powers ordinarily exercised by the President of a
corporation.
Section 3. Vice Presidents
There shall be one or more Vice Presidents who shall perform such duties
and shall have such authority and responsibilities as may be assigned to them
from time to to time by the President or the Board of Directors.
Section 4. Secretary
The Secretary shall keep the minutes of the meetings of the stockholders,
of the Board of Directors and of the Executive Committee in books provided for
the purpose; he shall see that all notices are duly given in accordance with the
provisions of the By-Laws or as required by law; he shall be the custodian of
the records and of the corporate seal or seals or the Corporation; he shall see
that the corporate seal is affixed to all documents, the execution of which on
behalf of the Corporation under its seal is duly authorized, and when so affixed
may
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attest the same; he may sign, with the President or a Vice President,
certificates of stock of the Corporation; and in general shall perform all the
duties ordinarily incident to the office of a Secretary of a Corporation and
such other duties as may be assigned to him by the Board of Directors or by the
President.
Section 5 (a). Treasurer
The Treasurer shall have charge of and be responsible for all funds,
securities, receipts and disbursements of the Corporation, and shall deposit or
cause to be deposited, in the name of the Corporation, all monies or other
valuable effects in such banks, trust companies, or other depositories as shall
from time to time be selected by the Board of Directors; he shall render to the
President and to the Board of Directors, whenever requested, an account of the
financial condition of the Corporation; he may sign, with the President or a
Vice President, certificates of stock of the Corporation; and in general, shall
perform all the duties ordinarily incident to the office of a Treasurer of a
corporation, and such other duties as may be assigned to him by the Board of
Directors or by the President.
Section 6. Assistant Officers
The Board of Directors may elect one or more Assistant Secretaries, and
one or more Assistant Treasurers. Each such Assistant Secretary and Assistant
Treasurer shall hold office for such period and shall have such authority and
perform such duties as the Board of Directors may prescribe.
Section 7. Compensation
The Board of Directors shall have power to fix the compensation of all
officers of the Corporation. It may authorize any officer upon whom the power of
appointing subordinate officers may have been conferred to fix the compensation
of such subordinate officers.
Section 8. Officers Holding More Than One Office
Two or more offices (except that of President and Vice President) may be
held by the same person, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity.
Section 9. Removal
The Board of Directors shall have power at any regular or special meeting
to remove any officer with or without cause, and such action shall be conclusive
on the officer so removed. The Board may authorize any officer to remove
subordinate officers.
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Section 10. Vacancies
The Board of Directors, at any regular or special meeting, shall have
power to fill a vacancy occurring in any office for the unexpired portion of the
term.
ARTICLE IV. COMMITTEES
Section 1. Executive Committee
The Board may create an executive committee of its own members and define
its duties, subject to the provisions of law. In the absence of any member, the
members thereof present at a meeting may appoint another member of the Board to
act in the place of such absent member.
Section 2. Other Committees
The Board may create such other committees as it deems advisable and
define their duties.
ARTICLE V. STOCK
Section 1. Certificates
Each stockholder shall be entitled to a stock certificate or certificates
certifying the number and kind of shares owned by him. Said certificate shall be
signed by the President or a Vice President and by the Secretary or an Assistant
Secretary, or the Treasurer or an Assistant Treasurer, and shall thereafter be
sealed with the seal of the Corporation.
Section 2. Transfer of shares
Shares of stock shall be transferable only on the books of the Corporation
by the holder thereof in person or by his duly authorized attorney, and on
surrender of the certificate or certificates duly endorsed.
ARTICLE VI. SUNDRY PROVISIONS
Section 1. Dividends
Subject to the applicable provisions of law and of the Charter, the Board
of Directors may in its discretion declare what, if any, dividends shall be paid
from the surplus or from the net profits of the Corporation, or upon any class
of such stock, the date when such dividends shall be payable, and the date for
the determination of holders of record to whom such dividends shall be payable.
Section 2. Negotiable instruments and other evidences of indebtedness.
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All checks, drafts or orders for the payment of money, notes and other
evidences of indebtedness, issued in the name of the Corporation, shall be
signed by such officer or officers as may be designated from time to time by
resolution of the Board of Directors. No checks shall be signed in blank.
Section 3. Fiscal year.
The fiscal year of the Corporation shall begin on the first day of May and
end on the thirtieth day of April of each and every year.
Section 4. Seal.
The seal of the Corporation shall be circular in form, with the name of
the Corporation and "Maryland" inscribed around the outer edge, and in the
center shall be inscribed the words "Incorporated" and the year of
incorporation.
Section 5. Amendments
Except as hereinafter provided, these By-Laws, or any of them, or any
additional or amended By-Laws, may be altered or repealed and new By-Laws may be
adopted by any regular meeting of the Board of Directors without notice, or at
any special meeting the notice of which shall set forth the term of the proposed
amendment, by the vote of a majority of the entire Board. This section 5
relating to amendments may, however, be amended only at a regular meeting of
stockholders without notice, or at a special meetings of stockholders the notice
of which shall set forth the terms of the proposed amendment, in either case by
the vote of a majority of the votes entitled to be cast in the aggregate by all
stockholders present in person or by proxy at such meeting.
I, Edwin F. Miller, Secretary of PHH OMW Leasing, Inc. do hereby certify
that the foregoing is a true and complete copy of the By-Laws of said
Corporation.
WITNESS my hand and seal of the said Corporation, the 12th day of October,
1984.
/s/ Edwin E. Miller
--------------------------
Edwin E. Miller, Secretary
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Exhibit 3.66
BY-LAWS
OF
PHH CANADIAN HOLDINGS, INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
Section 2. Annual Meetings. The Annual Meetings of Stockholders for
the election of directors shall be held on such date and at such time as shall
be
<PAGE>
designated from time to time by the Board of Directors. Any other proper
business may be transacted at the Annual Meeting of Stockholders.
Section 3. Special Meetings. Unless otherwise required by law or by
the certificate of incorporation of the Corporation, as amended and restated
from time to time (the "Certificate of Incorporation"), Special Meetings of
Stockholders, for any purpose or purposes, may be called by either (i) the
Chairman, if there be one, or (ii) the President, (iii) any Vice President, if
there be one, (iv) the Secretary or (v) any Assistant Secretary, if there be
one, and shall be called by any such officer at the request in writing of (i)
the Board of Directors, (ii) a committee of the Board of Directors that has been
duly designated by the Board of Directors and whose powers and authority include
the power to call such meetings or (iii) stockholders owning a majority of the
capital stock of the Corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting. At a
Special Meeting of Stockholders, only such business shall be conducted as shall
be specified in the notice of meeting (or any supplement thereto).
Section 4. Notice. Whenever stockholders are required or permitted
to take any action at a meeting, a written notice of the meeting shall be given
which shall state the place, date and hour of the meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. Unless
otherwise required by law, the written notice of any meeting shall be given not
less than ten nor
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more than sixty days before the date of the meeting to each stockholder entitled
to vote at such meeting.
Section 5. Adjournments. Any meeting of the stockholders may be
adjourned from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting, the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 6. Quorum. Unless otherwise required by law or the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. A quorum, once established, shall
not be broken by the withdrawal of enough votes to leave less than a quorum. If,
however, such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn
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the meeting from time to time, in the manner provided in Section 5, until a
quorum shall be present or represented.
Section 7. Voting. Unless otherwise required by law, the Certificate
of Incorporation or these By-laws, any question brought before any meeting of
stockholders, other than the election of directors, shall be decided by the vote
of the holders of a majority of the total number of votes of the capital stock
represented and entitled to vote thereat, voting as a single class. Unless
otherwise provided in the Certificate of Incorporation, and subject to Section 5
of Article V hereof, each stockholder represented at a meeting of stockholders
shall be entitled to cast one vote for each share of the capital stock entitled
to vote thereat held by such stockholder. Such votes may be cast in person or by
proxy but no proxy shall be voted on or after three years from its date, unless
such proxy provides for a longer period. The Board of Directors, in its
discretion, or the officer of the Corporation presiding at a meeting of
stockholders, in such officer's discretion, may require that any votes cast at
such meeting shall be cast by written ballot.
Section 8. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation, may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be
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signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the Corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty days of the
earliest dated consent delivered in the manner required by this Section 8 to the
Corporation, written consents signed by a sufficient number of holders to take
action are delivered to the Corporation by delivery to its registered office in
the state of Delaware, its principal place of business, or an officer or agent
of the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing and who, if the action
had been taken at a meeting, would have been entitled to notice of the meeting
if the record date for such meeting had
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been the date that written consents signed by a sufficient number of holders to
take the action were delivered to the Corporation as provided above in this
section.
Section 9. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not so specified,
at the place where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder of the Corporation who is present.
Section 10. Stock Ledger. The stock ledger of the Corporation shall
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 9 of this Article II or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 11. Conduct of Meetings. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the conduct
of
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the meeting of the stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of the stockholders shall have the right
and authority to prescribe such rules, regulations and procedures and to do all
such acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda
or order of business for the meeting; (ii) the determination of when the polls
shall open and close for any given matter to be voted on at the meeting; (iii)
rules and procedures for maintaining order at the meeting and the safety of
those present; (iv) limitations on attendance at or participation in the meeting
to stockholders of record of the corporation, their duly authorized and
constituted proxies or such other persons as the chairman of the meeting shall
determine; (v) restrictions on entry to the meeting after the time fixed for the
commencement thereof; and (vi) limitations on the time allotted to questions or
comments by participants.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The Board of Directors
shall consist of not less than one nor more than fifteen members, the exact
number of
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which shall initially be fixed by the Incorporator and thereafter from time to
time by the Board of Directors. Except as provided in Section 2 of this Article
III, directors shall be elected by a plurality of the votes cast at the Annual
Meetings of Stockholders and each director so elected shall hold office until
the next Annual Meeting of Stockholders and until such director's successor is
duly elected and qualified, or until such director's earlier death, resignation
or removal. Any director may resign at any time upon written notice to the
Corporation. Directors need not be stockholders.
Section 2. Vacancies. Unless otherwise required by law or the
Certificate of Incorporation, vacancies arising through death, resignation,
removal, an increase in the number of directors or otherwise may be filled only
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
qualified, or until their earlier death, resignation or removal.
Section 3. Duties and Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of Directors
which may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Certificate of Incorporation or
by these By-Laws required to be exercised or done by the stockholders.
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Section 4. Meetings. The Board of Directors may hold meetings, both
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time and
at such place as may from time to time be determined by the Board of Directors.
Special meetings of the Board of Directors may be called by the Chairman, if
there be one, the President, or by any director. Notice thereof stating the
place, date and hour of the meeting shall be given to each director either by
mail not less than forty-eight (48) hours before the date of the meeting, by
telephone or telegram on twenty-four (24) hours' notice, or on such shorter
notice as the person or persons calling such meeting may deem necessary or
appropriate in the circumstances.
Section 5. Quorum. Except as otherwise required by law or the
Certificate of Incorporation, at all meetings of the Board of Directors, a
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting of the time and
place of the adjourned meeting, until a quorum shall be present.
Section 6. Actions by Written Consent. Unless otherwise provided in
the Certificate of Incorporation, or these By-Laws, any action required or
permitted
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to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 7. Meetings by Means of Conference Telephone. Unless
otherwise provided in the Certificate of Incorporation, members of the Board of
Directors of the Corporation, or any committee thereof, may participate in a
meeting of the Board of Directors or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section 7 shall constitute presence in person at such meeting.
Section 8. Committees. The Board of Directors may designate one or
more committees, each committee to consist of one or more of the directors of
the Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously
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appoint another member of the Board of Directors to act at the meeting in the
place of any absent or disqualified member. Any committee, to the extent
permitted by law and provided in the resolution establishing such committee,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it. Each committee shall keep regular minutes and report to the Board of
Directors when required.
Section 9. Compensation. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director, payable in cash or securities. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
Section 10. Interested Directors. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest, shall be void or voidable solely for this
reason, or solely because the director or officer is present at or participates
in the meeting of the Board of
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Directors or committee thereof which authorizes the contract or transaction, or
solely because the director or officer's vote is counted for such purpose if (i)
the material facts as to the director or officer's relationship or interest and
as to the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (ii) the material facts as to the director or
officer's relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified by the Board of Directors,
a committee thereof or the stockholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a President, a Secretary and a Treasurer.
The
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Board of Directors, in its discretion, also may choose a Chairman of the Board
of Directors (who must be a director) and one or more Vice Presidents, Assistant
Secretaries, Assistant Treasurers and other officers. Any number of offices may
be held by the same person, unless otherwise prohibited by law or the
Certificate of Incorporation. The officers of the Corporation need not be
stockholders of the Corporation nor, except in the case of the Chairman of the
Board of Directors, need such officers be directors of the Corporation.
Section 2. Election. The Board of Directors, at its first meeting
held after each Annual Meeting of Stockholders (or action by written consent of
stockholders in lieu of the Annual Meeting of Stockholders), shall elect the
officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors; and all officers of the Corporation
shall hold office until their successors are chosen and qualified, or until
their earlier death, resignation or removal. Any officer elected by the Board of
Directors may be removed at any time by the affirmative vote of the Board of
Directors. Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
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relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice President or any
other officer authorized to do so by the Board of Directors and any such officer
may, in the name of and on behalf of the Corporation, take all such action as
any such officer may deem advisable to vote in person or by proxy at any meeting
of security holders of any corporation in which the Corporation may own
securities and at any such meeting shall possess and may exercise any and all
rights and power incident to the ownership of such securities and which, as the
owner thereof, the Corporation might have exercised and possessed if present.
The Board of Directors may, by resolution, from time to time confer like powers
upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of the
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. The Chairman of the Board of
Directors shall be the Chief Executive Officer of the Corporation, unless the
Board of Directors designates the President as the Chief Executive Officer, and,
except where by law the signature of the President is required, the Chairman of
the Board of Directors shall possess the same power as the President to sign all
contracts, certificates and other instruments of the Corporation which may be
authorized by the Board of Directors. During the absence or disability of the
President, the Chairman of the Board of Directors shall exercise all the powers
and discharge all the duties of the President. The Chairman
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of the Board of Directors shall also perform such other duties and may exercise
such other powers as may from time to time be assigned by these By-Laws or by
the Board of Directors.
Section 5. President. The President shall, subject to the control of
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. The President shall execute all bonds, mortgages, contracts and other
instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these By-Laws, the Board of Directors or
the President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. If there be no Chairman of the
Board of Directors, or if the Board of Directors shall otherwise designate, the
President shall be the Chief Executive Officer of the Corporation. The President
shall also perform such other duties and may exercise such other powers as may
from time to time be assigned to such officer by these By-Laws or by the Board
of Directors.
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Section 6. Vice Presidents. At the request of the President or in
the President's absence or in the event of the President's inability or refusal
to act (and if there be no Chairman of the Board of Directors), the Vice
President, or the Vice Presidents if there is more than one (in the order
designated by the Board of Directors), shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President. Each Vice President shall perform such
other duties and have such other powers as the Board of Directors from time to
time may prescribe. If there be no Chairman of the Board of Directors and no
Vice President, the Board of Directors shall designate the officer of the
Corporation who, in the absence of the President or in the event of the
inability or refusal of the President to act, shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
Section 7. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for committees of the Board of
Directors when required. The Secretary shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors, the Chairman of the Board of
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Directors or the President, under whose supervision the Secretary shall be. If
the Secretary shall be unable or shall refuse to cause to be given notice of all
meetings of the stockholders and special meetings of the Board of Directors, and
if there be no Assistant Secretary, then either the Board of Directors or the
President may choose another officer to cause such notice to be given. The
Secretary shall have custody of the seal of the Corporation and the Secretary or
any Assistant Secretary, if there be one, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by the
signature of the Secretary or by the signature of any such Assistant Secretary.
The Board of Directors may give general authority to any other officer to affix
the seal of the Corporation and to attest to the affixing by such officer's
signature. The Secretary shall see that all books, reports, statements,
certificates and other documents and records required by law to be kept or filed
are properly kept or filed, as the case may be.
Section 8. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the
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President and the Board of Directors, at its regular meetings, or when the Board
of Directors so requires, an account of all transactions as Treasurer and of the
financial condition of the Corporation. If required by the Board of Directors,
the Treasurer shall give the Corporation a bond in such sum and with such surety
or sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of the office of the Treasurer and for the restoration
to the Corporation, in case of the Treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in the Treasurer's possession or under the Treasurer's control
belonging to the Corporation.
Section 9. Assistant Secretaries. Assistant Secretaries, if there be
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Secretary, and in the absence of the Secretary or in the
event of the Secretary's disability or refusal to act, shall perform the duties
of the Secretary, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Secretary.
Section 10. Assistant Treasurers. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of
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the Treasurer's disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of the office of Assistant Treasurer and
for the restoration to the Corporation, in case of the Assistant Treasurer's
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the Assistant Treasurer's
possession or under the Assistant Treasurer's control belonging to the
Corporation.
Section 11. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i)
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by the Chairman of the Board of Directors, the President or a Vice President and
(ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares owned by
such stockholder in the Corporation.
Section 2. Signatures. Any or all of the signatures on a certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
Section 3. Lost Certificates. The Board of Directors may direct a
new certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen or destroyed. When authorizing such issue of a new certificate,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or the owner's legal representative, to advertise the same in such
manner as the Board of Directors shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the
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certificate alleged to have been lost, stolen or destroyed or the issuance of
such new certificate.
Section 4. Transfers. Stock of the Corporation shall be transferable
in the manner prescribed by law and in these By-Laws. Transfers of stock shall
be made on the books of the Corporation only by the person named in the
certificate or by such person's attorney lawfully constituted in writing and
upon the surrender of the certificate therefor, which shall be cancelled before
a new certificate shall be issued. No transfer of stock shall be valid as
against the Corporation for any purpose until it shall have been entered in the
stock records of the Corporation by an entry showing from and to whom
transferred.
Section 5. Record Date.
(a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
date is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business
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on the day next preceding the day on which the meeting is held. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; providing, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in this State, its principal
place of business, or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of stockholders are recorded. Delivery
made to a corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
law, the
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record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolutions taking such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
Section 6. Record Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise required by
law.
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ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Written notice may also
be given personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required by
law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed, by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto. Attendance of
a person at a meeting, present in person or represented by proxy, shall
constitute a waiver of notice of such meeting, except where the person attends
the meeting for the express purpose of objecting at the beginning of the meeting
to the transaction of any business because the meeting is not lawfully called or
convened.
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ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the requirements of the DGCL and the provisions of the
Certificate of Incorporation, if any, may be declared by the Board of Directors
at any regular or special meeting of the Board of Directors (or any action by
written consent in lieu thereof in accordance with Section 6 of Article III
hereof), and may be paid in cash, in property, or in shares of the Corporation's
capital stock. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
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Section 4. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings other
than Those by or in the Right of the Corporation. Subject to Section 3 of this
Article VIII, the Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director or officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
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to the best interests of the Corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe such person's conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which such person reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or
in the Right of the Corporation. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that such person is or was a director or officer of the Corporation, or is
or was a director or officer of the Corporation serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the
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Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because such person has met the applicable standard of conduct set forth in
Section 1 or Section 2 of this Article VIII, as the case may be. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (i) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (ii) by a committee of such directors designated by a
majority vote of such directors, even though less than a quorum, or (iii) if
there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion or (iv) by the stockholders. Such
determination shall be made, with respect to former directors and officers, by
any person or persons having the authority to act on the
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matter on behalf of the Corporation. To the extent, however, that a present or
former director or officer of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding described above, or in
defense of any claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith, without the necessity of authorization in
the specific case.
Section 4. Good Faith Defined. For purposes of any determination
under Section 3 of this Article VIII, a person shall be deemed to have acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe such
person's conduct was unlawful, if such person's action is based on the records
or books of account of the Corporation or another enterprise, or on information
supplied to such person by the officers of the Corporation or another enterprise
in the course of their duties, or on the advice of legal counsel for the
Corporation or another enterprise or on information or records given or reports
made to the Corporation or another enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable care by
the Corporation or another enterprise. The term "another enterprise" as used in
this Section 4 shall mean any other corporation or any partnership, joint
venture, trust, employee benefit plan or other enterprise of which such person
is or was
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serving at the request of the Corporation as a director, officer, employee or
agent. The provisions of this Section 4 shall not be deemed to be exclusive or
to limit in any way the circumstances in which a person may be deemed to have
met the applicable standard of conduct set forth in Section 1 or 2 of this
Article VIII, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to the Court of Chancery in the State of Delaware for
indemnification to the extent otherwise permissible under Sections 1 and 2 of
this Article VIII. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director or officer is
proper in the circumstances because such person has met the applicable standards
of conduct set forth in Section 1 or 2 of this Article VIII, as the case may be.
Neither a contrary determination in the specific case under Section 3 of this
Article VIII nor the absence of any determination thereunder shall be a defense
to such application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If successful, in
whole or
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in part, the director or officer seeking indemnification shall also be entitled
to be paid the expense of prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses incurred by a
director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not entitled to
be indemnified by the Corporation as authorized in this Article VIII.
Section 7. Nonexclusivity of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by or granted
pursuant to this Article VIII shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under the Certificate of Incorporation, any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any person who is not specified in
Section 1 or 2 of this Article VIII but whom the
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Corporation has the power or obligation to indemnify under the provisions of the
General Corporation Law of the State of Delaware, or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against any liability asserted against such person and incurred
by such person in any such capacity, or arising out of such person's status as
such, whether or not the Corporation would have the power or the obligation to
indemnify such person against such liability under the provisions of this
Article VIII.
Section 9. Certain Definitions. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand in
the
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same position under the provisions of this Article VIII with respect to the
resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had continued. For
purposes of this Article VIII, references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner such person reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article VIII.
Section 10. Survival of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VIII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
Section 11. Limitation on Indemnification. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce
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rights to indemnification (which shall be governed by Section 5 hereof), the
Corporation shall not be obligated to indemnify any director or officer in
connection with a proceeding (or part thereof) initiated by such person unless
such proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.
Section 12. Indemnification of Employees and Agents. The Corporation
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
Section 1. Amendments. These By-Laws may be altered, amended or
repealed, in whole or in part, or new By-Laws may be adopted by the stockholders
or by the Board of Directors, provided, however, that notice of such alteration,
amendment, repeal or adoption of new By-Laws be contained in the notice of such
meeting of stockholders or Board of Directors as the case may be. All such
amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.
34
<PAGE>
Section 2. Entire Board of Directors. As used in this Article IX and
in these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no vacancies.
***
Adopted as of: _____________________
Last Amended as of: ________________
<PAGE>
Exhibit 3.67
BY-LAWS
OF
PHH DEUTSCHLAND, INC.
ARTICLE I. STOCKHOLDERS
Section 1. Annual Meetings
The annual meeting of the stockholders shall be held on any day duly
designated by the Board of Directors during the period commencing with the third
Monday in August and ending thirty days thereafter, if not a legal holiday and
if a legal holiday then the next succeeding day not a legal holiday at the hour
and place designated by the Board of Directors. Such annual meetings shall be
general meetings open for the transaction of any business within the powers of
the Corporation without special notice of such business.
Section 2. Special Meetings
Special meetings of the stockholders of the Corporation may be called at
any time by the President or by a majority of the Board of Directors, either by
vote or in writing, or by a majority of the Executive Committee (if created
pursuant to the By-Laws) either by vote or in writing. Upon request in writing,
delivered to the Secretary or any Assistant Secretary, of the holders of a
majority of all the shares outstanding and entitled to vote, it shall be the
duty of the said Secretary or Assistant Secretary to call forthwith a meeting of
stockholders, at the expense of the Corporation. Such request shall state the
purpose of the meeting and notice thereof shall be given as provided in Section
3 of this Article I. No business other than that stated in the notice of the
meeting shall be transacted at any special meeting of the stockholders, however
called. Special meetings of the stockholders shall be held at the principal
office of the Corporation, whether within or outside the State of Maryland, as
named in Section 1 of this Article I. Special meetings may also be called in
accordance with applicable provisions of law.
Section 3. Notice of Meetings
Not less than ten (10) days and not more than sixty (60) days written or
printed notice of every annual meeting and of every special meeting of the
stockholders (except of any meeting called by the stockholders as provided in
Section 2 of this Article I) shall be given to each holder of stock having
voting rights whose name appears as a holder of record upon the books of the
Corporation at the close of business on the date fixed by the Board of Directors
for the determination of stockholders entitled to notice of such meeting in
accordance with the provisions of these By-Laws, and, if no such date shall have
been fixed by the Board for such purpose, then to the holders of
<PAGE>
record on the date when such notice shall be shall be given. Such notices of
annual or special meetings shall state the place, day and hour of such meetings
and, in the case of special meetings, shall also state the business proposed to
be transacted thereat. Such notice shall be given to each stockholder by leaving
the same with him or at his residence or usual place of business, or by mailing
it postage prepaid and addressed to him at his address as it appears upon the
books of the Corporation. No notice of the time, place or purpose of any meeting
of stockholders, whether prescribed by law, by the Charter, or by these By-Laws,
need be given to any stockholder who attends in person, or by proxy, or who, in
writing executed and filed with the records of the meeting either before or
after the holding thereof, waives such notice. No notice of any meeting, regular
or special, need be given any stockholder who is not entitled to vote thereat.
Section 4. Quorum
At any meeting of stockholders, the presence, in person or by proxy, of
the holders of a majority of all shares having voting rights at such meeting
shall be necessary and sufficient to constitute a quorum for the election of
Directors or for the transaction of other business; but in the absence of a
quorum, the stockholders entitled to vote who shall be present in person or by
proxy at any meeting (or adjournment thereof) may, by vote of a majority of
shares so present and entitled to vote, adjourn the meeting from time to time,
but not for a period of over thirty (30) days at any one time, by announcement
at the meeting until a quorum shall attend. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted at the meeting
as originally notified.
Section 5. Proxies
Stockholders may vote either in person or by proxy, but no proxy which is
dated more than eleven months before the meeting at which it is offered shall be
accepted unless such proxy shall on its face name a longer period for which it
is to remain in force. Every proxy shall be in writing subscribed by a
stockholder, or by his duly authorized attorney, and shall be dated; but need
not be sealed, witnessed or acknowledged.
Section 6. Voting
At every meeting of the stockholders, every stockholder of the Corporation
shall be entitled to one vote for each share of voting stock registered in his
name on the books of the Corporation on the date for the determination of voting
rights thereat; provided, however, that no share shall be voted by any
stockholder if any installment duly called thereon shall be overdue and unpaid.
Upon demand of stockholders holding ten percent (10%) of the shares present in
person or by proxy and entitled to vote, the votes of Directors, or upon any
question
<PAGE>
before a meeting, shall be by ballot; and except in cases in which it is by
statute by the Charter, or by these By-Laws otherwise provided, a majority of
the votes cast shall be sufficient to elect and pass any measure.
Section 7. Inspectors
Two inspectors may be elected by the stockholders at any meeting, and if
so elected, such inspectors shall open and close the polls, shall receive and
take charge of the proxies and ballots and decide all questions as to the
qualifications of voters, the validity of proxies and the acceptance or
rejection of votes.
Section 8. List of Stockholders
Prior to each meeting of the stockholders, the Secretary or an Assistant
Secretary shall prepare a full, true and complete list in alphabetical order, of
all stockholders entitled to vote at such meeting, indicating the number of
shares held by each, and shall be responsible for the production of such list at
the meeting.
Section 9. Order of Business
At all meetings of stockholders, the order of business shall be as far as
applicable and practicable, as follows:
1. Organization;
2. Proof of notice of meeting or of waivers thereof. The Certificate of
the Secretary of the Corporation or the affidavit of any other person who mailed
the notice or caused the same to be mailed, shall be accepted as proof of
service of notice by mail, and the affidavit of the publisher of the notice
shall be accepted as proof in all instances in which the notice of a meeting is
given by advertisement;
3. Submission of an alphabetical list of stockholders entitled to vote
thereat;
4. At an annual meeting, or at a meeting called for that purpose, reading
of unapproved minutes of preceding meetings, and action thereon;
5. Reports;
6. At an annual meeting, the election of Directors;
7. Unfinished business;
8. New business;
9. Adjournment.
<PAGE>
ARTICLE II. BOARD OF DIRECTORS
Section 1. Election and Powers
The business and property of the Corporation, except as otherwise provided
by statute or by the Charter, or by these By-Laws, shall be conducted and
managed by its Board of Directors, which shall consist of not less than three
(3) members no more than seven (7) members provided that the tenure of office of
no Director shall be affected thereby. The number of Directors shall be fixed
from time to time by the vote of a majority of the entire Board of Directors.
The members of the Board of Directors shall be elected at an annual meeting of
stockholders by holders of stock present in person or by proxy at such meeting
and entitled to vote thereat. Each Director elected at any annual meeting shall
hold office until his successor shall have been elected and qualified or until
he shall die or resign, or shall have been removed. The Borad of Directors shall
keep minutes of its meetings and a full account of its transactions.
Section 2. First Regular Meeting
After each meeting of stockholders at which a Board of Directors shall
have been elected, the Board of Directors so elected shall meet for the purpose
of organization and the transaction of other business, at such time and place as
may be designated by the stockholders at such meeting; or, in the absence of
such designation, shall meet as soon as practical at the principal business
office of the Corporation.
Section 3. Additional Regular Meetings
Regular meetings of the Board of Directors shall be held at the principal
business office of the Corporation, at such times as may be fixed by general
resolution of the Board, or at such other place as shall be specified by the
Board.
Section 4. Special Meetings
Special meetings of the Board of Directors shall be held by the President,
by a majority of the Directors, or by a majority of the Executive Committee, if
there shall be an Executive Committee, either in writing or by vote.
Section 5. Place of Meetings
Subject to the provisions of Section 2 of this Article II, the Board of
Directors may hold its regular and special meetings at such place or places
within or without the State of Maryland as it may from time to time determine.
In the absence of any such determination, regular and special meetings of the
Board of Directors shall be held at the principal business office of the
Corporation.
<PAGE>
Section 6. Notice of Meetings
Notice of the place, day and hour of every regular and special meeting
shall be given to each Director, either:
1. By notice in writing mailed to him postage prepaid not later than the
second day before the day set for the meeting and addressed to him at his last
known post office address according to the records of the Corporation;
2. By notice in writing delivered to him personally or left at his
residence or usual place of business not later than the second day before the
day fixed for the meeting; or
3. By telegraph or telephone not later than the day before the day set for
the meeting.
PROVIDED, HOWEVER: That, if at any meeting of stockholders at which a
Board of Directors shall be elected, the stockholders shall designate the time
and place of the first regular meeting of the Board, then no notice thereof need
be given to any Director. No notice of the time, place or purpose of any meeting
need be given to any Director who, in writing executed and filed with the
records of the meeting either before or after the holding thereof, waives such
notice. No notice of any adjourned meeting of the Board of Directors need be
given.
Section 7. Quorum
Two (2) members of the Board of Directors shall be necessary and
sufficient to constitute a quorum for the transaction of business at every
meeting of the Board of Directors.
Section 8. Removal
At any meeting of the stockholders called for the purpose, any Director
may, by the vote of a majority of all the shares of stock outstanding and
entitled to vote, be removed from office for cause only, and another may be
appointed in the place of the person so removed, to serve for the remainder of
his term.
Section 9. Vacancies
If any Director shall die or resign, or if the stockholders shall remove
any Director without appointing another in his place, a majority of the
remaining Directors (although such a majority is less than a quorum) may elect a
successor to hold office for the unexpired portion of the term of the Director
whose place shall so become vacant, and until his successor shall have been duly
chosen and qualified.
<PAGE>
Board of Directors created by an increase in the number of Directors may be
filled by the vote of a majority of the entire Board as constituted prior to
such increase, and the Directors so elected by the Board to fill such vacancies
shall hold office until the next succeeding annual meeting of the stockholders
and thereafter until their successor shall be elected and qualified.
Section 10. Compensation
Directors, as such, shall not receive any stated compensation for their
services, but by resolution of the Board of Directors a fixed sum and expenses
of attendance, if any, may be allowed for attendance at any regular or special
meeting thereof. Nothing in this Section shall be construed to preclude a
director from serving the corporation in any other capacity and receiving
compensation therefor.
ARTICLE III. OFFICERS
Section 1. Executive Officers
The Executive Officers of the Corporation shall be a Chairman of the Board
of Directors, a President, one or more Executive Vice Presidents, Senior Vice
Presidents and/or Vice Presidents, a Secretary and a Treasurer, and such other
officers as the Board from time to time considers necessary for the proper
conduct of the business of the Corporation. The Executive Officers and other
officers shall be elected annually by the Board of Directors at its first
meeting following the annual meeting of stockholders. Each such officer shall
serve at the pleasure of the Board of Directors.
Section 2(a). Chairman of the Board of Directors
In general the Chairman of the Board of Directors shall be the Chief
Executive Officer of the Corporation. He shall have general management and
direction of the business of the Corporation and all powers ordinarily exercised
by the Chairman of the Board of Directors of a corporation. Specifically, he
shall:
1. preside at the meetings of the stockholders and directors, prepare the
agenda therefor, and direct the Secretary in scheduling meetings of the Board of
Directors and stockholders and in recording the proceedings of such meetings;
2. be a member of and Chairman of the Executive Committee and an ex
officio member of all or any corporate committees;
3. develop and direct his supporting organization and establish the duties
and responsibilities for positions reporting directly to him, including the
President, select
<PAGE>
major executives and officers of the Corporation and determine their
compensation, subject to the approval of the Board of Directors, and interpret
the Corporation's objectives and policies to them in terms of their duties and
responsibilities;
4. establish effective means of control which will permit appropriate
delegation of responsibility and authority of executives;
5. be responsible for the formulation and direction of all major Corporate
policies and the administration of such policies, including those which are
defined and established by the Board of Directors;
6. institute the immediate and long range planning schedules for the
Corporation's affairs, based on continued reevaluation of established objectives
and results;
7. act as the final source of authority in matters pertaining to major
management decisions, and coordinate the activities of the various divisions and
departments of the Corporation and its subsidiaries;
8. have the power to sign and execute all authorized certificates,
contracts or other instruments of the Corporation;
9. execute stockholders' consents, attend meetings and act and vote in
person or by proxy at any meeting of stockholders of companies in which the
Corporation may own stock;
10. inform the directors at each meeting of the Board of Directors of the
progress of the Corporation in all phases of its activities and operations;
11. prepare a full and true statement of the affairs of the Corporation,
including a balance sheet and operation statement, which shall be submitted at
the annual meeting of the stockholders and filed within twenty days thereafter
at the principal office of the Corporation in the State of Maryland;
12. in the event of the absence or in the event of the death, inability or
refusal to act of the President, assume the duties and responsibilities of
President.
Section 2(b). President
In general, the President shall be the Chief Operating Officer of the
Corporation and shall be responsible to the Chairman and the Board of Directors
for the operation and management of the business and for its operating profit.
He shall also advise with the Chairman on matters of general policy and perform
such other duties as may be assigned to him from time to time by the Chairman or
the Board of Directors.
<PAGE>
Specifically, he shall:
1. be a member of the Board of Directors;
2. carry out assignments specified by the Board of Directors or the
Chairman;
3. assist the Chairman in all matters involving stockholders and in
establishing and maintaining friendly relations with clients, lessees, lending
and banking institutions, government officials and the general public in
connection with the Corporation's business;
4. advise with the Chairman, other members of the Board of Directors and
any committees of the Board on matters of general policy and in the formation of
long range programs;
5. execute stockholders' consent, attend meetings and act and vote, in
person or by proxy, at any meeting of stockholders of companies in which the
Corporation may own stock;
6. have the power to sign and execute all authorized certificates,
contracts or other instruments of the Corporation;
7. in the event of the absence or in the event of the death, inability or
refusal to act of the Chairman, perform the duties of Chairman.
Section 3. Vice Presidents
There shall be one or more Executive Vice Presidents, Senior Vice
Presidents and/or Vice Presidents who shall perform such duties and shall have
such authority and responsibilities as may be assigned to them from time to time
by the Chairman of the Board of Directors.
Section 4. Secretary
The Secretary shall keep the minutes of the meetings of the stockholders,
of the Board of Directors and of the Executive Committee in books provided for
the purpose; he shall see that all notices are duly given in accordance with the
provisions of the By-Laws or as required by law; he shall be the custodian of
the records and of the corporate seal or seals of the Corporation; he shall see
that the corporate seal is affixed to all documents, the execution of which on
behalf of the Corporation under its seal is duly authorized, and when so affixed
may attest the same; he may sign, with the Chairman of the Board, President or a
Vice President, certificates of stock of the Corporation; and in general shall
perform all the duties ordinarily incident to the office of a Secretary of a
Corporation and such other duties as may be assigned to him by
<PAGE>
the Chairman of the Board, the General Counsel, or the Board of Directors.
Section 5(a). Treasurer
The Treasurer shall have charge of and be responsible for all funds,
securities, receipts and disbursements of the Corporation, and shall deposit or
cause to be deposited, in the name of the Corporation, all monies or other
valuable effects in such banks, trust companies, or other depositories as shall
from time to time be selected by the Board of Directors; he shall render to the
Chairman of the Board, and to the Board of Directors, whenever requested, an
account of the financial position of the Corporation; he may sign, with the
Chairman of the Board, President or a Vice president, certificates of stock of
the Corporation; and in general, shall perform all the duties ordinarily
incident to the office of a Treasurer of a corporation, and such other duties as
may be assigned to him by the Chairman of the Board, the Chief Financial
Officer, or the Board of Directors.
Section 5(b). Controller
The Controller is the Chief Accounting Officer of the Corporation. He
shall have charge of, and be responsible for, all accounting records and the
preparation of reports covering the operating results and financial condition of
the Corporation, and he shall evaluate such reports; and, in general shall
perform all the duties ordinarily incident to the office of a controller of a
corporation, and such other duties as may be assigned him by the Chairman of the
Board, the Board of Directors, or the Chief Financial Officer.
Section 6. Assistant Officers
The Board of Directors may elect one or more Assistant Secretaries,
Assistant Treasurers, and Assistant Controllers. Each such Assistant Officer
shall hold office for such period and shall have such authority and perform such
duties as the Board of Directors may prescribe.
Section 7. Compensation
The Board of Directors shall have power to fix the compensation of all
officers of the Corporation. It may authorize any officer upon whom the power of
appointing subordinate officers may have been conferred to fix the compensation
of such subordinate officers.
<PAGE>
Section 8. Officers Holding More Than One Office
Two or more officers (except that of President and Vice President) may be
held by the same person, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity.
Section 9. Removal
The Board of Directors shall have power at any regular or special meeting
to remove any officer with or without cause, and such action shall be conclusive
on the officer so removed. The Board may authorize any officer to remove
subordinate officers.
Section 10. Vacancies
The Board of Directors, at any regular or special meeting, shall have
power to fill a vacancy occurring in any office for the unexpired portion of the
term.
ARTICLE IV. DIVISIONAL TITLES
Section 1. Conferring Divisional Titles
The Board of Directors may from time to time confer upon any employee of a
division of the Corporation the title of President, Vice President, Treasurer or
Secretary of such division or any other title or titles deemed appropriate, or
may authorize the Chairman of the Board or the President to do so. Any such
titles so conferred may be discontinued and withdrawn at any time by the Board
of Directors, or by the Chairman of the Board or the President if so authorized
by the Board of Directors. Any employee of a division designated by such a
divisional title shall have the powers and duties with respect to such division
as shall be prescribed by the Board of Directors or the Chairman of the Board or
the President.
Section 2. Effect of Divisional Titles
The conferring of divisional titles shall not create an office of the
Corporation under Article III unless specifically designated as such by the
Board of Directors; but any person who is an officer of the Corporation may also
have a divisional title.
ARTICLE V. COMMITTEES
Section 1. Executive Committee
The Board may create an executive committee of its own members and define
its duties, subject to the provisions of law.
<PAGE>
In the absence of any member, the members thereof present at a meeting may
appoint another member of the Board to act in the place of such absent member.
Section 2. Other Committees
The Board may create such other committees as it deems advisable and
define their duties.
ARTICLE VI. STOCK
Section 1. Certificates
Each stockholder shall be entitled to a stock certificate or certificates
certifying the number and kind of shares owned by him. Said certificate shall be
signed by the Chairman of the Board or President or a Vice President and by the
Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer,
and shall thereafter be sealed with the seal of the Corporation.
Section 2. Transfer of Shares
Shares of stock shall be transferable only on the books of the Corporation
by the holder thereof in person or by his duly authorized attorney, and on
surrender of the certificate or certificates duly endorsed.
ARTICLE VII. SUNDRY PROVISIONS
Section 1. Dividends
Subject to the applicable provisions of law and of the Charter, the Board
of Directors may, at its discretion, declare that, if any, dividends shall be
paid from the surplus or from the net profits of the corporation, or upon any
class of such stock, the date when such dividends shall be payable, and the date
for the determination of holders of record to whom such dividends shall be
payable.
Section 2. Negotiable Instruments and Other Evidences of Indebtedness
All checks, drafts or orders for the payment of money, notes and other
evidences of indebtedness, issued in the name of the Corporation, shall be
signed by such officer or officers as may be designated from time to time by
resolution of the Board of Directors and such resolution may authorize one or
more such officers to designate others to sign such instruments. No checks shall
be signed in blank.
<PAGE>
Section 3. Fiscal Year
The fiscal year of the Corporation shall begin on the first day of May and
end of the thirtieth day of April of each and every year.
Section 4. Seal
The seal of the Corporation shall be circular in form, with the name of
the Corporation and "Maryland" inscribed around the outer edge, and in the
center shall be inscribed the words "Incorporated" and the year of
incorporation.
Section 5. Amendments
Except as hereinafter provided, these By-Laws, or any of them, or any
additional or amended By-Laws, may be altered or repealed and new By-Laws may be
adopted at any regular meeting of the Board of Directors without notice, or at
any special meeting the notice of which shall set forth the terms of the
proposed amendment, by the vote of a majority of the entire Board. This section
5 relating to amendments may, however, be amended only at a regular meeting of
stockholders without notice, or at a special meeting of stockholders, the notice
of which shall set forth the terms of the proposed amendment, in either case by
the vote of a majority of the votes entitled to be cast in the aggregate by all
stockholders present in person or by proxy at such meeting.
Section 6. Indemnification
6.1 The Corporation shall indemnify its directors and officers who are
directors as required by the Charter of the Corporation and shall indemnify its
officers who are not directors to the same extent. Such indemnification shall
apply to all proceedings arising after the time of adoption of this by-law
amendment (the "effective date") in connection with (i) any facts and
circumstances occurring after the effective date or (ii) any facts or
circumstances occurring before the effective date.
6.2 Any indemnification, or payment of expenses in advance of the final
disposition of any proceeding, shall be made promptly, and in any event within
sixty (60) days, upon the written request of the director or officer entitled to
seek indemnification (the "Indemnified Party"). The right to indemnification and
advances hereunder shall be enforceable by the Indemnified Party in any court of
competent jurisdiction, if (i) the Corporation denies such request, in whole or
in part, or (ii) no disposition thereof is made within 60 days. The Indemnified
Party's costs and expenses incurred in connection with successfully establishing
his right to indemnification, in whole or in part, in any such action shall also
be indemnified by the Corporation. It shall be a defense to any action for
<PAGE>
advance for expenses that (a) a determination has been made that the facts then
known to those making the determination would preclude indemnification or (b)
the Corporation has not received either (i) an undertaking as required by law to
repay such advances in the event it shall ultimately be determined that the
standard of conduct has not been met or (ii) a written affirmation by the
Indemnified Party of such Indemnified Party's good faith belief that the
standard of conduct necessary for indemnification by the Corporation has been
met.
6.3 The indemnification and advance of expenses provided by the Charter
and these by-laws shall not be deemed exclusive of any other rights to which a
person seeking indemnification or advance of expenses may be entitled under any
law (common or statutory), or any agreement, vote of stockholders or
disinterested directors or other provision that is consistent with law, both as
to action in his official capacity and as to action in another capacity while
holding office or while employed by or acting as agent for the Corporation,
shall continue in respect of all events occurring while a person was a director
or officer after such person has ceased to be a director or officer, and shall
inure to the benefit of the estate, heirs, executors and administrators of such
person. All rights to indemnification and advance of expenses under the Charter
of the Corporation and hereunder shall be deemed to be a contract between the
Corporation and each director or officer of the Corporation who serves or served
in such capacity at any time while this by-law is in effect. Nothing herein
shall prevent the amendment of this by-law, provided that no such amendment
shall diminish the rights of any person hereunder with respect to events
occurring or claims made before its adoption or as to claims made after its
adoption in respect of events occurring before its adoption. Any repeal or
modification of this by-law shall not in any way diminish any rights to
indemnification or advance of expenses of such director or officer or the
obligations of the Corporation arising hereunder with respect to events
occurring, or claims made, while this by-law or any provision hereof is in
force.
7. The invalidity or unenforceability of any provision of this Section 6
shall not affect the validity or enforceability of any other provision hereof.
<PAGE>
I, Gordon W. Priest, Jr., Assistant Secretary of PHH Deutschland, Inc. do
hereby certify that the foregoing is a true and complete copy of the By-Laws of
said Corporation.
WITNESS my hand and seal of the said Corporation, the 28th day of July
1989.
/s/ Gordon W. Priest Jr.
----------------------------------------
Assistant Secretary
<PAGE>
Exhibit 3.68
KOBRICK-HFS FUNDS, INC.
BYLAWS
ARTICLE I - STOCKHOLDERS
Section 1. Annual Meeting.
An annual meeting of the stockholders, for the election of directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at such place within or
without the State of Delaware, on such date, and at such time as the Board of
Directors shall each year fix.
Section 2. Special Meetings.
Subject to the rights of the holders of any class or series of preferred
stock of the Corporation, special meetings of stockholders of the Corporation
may be called by the Chairman of the Board, if any, the President or the Board
of Directors pursuant to a resolution adopted by a majority of the total number
of directors authorized. Special meetings of the stockholders may be held at
such place within or without the State of Delaware, on such date, and at such
time as shall be fixed by the Board of Directors or the person calling the
meeting. Only such business as shall have been set forth in the notice of a
special meeting of stockholders shall be conducted at such special meeting.
Section 3. Notice of Meetings.
Written notice of the place, date, and time of all meetings of the
stockholders shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required from time to time by
the Delaware General Corporation Law or the Certificate of Incorporation of the
Corporation, as amended from time to time).
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty (30) days
after the date for which the meeting was originally noticed, or if a new record
date is fixed for the adjourned meeting, written notice of the place, date, and
time of the adjourned meeting shall be given in conformity herewith. At any
adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
<PAGE>
Section 4. Quorum.
At any meeting of the stockholders, the holders of a majority of all of
the shares of the stock of the Corporation entitled to vote at the meeting,
present in person or by proxy, shall constitute a quorum for all purposes,
unless or except to the extent that the presence of a larger number may be
required by law. Where a separate vote by a class or classes, or series thereof,
is required, a majority of the shares of such class or classes, or series,
present in person or represented by proxy shall constitute a quorum entitled to
take action with respect to that vote on that matter.
If a quorum shall fail to attend any meeting, the chairman of the meeting
or the holders of a majority of the shares of stock entitled to vote who are
present, in person or by proxy, may adjourn the meeting to another place, date,
or time.
Section 5. Organization.
The Chairman of the Board of Directors, if any, or such person as the
Board of Directors may have designated or, in his or her absence, the chief
executive officer of the Corporation or, in his or her absence, such person as
may be chosen by the holders of a majority of the shares entitled to vote who
are present, in person or by proxy, shall call to order any meeting of the
stockholders and act as chairman of the meeting. In the absence of the Secretary
of the Corporation, the secretary of the meeting shall be such person as the
chairman of the meeting appoints.
Section 6. Conduct of Business.
The Chairman of the Board of Directors, if any, or his or her designee or,
if neither the Chairman of the Board nor his or her designee is present at the
meeting, then a person appointed by a majority of the Board of Directors, shall
preside at, and act as chairman of, any meeting of the stockholders. The
chairman of any meeting of stockholders shall determine the order of business
and the procedures at the meeting, including such regulation of the manner of
voting and the conduct of discussion as he or she deems to be appropriate.
Section 7. Proxies and Voting.
At any meeting of the stockholders, every stockholder entitled to vote may
vote in person or by proxy authorized by an instrument in writing filed in
accordance with the procedure established for the meeting.
Each stockholder shall have one (1) vote for every share of stock entitled
to vote which is registered in his or her name on the record date for the
meeting, except as otherwise provided herein or in the Certificate of
Incorporation of the Corporation as amended from time to time (the "Certificate
of Incorporation") or required by law.
All voting, including on the election of directors but excepting where
otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefor by a stockholder entitled to vote or his or her proxy, a vote by
ballot shall be taken.
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Except as otherwise provided in the terms of any class or series of
preferred stock of the Corporation, all elections shall be determined by a
plurality of the votes cast, and except as otherwise required by law, all other
matters shall be determined by a majority of the votes cast.
Section 8. Action Without Meeting.
Any action required to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken, upon not less than ten (10) days' prior
notice to holders of the Corporation's common stock and warrants for the
purchase of common stock, without a meeting and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall be (1) signed and
dated by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
(2) delivered to the Corporation within sixty (60) days of the earliest dated
consent by delivery to its registered office in the State of Delaware (in which
case delivery shall be by hand or by certified or registered mail, return
receipt requested), its principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Section 9. Stock List.
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
or her name, shall be open to the examination of any such stockholder, for any
purpose germane to the meeting, during ordinary business hours for a period of
at least ten (10) days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held.
The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. Such list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
ARTICLE II - BOARD OF DIRECTORS
Section 1. General Powers, Number, Election, Tenure and Qualification.
The business and affairs of the Corporation shall be managed by or under
the direction of its Board of Directors. The number of directors who shall
constitute the whole board shall be eight (8). The directors shall be elected at
the annual meeting or at any special meeting of the
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stockholders, except as provided in Section 2 of this Article II, and each
director elected shall hold office until his or her successor is duly elected
and qualified, unless sooner displaced. Directors need not be stockholders of
the Corporation.
Section 2. Vacancies and Newly Created Directorships.
Subject to the rights of the holders of any class or series of preferred
stock of the Corporation to elect directors and except as otherwise required by
law, newly created directorships resulting from any increase in the authorized
number of directors or any vacancies in the Board of Directors resulting from
death, resignation, retirement, disqualification, removal from office or other
cause may be filled only by a majority vote of the directors then in office,
though less than a quorum, or the sole remaining director. No decrease in the
number of authorized directors constituting the Board of Directors shall shorten
the term of any incumbent director.
Section 3. Resignation and Removal.
Any director may resign at any time upon written notice to the Corporation
at its principal place of business or to the chief executive officer or
Secretary. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some other
event. Any director or the entire Board of Directors may be removed, with or
without cause, by the holders of a majority of the shares then entitled to vote
at an election of directors, unless otherwise specified by law or the
Certificate of Incorporation.
Section 4. Meetings of the Board of Directors.
A. Generally. The Board of Directors shall meet at least semi-annually.
B. Regular Meetings. Regular meetings of the Board of Directors shall be
held at such place or places, on such date or dates, and at such time or times
as shall have been established by the Board of Directors and publicized among
all directors. A written notice of each regular meeting shall not be required.
C. Special Meetings. Special meetings of the Board of Directors may be
called by the Chairman of the Board of Directors, if any, or by the President or
by a majority of the directors then in office and shall be held at such place,
on such date, and at such time as they or he or she shall fix. Notice of the
place, date, and time of each such special meeting shall be given each director
by whom it is not waived by mailing written notice not less than three (3) days
before the meeting or by telegraph, telex, cable or telecopy given not less than
twenty-four (24) hours before the meeting. Unless otherwise indicated in the
notice thereof, any and all business may be transacted at a special meeting.
Section 5. Quorum.
At any meeting of the Board of Directors, a majority (but not fewer than
four (4)) of the total number of members of the Board of Directors shall
constitute a quorum for all purposes. If a
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quorum shall fail to attend any meeting, a majority of those present may adjourn
the meeting to another place, date, or time, without further notice or waiver
thereof.
Section 6. Action by Consent.
Unless otherwise restricted by the Certificate of Incorporation or these
Bylaws, any action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a meeting, if all
members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
Section 7. Participation in Meetings By Conference Telephone.
Members of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other and such participation shall
constitute presence in person at such meeting.
Section 8. Conduct of Business.
At any meeting of the Board of Directors, business shall be transacted in
such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present
(but not fewer than four (4) members of the Board), except as otherwise provided
herein or required by law.
Section 9. Powers.
The Board of Directors may, except as otherwise required by law, exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, including, without limiting the generality of the foregoing,
the unqualified power:
(a) To declare dividends from time to time in accordance with law;
(b) To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
(c) To authorize the creation, making and issuance, in such form
as it may determine, of written obligations of every kind,
negotiable or non-negotiable, secured or unsecured, to borrow
funds and guarantee obligations, and to do all things
necessary in connection therewith;
(d) To remove any officer of the Corporation with or without
cause, and from time to time to devolve the powers and duties
of any officer upon any other person for the time being:
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(e) To confer upon any officer of the Corporation the power to
appoint, remove and suspend subordinate officers, employees
and agents;
(f) To adopt from time to time such stock, option, stock purchase,
bonus or other compensation plans for directors, officers,
employees and agents of the Corporation and its subsidiaries
as it may determine;
(g) To adopt from time to time such insurance, retirement, and
other benefit plans for directors, officers, employees and
agents of the Corporation and its subsidiaries as it may
determine; and
(h) To adopt from time to time regulations, not inconsistent with
these Bylaws, for the management of the Corporation's business
and affairs.
Section 10. Certain Actions.
Notwithstanding anything to the contrary contained in these Bylaws, and
without limiting the overall authority of the Board of Directors, the following
actions shall require the approval of the Board of Directors:
(a) any amendments to or changes in the purpose, business,
objectives or scope of the Corporation, as set forth in
Article IX, Section 1(a) of these Bylaws;
(b) the appointment of the President of the Corporation;
(c) decisions regarding the raising of capital for the
Corporation, including the issuance of authorized capital
stock (other than in connection with the exercise of warrants
or options issued pursuant to arrangements approved by the
Board of Directors);
(d) annual financial statements and establishment of accounting
policy for the Corporation, including depreciation rates and
accruals and internal accounting controls;
(e) any agreement, contract, transaction, series of transactions
or plan of action involving aggregate payments, liabilities,
obligations or the forgiveness of any of the same in excess of
$100,000 in value;
(f) determination of levels of authority for the President,
Secretary and Treasurer of the Corporation;
(g) authorization of individuals to act on behalf of the
Corporation for particular matters or classes of matters
(subject to the authority of the Board of Directors);
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(h) any sale or acquisition of assets other than in the ordinary
course of business;
(i) designation of directors of each investment company as to
which the Corporation or any of its subsidiaries serves as
investment advisor;
(j) all decisions regarding the establishment of each investment
company as to which the Corporation or any of its subsidiaries
serves as investment advisor;
(k) adoption of the statement of principles regarding avoidance of
conflicts of interest between investment companies as to which
the Corporation or any of its subsidiaries serves as
investment advisor and the hedge fund business of Kobrick
Fund, L.P.; and
(l) adoption of the Corporation's annual budget and business plan.
Section 11. Compensation of Directors.
Directors, as such, may receive, pursuant to a resolution of the Board of
Directors, fixed fees and other compensation for their services as directors,
including, without limitation, their services as members of committees of the
Board of Directors.
ARTICLE III - COMMITTEES
Section 1. Committees of the Board of Directors.
The Board of Directors, by a vote of a majority of the Board of Directors,
may from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the Board and shall, for those committees and any others provided for herein,
elect a director or directors to serve as the member or members, designating, if
it desires, other directors as alternate members who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to the
extent provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the Bylaws of the Corporation. Any committee so designated may
exercise the power and authority of the Board of Directors to declare a
dividend, to authorize the issuance of stock or to adopt a certificate of
ownership and merger pursuant to Section 253 of the Delaware General Corporation
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Law if the resolution which designates the committee or a supplemental
resolution of the Board of Directors shall so provide. In the absence or
disqualification of any member of any committee and any alternate member in his
or her place, the member or members of the committee present at the meeting and
not disqualified from voting, whether or not he or she or they constitute a
quorum, may by unanimous vote appoint another member of the Board of Directors
to act at the meeting in the place of the absent or disqualified member.
Section 2. Conduct of Business.
Each committee of the Board of Directors may determine the procedural
rules for meeting and conducting its business and shall act in accordance
therewith, except as otherwise provided herein or required by law. Adequate
provision shall be made for notice to members of all meetings of committees;
one-third (1/3) of the members shall constitute a quorum; and all matters shall
be determined by a majority vote of the members present. Action may be taken by
any committee without a meeting if all members thereof consent thereto in
writing, and the writing or writings are filed with the minutes of the
proceedings of such committee.
ARTICLE IV - OFFICERS
Section 1. Enumeration.
The officers of the Corporation shall consist of a President, a Treasurer,
a Secretary and such other officers as the Board of Directors may determine,
including, but not limited to, a Chairman of the Board of Directors and one or
more Vice Presidents, Assistant Treasurers and Assistant Secretaries.
Section 2. Election.
The Chairman of the Board, if any, the President, the Treasurer and the
Secretary shall be elected annually by the Board of Directors at their first
meeting following the annual meeting of the stockholders. The Board of Directors
may, from time to time, elect or appoint such other officers as it may
determine, including, but not limited to, one or more Vice Presidents, Assistant
Treasurers and Assistant Secretaries.
Section 3. Qualification.
No officer need be a stockholder. The Chairman of the Board, if any, and
any Vice Chairman appointed to act in the absence of the Chairman, if any, shall
be elected by and from the Board of Directors, but no other officer need be a
director. Two or more offices may be held by any one person. If required by vote
of the Board of Directors, an officer shall give bond to the Corporation for the
faithful performance of his or her duties, in such form and amount and with such
sureties as the Board of Directors may determine. The premiums for such bonds
shall be paid by the Corporation.
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Section 4. Tenure and Removal.
Each officer shall hold office until the first meeting of the Board of
Directors following the next annual meeting of the stockholders and until his or
her successor is elected or appointed and qualified, or until he or she dies,
resigns, is removed or becomes disqualified, unless a shorter term is specified
in the vote electing or appointing said officer. Any officer may resign by
giving written notice of his or her resignation to the Chairman of the Board, if
any, the President, or the Secretary, or to the Board of Directors at a meeting
of the Board, and such resignation shall become effective at the time specified
therein. Arty officer may be removed from office with or without cause by vote
of a majority (but not fewer than four (4)) of the directors.
Section 5. Chairman of the Board.
The Chairman of the Board, if any, shall preside at all meetings of the
Board of Directors and stockholders at which he or she is present and shall have
such authority and perform such duties as may be prescribed by these Bylaws or
from time to time be determined by the Board of Directors. Unless otherwise
directed by the Board of Directors, the Chairman of the Board shall also have
the power and authority to sign all stock certificates, contracts and other
instruments of the Corporation which are authorized.
Section 6. President.
The President shall be the chief executive officer of the Corporation
unless the Board of Directors otherwise provides. The President shall, subject
to the control and direction of the Board of Directors, have general and active
control of the day-to-day management and operations of the Corporation, see that
all orders and resolutions of the Board of Directors are carried into effect and
shall have and perform such powers and duties as may be prescribed by these
Bylaws or from time to time be determined by the Board of Directors. Unless
otherwise directed by the Board of Directors, the President shall have the power
and authority to sign all stock certificates, contacts and other instruments of
the Corporation which are authorized. The President shall report on his or her
activities to the Board of Directors as requested by the Board of Directors.
Section 7. Vice Presidents.
Each Vice President shall have such powers and duties as may be determined
by the Board of Directors and the President from time to time. If more than one
Vice President is duly appointed and holding such office, the Board of Directors
shall designate one (1) Vice President to have and perform the powers and duties
of the President whenever the President is absent or unable to act.
Section 8. Treasurer and Assistant Treasurers.
The Treasurer shall, subject to the control and direction of the Board of
Directors, have the responsibility for maintaining the financial records of the
Corporation and shall have and perform such other powers and duties as may be
prescribed in these Bylaws or be determined from time to time by the Board of
Directors. All property of the Corporation in the custody of the Treasurer
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shall be subject at all times to the inspection and control of the Board of
Directors. Unless otherwise voted by the Board of Directors, each Assistant
Treasurer, if any, shall have and perform the powers and duties of the Treasurer
whenever the Treasurer is absent or unable to act, and may at any time exercise
such of the powers of the Treasurer, and such other powers and duties, as may
from time to time be determined by the Board of Directors. The Treasurer shall
report on his or her activities to the President as requested by the President.
Section 9. Secretary and Assistant Secretaries.
The Board of Directors shall appoint a Secretary and, in his or her
absence, an Assistant Secretary. The Secretary or, in his or her absence, any
Assistant Secretary (or, as provided below, a temporary secretary), shall attend
all meetings of the stockholders and the Board of Directors and shall record all
votes of the stockholders and the Board of Directors and minutes of the
proceedings at such meetings. The Secretary or, in his or her absence, any
Assistant Secretary, shall issue all required notices for meetings of the
stockholders and the Board of Directors, and shall have and perform such other
powers and duties as may from time to time be determined by the Board of
Directors. If the Secretary or an Assistant Secretary is elected but is absent
from any meeting of directors, a temporary secretary may be appointed by the
directors or by the person presiding at the meeting. Without limiting the
foregoing, and unless otherwise directed by the Board of Directors, (i) the
Secretary or any Assistant Secretary or duly appointed temporary secretary shall
keep accurate minutes of the deliberations of the Board of Directors, which
minutes shall record all proposed decisions and all actions recommended or
taken; (ii) the Secretary shall circulate or cause to be circulated, within
twenty (20) days after each meeting of the Board of Directors, to each member of
the Board of Directors and to each "Principal Stockholder" (as such term is
defined in that certain Agreement, dated August 28, 1997, among HFS
Incorporated, Frederick R. Kobrick and Michael T. Carmen, as the same may be
amended from time to time), a draft of the minutes of each meeting of the Board
of Directors; and (iii) the Secretary shall present or cause to be presented to
the Board of Directors at their next meeting said draft minutes for approval.
The Secretary shall report on his or her activities to the President as
requested by the President.
Section 10. Bond.
If required by the Board of Directors, any officer shall give the
Corporation a bond in such sum and with such surety or sureties and upon such
terms and conditions as shall be satisfactory to the Board of Directors,
including without limitation a bond for the faithful performance of the duties
of his office and for the restoration to the Corporation of all books, papers,
vouchers, money and other property of whatever kind in his or her possession or
under his control and belonging to the Corporation.
Section 11. Action with Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the President, the
Treasurer or any officer of the Corporation authorized by the President shall
have power to vote and otherwise act on behalf of the Corporation, in person or
by proxy, at any meeting of stockholders of or with respect
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to any action of stockholders of any other corporation in which this Corporation
may hold securities and otherwise to exercise any and all rights and powers
which this Corporation may possess by reason of its ownership of securities in
such other corporation.
ARTICLE V - STOCK
Section 1. Certificates of Stock.
Each stockholder shall be entitled to a certificate signed by, or in the
name of the Corporation by the Chairman of the Board of Directors, or the
President or a Vice President, and by the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary, certifying the number of shares
owned by him or her. Any or all of the signatures on the certificate may be by
facsimile.
Section 2. Transfers of Stock.
Transfers of stock shall be made only upon the transfer books of the
Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a
certificate is issued in accordance with Section 4 of this Article of these
Bylaws, an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.
Section 5. Record Date.
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders, or to receive payment of
any dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date on which the resolution
fixing the record date is adopted and which record date shall not be more than
sixty (60) nor less than ten (10) days before the date of any meeting of
stockholders, nor more than sixty (60) days prior to the time for such other
action as hereinbefore described; provided, however, that if no record date is
fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the day next preceding the day
on which the meeting is held, and, for determining stockholders entitled to
receive payment of any dividend or other distribution or allotment of rights or
to exercise any rights of change, conversion or exchange of stock or for any
other purpose, the record date shall be at the close of business on the day on
which the Board of Directors adopts a resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
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Section 4. Lost, Stolen or Destroyed Certificates.
In the event of the loss, theft or destruction of any certificate of
stock, another may be issued in its place pursuant to such regulations as the
Board of Directors may establish concerning proof of such loss, theft or
destruction and concerning the giving of a satisfactory bond or bonds of
indemnity.
Section 5. Regulations.
The issue, transfer, conversion and registration of certificates of stock
shall be governed by such other regulations as the Board of Directors may
establish.
Section 6. Interpretation.
The Board of Directors shall have the power to interpret all of the terms
and provisions of these Bylaws, which interpretation shall be conclusive.
ARTICLE VI - NOTICES
Section 1. Notices.
Except as otherwise specifically provided herein or required by law, all
notices required to be given to any stockholder, director, officer, employee or
agent shall be in writing and may in every instance be effectively given by hand
delivery to the recipient thereof, by depositing such notice in the mail,
postage paid, or by sending such notice by courier service, prepaid telegram or
mailgram, or telecopy, cable, or telex. Any such notice shall be addressed to
such stockholder, director, officer, employee or agent at his or her last known
address as the same appears on the books of the Corporation. The time when such
notice is received, if hand delivered, or dispatched, if delivered through the
mail or by courier, telegram, mailgram, telecopy, cable, or telex shall be the
time of the giving of the notice.
Section 2. Waiver of Notice.
A written waiver of any notice, signed by a stockholder, director,
officer, employee or agent, whether before or after the time of the event for
which notice is to be given, shall be deemed equivalent to the notice required
to be given to such stockholder, director, officer, employee or agent. Neither
the business nor the purpose of any meeting need be specified in such a waiver.
Attendance of a director or stockholder at a meeting without protesting prior
thereto or at its commencement the lack of notice shall also constitute a waiver
of notice by such director or stockholder.
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ARTICLE VII - INDEMNIFICATION
Section 1. Actions other than by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he or she is or was a director, officer, employee, controlling person
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee, controlling person or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her in connection with
such action, suit or proceeding if he or she acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceedings, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
Section 2. Actions by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he or she is or was a director, officer, employee,
controlling person or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee, controlling person
or agent of another corporation, partnership, joint venture, trust, or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of the State
of Delaware or such other court shall deem proper.
Section 3. Success on the Merits.
To the extent that any person described in Section 1 or Section 2 of this
Article has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in said Sections, or in defense of any claim,
issue or matter therein, he or she shall be indemnified against
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expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection therewith.
Section 4. Specific Authorization.
Any indemnification under Section 1 or Section 2 of this Article (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of any person described
in said Sections is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in said Sections. Such determination
shall be made (1) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (2) if such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders of the Corporation.
Section 5. Advance Payment.
Expenses incurred in defending any civil, criminal, administrative, or
investigative action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of any person described in said Section to
repay such amount if it shall ultimately be determined that he or she is not
entitled to indemnification by the Corporation as authorized in this Article.
Section 6. Non-Exclusivity.
The indemnification and advancement of expenses provided by, or granted
pursuant to, the other Sections of this Article shall not be deemed exclusive of
any other rights to which those provided indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.
Section 7. Insurance.
The Board of Directors may authorize, by a vote of the majority of the
full board, the Corporation to purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, controlling person or agent
of the Corporation, or is or was serving at the request of the corporation as a
director, officer, employee, controlling person or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the corporation would
have the power to indemnify him or her against such liability under the
provisions of this Article.
Section 8. Continuation of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article shall continue as to a person who has ceased to be a
director, officer, employee or agent and
14
<PAGE>
shall inure to the benefit of the heirs, executors and administrators of such a
person.
Section 9. Severability.
If any word, clause or provision of this Article or any award made
hereunder shall for any reason be determined to be invalid, the provisions
hereof shall not otherwise be affected thereby but shall remain in full force
and effect.
Section 10. Intent of Article.
The intent of this Article is to provide for indemnification and
advancement of expenses to the fullest extent permitted by Section 145 of the
General Corporation Law of Delaware. To the extent that such Section or any
successor section may be amended or supplemented from time to time, this Article
shall be amended automatically and construed so as to permit indemnification and
advancement of expenses to the fullest extent from time to time permitted by
law.
ARTICLE VIII - CERTAIN TRANSACTIONS
Section 1. Transactions with Interested Parties.
No contract or transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board or
committee thereof which authorizes the contract or transaction or solely because
the votes of such director or officer are counted for such purpose, if:
(a) The material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the Board
of Directors or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
(b) The material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the Corporation as of
the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof, or the stockholders.
15
<PAGE>
Section 2. Quorum.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
ARTICLE IX - MISCELLANEOUS
Section 1. Business; Purposes.
The nature of the business to be conducted and the purposes of the
Corporation are: (a) to establish, market and manage mutual funds, and (b) to
engage in any lawful act or activity or carry on any business for which
corporations may be organized under the Delaware General Corporation Law or any
successor statute.
Section 2. Facsimile Signatures.
In addition to the provisions for use of facsimile signatures elsewhere
specifically authorized in these Bylaws, facsimile signatures of any officer or
officers of the Corporation may be used whenever and as authorized by the Board
of Directors or a committee thereof.
Section 3. Corporate Seal.
The Board of Directors may provide a suitable seal, containing the name of
the Corporation, which seal shall be in the charge of the Secretary. If and when
so directed by the Board of Directors or a committee thereof, duplicates of the
seal may be kept and used by the Treasurer or by an Assistant Secretary or
Assistant Treasurer.
Section 4. Reliance upon Books, Reports and Records.
Each director, each member of any committee designated by the Board of
Directors, and each officer of the Corporation shall, in the performance of his
or her duties, be fully protected in relying in good faith upon the books of
account or other records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of its officers or
employees, or committees of the Board of Directors so designated, or by any
other person as to matters which such director or committee member reasonably
believes are within such other person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the Corporation.
Section 5. Fiscal Year.
Except as otherwise determined by the Board of Directors from time to
time, the fiscal year of the Corporation shall end on the last day of December
of each year.
16
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Section 6. Time Periods.
In applying any provision of these Bylaws which requires that an act be
done or not be done a specified number of days prior to an event or that an act
be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
ARTICLE X - AMENDMENTS
These Bylaws may be amended, added to, rescinded or repealed by the
affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the
voting shares then held by stockholders entitled to vote or by the Board of
Directors, when such power is conferred upon the Board of Directors by the
Certificate of Incorporation, at any meeting of the stockholders or of the Board
of Directors, provided notice of the proposed change was given in the notice of
the meeting or, in the case of a meeting of the Board of Directors, in a notice
given not less than two (2) days prior to the meeting.
A true copy.
ATTEST:
/s/ Michael T. Carmen
---------------------------------------
Michael T. Carmen, Secretary
17
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EXECUTION COPY
================================================================================
AVIS RENT A CAR, INC.
THE SUBSIDIARY GUARANTORS PARTIES HERETO,
AND
THE BANK OF NEW YORK,
AS TRUSTEE
11% Senior Subordinated Notes due 2009
=========
INDENTURE
Dated as of June 30, 1999
=========
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
Definitions and Incorporation by Reference ............................ 1
SECTION 1.1. Definitions ............................................. 1
SECTION 1.2. Other Definitions ....................................... 31
SECTION 1.3. Incorporation by Reference of Trust Indenture Act ....... 33
SECTION 1.4. Rules of Construction ................................... 33
ARTICLE II
The Securities ........................................................ 34
SECTION 2.1. Form, Dating and Terms .................................. 34
SECTION 2.2. Execution and Authentication ............................ 40
SECTION 2.3. Registrar and Paying Agent .............................. 41
SECTION 2.4. Paying Agent To Hold Money in Trust ..................... 41
SECTION 2.5. Securityholder Lists .................................... 42
SECTION 2.6. Transfer and Exchange ................................... 42
SECTION 2.7. Form of Certificate to be Delivered in Connection
with Transfers to Institutional Accredited Investors .... 45
SECTION 2.8. Form of Certificate to be Delivered in Connection
with Transfers Pursuant to Regulation S ................. 47
SECTION 2.9. Mutilated, Destroyed, Lost or Stolen Securities ......... 48
SECTION 2.10. Outstanding Securities .................................. 49
SECTION 2.11. Temporary Securities .................................... 50
SECTION 2.12. Cancellation ............................................ 50
SECTION 2.13. Payment of Interest; Defaulted Interest ................. 50
SECTION 2.14. Computation of Interest ................................. 51
SECTION 2.15. CUSIP Numbers ........................................... 51
ARTICLE III
Covenants ............................................................. 51
SECTION 3.1. Payment of Securities ................................... 51
SECTION 3.2. SEC Reports and Available Information ................... 52
SECTION 3.3. Limitation on Indebtedness .............................. 52
SECTION 3.4. Limitation on Restricted Payments ....................... 55
SECTION 3.5. Limitation on Restrictions on Distributions
from Restricted Subsidiaries ............................ 58
SECTION 3.6. Limitation on Sales of Assets and Subsidiary Stock ...... 59
SECTION 3.7. Limitation on Affiliate Transactions..................... 61
(i)
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SECTION 3.8. Change of Control ....................................... 62
SECTION 3.9. Limitation on Sale of Capital Stock of
Restricted Subsidiaries ................................. 64
SECTION 3.10. Limitation on Liens ..................................... 65
SECTION 3.11. Future Subsidiary Guarantors ............................ 65
SECTION 3.12. Limitation on Lines of Business ......................... 65
SECTION 3.13. Limitation on Permitted Vehicle Indebtedness ............ 65
SECTION 3.14. Maintenance of Office or Agency ......................... 66
SECTION 3.15. Limitation on Layering .................................. 67
SECTION 3.16. Corporate Existence ..................................... 67
SECTION 3.17. Payment of Taxes and Other Claims ....................... 67
SECTION 3.18. Payments for Consent .................................... 67
SECTION 3.19. Compliance Certificate .................................. 67
SECTION 3.20. Further Instruments and Acts ............................ 68
SECTION 3.21. Statement by Officers as to Default ..................... 68
ARTICLE IV
Successor Company ..................................................... 68
SECTION 4.1. Merger and Consolidation ................................ 68
ARTICLE V
Redemption of Securities .............................................. 69
SECTION 5.1. Optional Redemption ..................................... 69
SECTION 5.2. Applicability of Article ................................ 69
SECTION 5.3. Election to Redeem; Notice to Trustee ................... 69
SECTION 5.4. Selection by Trustee of Securities to Be Redeemed ....... 70
SECTION 5.5. Notice of Redemption .................................... 70
SECTION 5.6. Deposit of Redemption Price ............................. 71
SECTION 5.7. Notes Payable on Redemption Date ........................ 71
SECTION 5.8. Securities Redeemed in Part ............................. 71
ARTICLE VI
Defaults and Remedies ................................................. 72
SECTION 6.1. Events of Default ....................................... 72
SECTION 6.2. Acceleration ............................................ 74
SECTION 6.3. Other Remedies .......................................... 75
SECTION 6.4. Waiver of Past Defaults ................................. 75
SECTION 6.5. Control by Majority ..................................... 76
SECTION 6.6. Limitation on Suits ..................................... 76
SECTION 6.7. Rights of Holders to Receive Payment .................... 76
SECTION 6.8. Collection Suit by Trustee .............................. 77
SECTION 6.9. Trustee May File Proofs of Claim ........................ 77
(ii)
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SECTION 6.10. Priorities .................................................. 77
SECTION 6.11. Undertaking for Costs ....................................... 77
SECTION 6.12. Additional Payments ......................................... 78
ARTICLE VII
Trustee ................................................................... 78
SECTION 7.1. Duties of Trustee ........................................... 78
SECTION 7.2. Rights of Trustee ........................................... 79
SECTION 7.3. Individual Rights of Trustee ................................ 80
SECTION 7.4. Trustee's Disclaimer ........................................ 80
SECTION 7.5. Notice of Defaults .......................................... 80
SECTION 7.6. Reports by Trustee to Holders ............................... 80
SECTION 7.7. Compensation and Indemnity .................................. 80
SECTION 7.8. Replacement of Trustee ...................................... 81
SECTION 7.9. Successor Trustee by Merger ................................. 82
SECTION 7.10. Eligibility; Disqualification ............................... 82
SECTION 7.11. Preferential Collection of Claims Against Company ........... 83
SECTION 7.12. Trustees Application for Instruction from the Company ....... 83
ARTICLE VIII
Discharge of Indenture; Defeasance ........................................ 83
SECTION 8.1. Discharge of Liability on Securities; Defeasance ............ 83
SECTION 8.2. Conditions to Defeasance .................................... 84
SECTION 8.3. Application of Trust Money .................................. 86
SECTION 8.4. Repayment to Company ........................................ 86
SECTION 8.5. Indemnity for U.S. Government Obligations ................... 86
SECTION 8.6. Reinstatement ............................................... 86
ARTICLE IX
Amendments ................................................................ 87
SECTION 9.1. Without Consent of Holders .................................. 87
SECTION 9.2. With Consent of Holders ..................................... 87
SECTION 9.3. Compliance with Trust Indenture Act ......................... 88
SECTION 9.4. Revocation and Effect of Consents and Waivers ............... 88
SECTION 9.5. Notation on or Exchange of Securities ....................... 89
SECTION 9.6. Trustee To Sign Amendments .................................. 89
(iii)
<PAGE>
Page
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ARTICLE X
Subordination ......................................................... 89
SECTION 10.1. Agreement To Subordinate ............................... 89
SECTION 10.2. Liquidation, Dissolution, Bankruptcy ................... 89
SECTION 10.3. Default on Senior Indebtedness ......................... 90
SECTION 10.4. Acceleration of Payment of Securities .................. 91
SECTION 10.5. When Distribution Must Be Paid Over .................... 91
SECTION 10.6. Subrogation ............................................ 91
SECTION 10.7. Relative Rights ........................................ 91
SECTION 10.8. Subordination May Not Be Impaired by Company ........... 91
SECTION 10.9. Rights of Trustee and Paying Agent ..................... 91
SECTION 10.10 Distribution or Notice to Representative ............... 92
SECTION 10.11. Not To Prevent Events of Default or Limit Right
To Accelerate .......................................... 92
SECTION 10.12. Trust Moneys Not Subordinated .......................... 92
SECTION 10.13. Trustee Entitled To Rely ............................... 92
SECTION 10.14. Trustee To Effectuate Subordination .................... 93
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness ........................................... 93
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Indebtedness on Subordination Provisions ............... 93
ARTICLE XI
Guarantee ............................................................. 93
SECTION 11.1. Guarantee .............................................. 93
SECTION 11.2. Limitation on Liability; Termination, Release
and Discharge .......................................... 95
SECTION 11.3. Right of Contribution .................................. 96
SECTION 11.4. No Subrogation ......................................... 96
ARTICLE XII
Subordination of Subsidiary Guarantees ................................ 96
SECTION 12.1. Agreement To Subordinate ............................... 96
SECTION 12.2. Liquidation, Dissolution, Bankruptcy ................... 96
SECTION 12.3. Default on Guarantor Senior Indebtedness ............... 97
SECTION 12.4. Acceleration of Payment of Securities .................. 98
SECTION 12.5. When Distribution Must Be Paid Over .................... 98
SECTION 12.6. Subrogation ............................................ 98
SECTION 12.7. Relative Rights ........................................ 98
SECTION 12.8. Subordination May Not Be Impaired by Company ........... 98
SECTION 12.9. Rights of Trustee and Paying Agent ..................... 99
SECTION 12.10. Distribution or Notice to Representative ............... 99
SECTION 12.11. Article XII Not To Prevent Events of Default or
Limit Right To Accelerate .............................. 99
(iv)
<PAGE>
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SECTION 12.12. Trust Moneys Not Subordinated ......................... 99
SECTION 12.13. Trustee Entitled To Rely .............................. 99
SECTION 12.14. Trustee To Effectuate Subordination ................... 100
SECTION 12.15. Trustee Not Fiduciary for Holders of Guarantor
Senior Indebtedness ................................... 100
SECTION 12.16. Reliance by Holders of Guarantor Senior Indebtedness
on Indebtedness on Subordination Provisions ........... 100
ARTICLE XIII
Miscellaneous ........................................................ 100
SECTION 13.1. Trust Indenture Act Controls .......................... 100
SECTION 13.2. Notices ............................................... 101
SECTION 13.3. Communication by Holders with other Holders ........... 101
SECTION 13.4. Certificate and Opinion as to Conditions Precedent .... 101
SECTION 13.5. Statements Required in Certificate or Opinion ......... 102
SECTION 13.6. When Securities Disregarded ........................... 102
SECTION 13.7. Rules by Trustee, Paying Agent and Registrar .......... 102
SECTION 13.8. Legal Holidays ........................................ 102
SECTION 13.9. GOVERNING LAW ......................................... 103
SECTION 13.10. No Recourse Against Others ............................ 103
SECTION 13.11. Successors ............................................ 103
SECTION 13.12. Multiple Originals .................................... 103
SECTION 13.13. Variable Provisions ................................... 103
SECTION 13.14. Qualification of Indenture ............................ 103
SECTION 13.15. Table of Contents; Headings ........................... 103
(v)
<PAGE>
INDENTURE dated as of June 30, 1999, among AVIS RENT A CAR, INC., a Delaware
corporation (the "Company"), THE SUBSIDIARY GUARANTORS (as defined) and The Bank
of New York, a New York banking corporation (the "Trustee") as Trustee.
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of (i) the Company's 11%
Senior Subordinated Notes due 2009 on the date hereof (the "Original Securities"
or "Initial Securities"), and (ii) if and when issued in exchange for Initial
Securities as provided in the Registration Rights Agreement or a similar
agreement relating to Initial Securities (as hereinafter defined), the Company's
11% Senior Subordinated Notes due 2009 (the "Exchange Securities") and (iii) if
and when issued as provided in the Registration Rights Agreement, the Private
Exchange Securities (as defined in the Registration Rights Agreement; together
with Initial Securities and Exchange Securities, the "Securities").
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"Acquisition Subsidiary" means Avis Fleet Leasing and Management
Corporation and any successor thereto.
"Additional Assets" means:
(1) any property or assets (other than Indebtedness and Capital
Stock) to be used by the Company or a Restricted Subsidiary in a Related
Business;
(2) the Capital Stock of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock by the
Company or a Restricted Subsidiary of the Company; or
(3) Capital Stock consulting a minority interest in any Person that
at such time is a Restricted Subsidiary of the Company.
provided, however, that, in the case of clauses (2) and (3), such Restricted
Subsidiary is primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"ARACS" means Avis Rent A Car System, Inc. and its successor and
assigns.
<PAGE>
"Asset Disposition" means any direct or indirect sale, lease (other
than an operating lease entered into in the ordinary course of business),
transfer, issuance or other disposition, or a series of related sales, leases,
transfers, issuances or dispositions that are part of a common plan, of shares
of Capital Stock of a Subsidiary (other than directors' qualifying shares),
property or other assets (each referred to for the purposes of this definition
as a "disposition") by the Company or any of its Restricted Subsidiaries,
including any disposition by means of a merger, consolidation or similar
transaction.
Notwithstanding the preceding, the following items shall not be
deemed to be Asset Dispositions:
(1) a disposition by a Restricted Subsidiary to the Company or by
the Company or a Restricted Subsidiary to a Wholly-Owned Subsidiary (other
than a Securitization Entity);
(2) the sale of Cash Equivalents in the ordinary course of business;
(3) a disposition of inventory or Eligible Vehicles in the ordinary
course of business;
(4) a disposition of obsolete or worn out equipment or equipment
that is no longer useful in the conduct of the business of the Company and
its Restricted Subsidiaries (other than Eligible Vehicles) and that is
disposed of in each case in the ordinary course of business;
(5) transactions permitted under Section 4.1;
(6) an issuance of Capital Stock by a Restricted Subsidiary of the
Company to the Company or to a Wholly-Owned Subsidiary (other than a
Securitization Entity) or in the case of a Securitization Entity to any
Person;
(7) for purposes of Section 3.6 only, the making of a Permitted
Investment or a disposition subject to Section 3.3;
(8) sales of Permitted Vehicle Collateral or an interest therein of
the type specified in the definition of "Qualified Securitization
Transaction" to a Securitization Entity;
(9) dispositions of assets with an aggregate fair market value in
any fiscal year of less than $2.5 million; and
(10) dispositions in connection with Permitted Liens.
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded
semi-annually) of the total obligations of the lessee for rental payments
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<PAGE>
during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended).
"Average Life" means, as of the date of determination, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing (1)
the sum of the products of the numbers of years from the date of determination
to the dates of each successive scheduled principal payment of such Indebtedness
or redemption or similar payment with respect to such Preferred Stock multiplied
by the amount of such payment by (2) the sum of all such payments.
"Bank Indebtedness" means any and all amounts, whether outstanding
on the Issue Date or thereafter Incurred, payable by the Company under or in
respect of the Senior Credit Agreement and any related notes, collateral
documents, letters of credit and guarantees and any Interest Rate Agreement
entered into in connection with the Senior Credit Agreement, including
principal, premium, if any, interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company at the rate specified therein whether or not a claim for post filing
interest is allowed in such proceedings), fees, charges, expenses, reimbursement
obligations, guarantees and all other amounts payable thereunder or in respect
thereof.
"Board of Directors" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banking institutions are authorized or required by law
to close in New York City.
"Call Transfer Agreement" means the Call Transfer Agreement made and
entered into March 4, 1997 between Avis Rent A Car System, Inc. and HFS
Incorporated.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participation or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation will be the capitalized amount of such obligation
at the time any determination thereof is to be made as determined in accordance
with GAAP, and the Stated Maturity thereof will be the date of the last payment
of rent or any other amount due under such lease prior to the first date such
lease may be terminated without penalty.
"Cash Equivalents" means:
(1) securities issued or directly and fully guaranteed or insured by
the United States or the United Kingdom Government or any agency or
instrumentality thereof, having maturities of not more than one year from
the date of acquisition;
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(2) marketable general obligations issued by the United Kingdom or
any state of the United States of America or any political subdivision of
any such state or any public instrumentality thereof maturing within one
year from the date of acquisition thereof and, at the time of acquisition
thereof, having a credit rating of "A" or better from either Standard &
Poor's Ratings Services or Moody's Investors Service, Inc.;
(3) certificates of deposit, time deposits, eurodollar time
deposits, overnight bank deposits or bankers' acceptances having
maturities of not more than one year from the date of acquisition thereof
issued by any commercial bank the long-term debt of which is rated at the
time of acquisition thereof at least "A" or the equivalent thereof by
Standard & Poor's Ratings Services, or "A" or the equivalent thereof by
Moody's Investors Service, Inc., and having combined capital and surplus
in excess of $500 million;
(4) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (1), (2) and
(3) entered into with any bank meeting the qualifications specified in
clause (3) above;
(5) commercial paper rated at the time of acquisition thereof at
least "A-2" or the equivalent thereof by Standard & Poor's Ratings
Services or "P-2" or the equivalent thereof by Moody's Investors Service,
Inc., or carrying an equivalent rating by a nationally recognized rating
agency, if both of the two named rating agencies cease publishing ratings
of investments, and in either case maturing within one year after the date
of acquisition thereof; and
(6) interests in any investment company or money market fund which
invests solely in instruments of the type specified in clauses (1) through
(5) above.
"Cendant" means Cendant Corporation and its successors or assigns.
"Change of Control" means:
(1) any "person" or "group" of related persons (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that such person or group shall be deemed to have "beneficial
ownership" of all shares that any such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of the Company (or its successor by
merger, consolidation or purchase of all or substantially all of its
assets) (for the purposes of this clause, such person or group shall be
deemed to beneficially own any Voting Stock of the Company held by an
entity, if such person or group "beneficially owns" (as defined above),
directly or indirectly, more than 35% of the voting power of the Voting
Stock of such entity);
(2) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination
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<PAGE>
for election by the shareholders of the Company, as the case may be, was
approved by a vote of at least a majority of the directors of the Company
then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved cease for any reason to constitute a majority of the Board of
Directors of the Company then in office;
(3) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the assets of the
Company and its Restricted Subsidiaries taken as a whole to any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act);
(4) the adoption by the stockholders of the Company of a plan or
proposal for the liquidation or dissolution of the Company;
(5) a Change of Control Event as defined under the Master License
Agreement; or
(6) a Change of Control as defined in any certificate of designation
or similar instrument relating to any series of PHH Sub Preferred Stock.
"Closing Date" with respect to any Initial Securities, means the
date on which such Initial Securities are originally issued.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Avis Rent A Car, Inc. or a successor.
"Computer Services Agreement" means the Computer Service Agreement,
effective as of July 30, 1997 between Avis Rent A Car System, Inc. and WizCom
International, Ltd.
"Consolidated Coverage Ratio" means as of any date of determination,
with respect to any Person, the ratio of (x) the aggregate amount of
Consolidated EBITDA of such Person for the period of the most recent four
consecutive fiscal quarters ending prior to the date of such determination for
which financial statements are in existence to (y) Consolidated Interest Expense
for such four fiscal quarters; provided, however, that:
(1) if the Company or any Restricted Subsidiary:
(a) has Incurred any Indebtedness since the beginning of such
period that remains outstanding on such date of determination or if
the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of Indebtedness,
Consolidated EBITDA and Consolidated Interest Expense for such
period will be calculated after giving effect on a pro forma basis
to such Indebtedness as if such Indebtedness had been Incurred on
the first day of such period (except that in making such
computation, the amount of Indebtedness under any revolving credit
facility outstanding on the date of such calculation will be
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<PAGE>
computed based on (i) the average daily balance of such Indebtedness
during such four fiscal quarters or such shorter period for which
such facility was outstanding or (ii) if such facility was created
after the end of such four fiscal quarters, the average daily
balance of such Indebtedness during the period from the date of
creation of such facility to the date of such calculation) and the
discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as
if such discharge had occurred on the first day of such period; or
(b) has repaid, repurchased, defeased or otherwise discharged
any Indebtedness since the beginning of the period that is no longer
outstanding on such date of determination or if the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio
involves a discharge of Indebtedness (in each case other than
Indebtedness incurred under any revolving credit facility unless
such Indebtedness has been permanently repaid and the related
commitment terminated), Consolidated EBITDA and Consolidated
Interest Expense for such period will be calculated after giving
effect on a pro forma basis to such discharge of such Indebtedness,
including with the proceeds of such new Indebtedness, as if such
discharge had occurred on the first day of such period;
(2) if since the beginning of such period the Company or any
Restricted Subsidiary will have made any Asset Disposition or if the
transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Asset Disposition:
(a) the Consolidated EBITDA for such period will be reduced by
an amount equal to the Consolidated EBITDA (if positive) directly
attributable to the assets which are the subject of such Asset
Disposition for such period or increased by an amount equal to the
Consolidated EBITDA (if negative) directly attributable thereto for
such period; and
(b) Consolidated Interest Expense for such period will be
reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary is
sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to
the extent the Company and its continuing Restricted Subsidiaries
are no longer liable for such Indebtedness after such sale);
(3) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) will have made an
Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary or is merged with or into the Company) or an
acquisition of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder,
which constitutes all or substantially all of an operating unit, division
or line of business,
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Consolidated EBITDA and Consolidated Interest Expense for such period will
be calculated after giving pro forma effect thereto (including the
Incurrence of any Indebtedness) as if such Investment or acquisition
occurred on the first day of such period; and
(4) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period)
will have made any Asset Disposition or any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (2) or
(3) above if made by the Company or a Restricted Subsidiary during such
period, Consolidated EBITDA and Consolidated Interest Expense for such
period will be calculated after giving pro forma effect thereto as if such
Asset Disposition or Investment or acquisition of assets occurred on the
first day of such period.
For purposes of this definition, whenever pro forma effect is to be
given under any calculation under this definition, the pro forma calculations
will be determined in good faith by a responsible financial or accounting
officer of the Company (including pro forma expense and cost reductions
calculated on a basis consistent with Regulation S-X under the Securities Act).
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest expense on such Indebtedness will be calculated as if
the rate in effect on the date of determination had been the applicable rate for
the entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months).
"Consolidated EBITDA" for any period means, without duplication, the
Consolidated Net Income for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income:
(1) Consolidated Interest Expense;
(2) Consolidated Income Taxes;
(3) consolidated non-vehicle related depreciation expense;
(4) consolidated non-vehicle related amortization of intangibles;
and
(5) other non-vehicle related non-cash charges reducing Consolidated
Net Income (excluding any such non-cash charge to the extent it represents
an accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior period not
included in the calculation).
Notwithstanding the preceding sentence, clauses (2) through (5)
relating to amounts of a Restricted Subsidiary of a Person will be added to
Consolidated Net Income to compute Consolidated EBITDA of such Person only to
the extent (and in the same proportion) that the net income (loss) of such
Restricted Subsidiary was included in calculating the Consolidated Net Income of
such Person and, to the extent the amounts set forth in clauses (2) through (5)
are in excess of those necessary to offset a net loss of such Restricted
Subsidiary
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or if such Restricted Subsidiary has net income for such period included in
Consolidated Net Income, only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.
"Consolidated Income Taxes" means, with respect to any Person for
any period, taxes imposed upon such Person or other payments required to be made
by such Person by any governmental authority which taxes or other payments are
calculated by reference to the income or profits of such Person or such Person
and its Restricted Subsidiaries (to the extent such income or profits were
included in computing Consolidated Net Income for such period), regardless of
whether such taxes or payments are required to be remitted to any governmental
authority.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted Subsidiaries,
whether paid or accrued, excluding interest on Permitted Vehicle Indebtedness,
plus, to the extent not included in such interest expense:
(1) interest expense attributable to Capitalized Lease Obligations
and the interest portion of rent expense associated with Attributable
Indebtedness in respect of the relevant lease giving rise thereto,
determined as if such lease were a capitalized lease in accordance with
GAAP and the interest component of any deferred payment obligations;
(2) amortization of debt discount and debt issuance cost;
(3) non-cash interest expense (except with respect to Permitted
Vehicle Indebtedness);
(4) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing;
(5) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured
by a Lien on assets of such Person or one of its Restricted Subsidiaries,
to the extent such Guarantee or Lien is called upon;
(6) net costs (if positive) associated with Hedging Obligations
(including amortization of fees);
(7) the consolidated interest expense of such Person and its
Restricted Subsidiaries that was capitalized during such period (except
with respect to Permitted Vehicle Indebtedness);
(8) the product of (a) all dividends paid or payable in cash, Cash
Equivalents or Indebtedness or accrued during such period on any series of
Disqualified Stock of such Person or on Preferred Stock of its Restricted
Subsidiaries payable to a party other than
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the Company or a Wholly-Owned Subsidiary, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the
then current effective combined federal, state, provincial and local
statutory tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP; and
(9) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust; provided,
however, that there will be excluded therefrom any such interest expense
of any Unrestricted Subsidiary to the extent the related Indebtedness is
not Guaranteed or paid by the Company or any Restricted Subsidiary.
For purposes of the foregoing, total interest expense will be
determined after giving effect to any net payments made or received by the
Company and its Subsidiaries with respect to Interest Rate Agreements.
"Consolidated Net Income" means, for any period, the net income
(loss) of the Company and its consolidated Restricted Subsidiaries determined in
accordance with GAAP; provided, however, that there will not be included in such
Consolidated Net Income:
(1) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that:
(a) subject to the limitations contained in clauses (4), (5)
and (6) below, the Company's equity in the net income of any such
Person for such period will be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by
such Person during such period to the Company or a Restricted
Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution to a Restricted Subsidiary, to
the limitations contained in clause (3) below); and
(b) the Company's equity in a net loss of any such Person
(other than an Unrestricted Subsidiary) for such period will be
included in determining such Consolidated Net Income to the extent
such loss has been funded with cash from the Company or a Restricted
Subsidiary;
(2) any net income (loss) of any Person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;
(3) any net income (but not loss) of any Restricted Subsidiary if
such Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that:
(a) subject to the limitations contained in clauses (4), (5)
and (6) below, the Company's equity in the net income of any such
Restricted
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Subsidiary for such period will be included in such Consolidated Net
Income up to the aggregate amount of cash that could have been
distributed by either such Restricted Subsidiary or the entity to
which the receivables or cash generated by such Consolidated Net
Income has been transferred for purposes of a Qualified
Securitization Transaction during such period to the Company or
another Restricted Subsidiary as a dividend (subject, in the case of
a dividend to another Restricted Subsidiary, to the limitation
contained in this clause); and
(b) the Company's equity in a net loss of any such Restricted
Subsidiary for such period will be included in determining such
Consolidated Net Income;
(4) any gain (loss) realized upon the sale or other disposition of
any property, plant or equipment of the Company or its consolidated
Restricted Subsidiaries (including pursuant to any Sale/Leaseback
Transaction) which is not sold or otherwise disposed of in the ordinary
course of business and any gain (loss) realized upon the sale or other
disposition of any Capital Stock of any Person;
(5) any extraordinary gain or loss; and
(6) the cumulative effect of a change in accounting principles.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Customer Lease Financing Loans" has the meaning set forth in the
definition of Specified Financing Subsidiary.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning set forth in Section
2.13.
"Definitive Securities" means certificated Securities.
"Designated Senior Indebtedness" means (1) the Bank Indebtedness (to
the extent such Bank Indebtedness constitutes Senior Indebtedness) and (2) any
other Senior Indebtedness which, at the date of determination, has an aggregate
principal amount outstanding of, or under which, at the date of determination,
the holders thereof are committed to lend up to, at least $50 million and is
specifically designated in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture.
"Determination Date" means the last calendar day of each month.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable) or upon the happening
of any event:
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(1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
(2) is convertible or exchangeable for Indebtedness or Disqualified
Stock (excluding Capital Stock which is convertible or exchangeable solely
at the option of the Company or a Restricted Subsidiary); or
(3) is redeemable at the option of the holder thereof, in whole or
in part, in each case on or prior to the date that is 91 days after the
date (a) on which the Securities mature or (b) on which there are no
Securities outstanding, provided that only the portion of Capital Stock
which so matures or is mandatorily redeemable, is so convertible or
exchangeable or is so redeemable at the option of the holder thereof prior
to such date will be deemed to be Disqualified Stock; provided, further
that any Capital Stock that would constitute Disqualified Stock solely
because the holders thereof have the right to require the Company to
repurchase such Capital Stock upon the occurrence of a change of control
or asset sale (each defined in a substantially identical manner to the
corresponding definitions in this Indenture) shall not constitute
Disqualified Stock if the terms of such Capital Stock (and all such
securities into which it is convertible or for which it is ratable or
exchangeable) provide that the Company may not repurchase or redeem any
such Capital Stock (and all such securities into which it is convertible
or for which it is ratable or exchangeable) pursuant to such provision
prior to compliance by the Company with the provisions of Section 3.8 and
Section 3.6 and such repurchase or redemption complies with Section 3.4.
"Domestic Subsidiary" means any Restricted Subsidiary that is
organized under the laws of the United States of America or any state thereof or
the District of Columbia.
"DTC" means The Depository Trust Company, its nominees and their
respective successors and assigns, or such other depository institution
hereinafter appointed by the Company.
"Eligible Leases" means open-end and closed-end automobile fleet
leases originated by or on behalf of the Company and its Restricted Subsidiaries
which are of a type customarily eligible for inclusion in a Qualified
Securitization Transaction.
"Eligible Vehicles" shall mean the motor vehicle inventory of the
Company and its Restricted Subsidiaries, in each case, whether held for sale,
lease or rental purposes which are of a type customarily eligible for inclusion
in a Qualified Securitization Transaction.
"Equity Clawback" means the redemption of the Securities by the
Company with the Net Cash Proceeds of one or more Public Equity Offerings as
permitted by this Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange and Registration Rights Agreement" means the Exchange and
Registration Rights Agreement dated the Issue Date among Chase Securities Inc.,
Lehman Brothers Inc., the Subsidiary Guarantors and the Company.
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"Exchange Securities" has the meaning ascribed to it in the second
introductory paragraph of this Indenture.
"Excluded Subsidiary" is a reference to a Foreign Subsidiary,
Securitization Entity, Specified Financing Subsidiary or any regulated bank
subsidiary or insurance subsidiary that has not issued a Guarantee of any Senior
Indebtedness.
"Fiscal Year" means a 52 or 53 week period ending on the last
Saturday in June.
"Fleet Receivables" means all receivables generated by the Company
and its Restricted Subsidiaries from obligors under fleet maintenance contracts,
fleet management contracts and fuel card contracts and any other service
contracts billed together with Eligible Leases, which are of a type customarily
eligible for inclusion in a Qualified Securitization Transaction.
"Foreign Subsidiary" means any Restricted Subsidiary that is not
organized under the laws of the United States of America or any state thereof or
the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the date of this Indenture, including those
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture will be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness of such other Person (whether arising by
virtue of partnership arrangements, or by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise); or
(2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part); provided,
however, that the term "Guarantee" will not include endorsements for
collection or deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
"Guarantor Senior Indebtedness" means, with respect to a Subsidiary
Guarantor, the following obligations, whether outstanding on the date of this
Indenture or thereafter issued, without duplication:
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(1) any Guarantee of the Bank Indebtedness by such Subsidiary
Guarantor and all other Guarantees by such Subsidiary Guarantor of Senior
Indebtedness of the Company or Guarantor Senior Indebtedness of any other
Subsidiary Guarantor; and
(2) all obligations consisting of principal of and premium, if any,
accrued and unpaid interest on, and fees and other amounts relating to,
all other Indebtedness of the Subsidiary Guarantor. Guarantor Senior
Indebtedness includes interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Subsidiary
Guarantor regardless of whether postfiling interest is allowed in such
proceeding.
Notwithstanding anything to the contrary in the preceding paragraph,
Guarantor Senior Indebtedness will not include:
(1) any Indebtedness which, in the instrument creating or evidencing
the same or pursuant to which the same is outstanding, it is provided that
the obligations in respect of such Indebtedness are not superior in right
of, or are subordinate to, payment of the Securities and the Subsidiary
Guarantee;
(2) any obligations of such Subsidiary Guarantor to another
Subsidiary or the Company;
(3) any liability for Federal, state, local, foreign or other taxes
owed or owing by such Subsidiary Guarantor;
(4) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including Guarantees thereof
or instruments evidencing such liabilities);
(5) any Indebtedness, Guarantee or obligation of such Subsidiary
Guarantor that is expressly subordinate or junior in right of payment to
any other Indebtedness, Guarantee or obligation of such Subsidiary
Guarantor, including, without limitation, any Guarantor Senior
Subordinated Indebtedness and Guarantor Subordinated Obligations of such
Guarantor; or
(6) any Capital Stock.
"Guarantor Senior Subordinated Indebtedness" means, with respect to
a Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee and any other Indebtedness of such Subsidiary Guarantor
(whether outstanding on the Issue Date or thereafter Incurred) that specifically
provides that such Indebtedness is to rank equally in right of payment with the
obligations of such Subsidiary Guarantor under the Subsidiary Guarantee and is
not expressly subordinated by its terms in right of payment to any Indebtedness
of such Subsidiary Guarantor which is not Guarantor Senior Indebtedness of such
Subsidiary Guarantor.
"Guarantor Subordinated Obligation" means, with respect to a
Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether
outstanding on the Issue
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Date or thereafter Incurred) which is expressly subordinate in right of payment
to the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee
pursuant to a written agreement.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered in the Note Register.
"Incur" means issue, create, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) will be deemed to
be incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary; and the terms "Incurred" and "Incurrence" have meanings correlative
to the foregoing.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal of and premium (if any) in respect of indebtedness
of such Person for borrowed money (including in respect of Qualified
Securitization Transactions);
(2) the principal of and premium (if any) in respect of obligations
of such Person evidenced by bonds, debentures, notes or other similar
instruments;
(3) the principal component of all obligations of such Person in
respect of letters of credit, bankers' acceptances or other similar
instruments (including reimbursement obligations with respect thereto
except to the extent such reimbursement obligation relates to a trade
payable and such obligation is satisfied within 30 days of Incurrence);
(4) the principal component of all obligations of such Person to pay
the deferred and unpaid purchase price of property (except trade
payables), which purchase price is due more than six months after the date
of placing such property in service or taking delivery and title thereto;
(5) Capitalized Lease Obligations and all Attributable Indebtedness
of such Person;
(6) the principal component of all obligations of such Person with
respect to the redemption, repayment or other repurchase of any
Disqualified Stock or, with respect to any Subsidiary, any Preferred
Stock;
(7) the principal component of all Indebtedness of other Persons
secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; provided, however, that the amount
of such Indebtedness will be the lesser of
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(a) the fair market value of such asset at such date of determination and
(b) the amount of such Indebtedness of such other Persons;
(8) the principal component of Indebtedness of other Persons to the
extent Guaranteed by such Person; and
(9) to the extent not otherwise included in this definition, net
obligations of such Person under Currency Agreements and Interest Rate
Agreements (the amount of any such obligations to be equal at any time to
the termination value of such agreement or arrangement giving rise to such
obligation that would be payable by such Person at such time).
The amount of Indebtedness of any Person at any date will be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
In addition, "Indebtedness" of any Person shall include Indebtedness
described in the preceding paragraph that would not appear as a liability on the
balance sheet of such Person if:
(1) such Indebtedness is the obligation of a partnership or joint
venture that is not a Restricted Subsidiary (a "Joint Venture");
(2) such Person or a Restricted Subsidiary of such Person is a
general partner of the Joint Venture (a "General Partner"); and
(3) there is recourse, by contract or operation of law, with respect
to the payment of such Indebtedness to property or assets of such Person
or a Restricted Subsidiary of such Person; and then such Indebtedness
shall be included in an amount not to exceed:
(a) the lesser of (i) the net assets of the General Partner
and (ii) the amount of such obligations to the extent that there is
recourse, by contract or operation of law, to the property or assets
of such Person or a Restricted Subsidiary of such Person; or
(b) if less than the amount determined pursuant to clause (a)
immediately above, the actual amount of such Indebtedness that is
recourse to such Person or a Restricted Subsidiary of such Person,
if the Indebtedness is evidenced by a writing and is for a
determinable amount and the related interest expense shall be
included in Consolidated Interest Expense to the extent actually
paid by the Company or its Restricted Subsidiaries.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Initial Securities" has the meaning ascribed to it in the second
introductory paragraph of this Indenture.
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"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the form of any direct or
indirect advance, loan (other than advances to customers in the ordinary course
of business) or other extension of credit (including by way of Guarantee or
similar arrangement, but excluding any debt or extension of credit represented
by a bank deposit other than a time deposit) or capital contribution to (by
means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, Indebtedness or other similar instruments issued
by, such Person and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided that:
(1) Hedging Obligations entered into in the ordinary course of
business and in compliance with this Indenture;
(2) endorsements of negotiable instruments and documents in the
ordinary course of business; and
(3) an acquisition of assets, Capital Stock or other securities by
the Company or a Restricted Subsidiary for consideration consisting
exclusively of common equity securities of the Company, shall in each case
not be deemed to be an Investment.
For purposes of Section 3.4,
(1) "Investment" will include the portion (proportionate to the
Company's equity interest in a Restricted Subsidiary to be designated as an
Unrestricted Subsidiary) of the fair market value of the net assets of such
Restricted Subsidiary of the Company at the time that such Restricted Subsidiary
is designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company will be
deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary in an amount (if positive) equal to (a) the Company's "Investment" in
such Subsidiary at the time of such redesignation less (b) the portion
(proportionate to the Company's equity interest in such Subsidiary) of the fair
market value of the net assets (as conclusively determined by the Board of
Directors of the Company in good faith) of such Subsidiary at the time that such
Subsidiary is so re-designated a Restricted Subsidiary; and
(2) any property transferred to or from an Unrestricted Subsidiary
will be valued at its fair market value at the time of such transfer, in each
case as determined in good faith by the Board of Directors of the Company. If
the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Voting Stock of any Restricted Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such entity is no
longer a Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the
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date of any such sale or disposition equal to the fair market value (as
conclusively determined by the Board of Directors of the Company in good faith)
of the Capital Stock of such Subsidiary not sold or disposed of.
"IPO" means the initial public offering of common stock of the
Company completed on September 24, 1997.
"Issue Date" means the date on which the Original Securities are
originally issued.
"IT Agreement" means an information technology agreement between PHH
Vehicle Management Services LLC and Cendant for continued access to Cendant's
main frame and information technology resources.
"Legal Holiday" has the meaning ascribed to it in Section 12.8.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Master License Agreement" means the Master License Agreement, dated
July 30, 1997, among HFS Car Rental, Inc., Avis Rent A Car System, Inc. and
Wizard Co., Inc.
"Merger Agreement" means the Agreement and Plan of Merger and
Reorganization by and among PHH Corporation, PHH Holdings Corporation, Avis Rent
A Car, Inc. and Avis Fleet Leasing and Management Corporation dated as of May
22, 1999, as the same may be amended, supplemented or otherwise modified from
time to time.
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other noncash form) therefrom, in each case net of:
(1) all legal, accounting, investment banking, title and recording
tax expenses, commissions and other fees and expenses incurred, and all
Federal, state, provincial, foreign and local taxes required to be paid or
accrued as a liability under GAAP (after taking into account any available
tax credits or deductions and any tax sharing agreements), as a
consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of
any Lien upon such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law
be repaid out of the proceeds from such Asset Disposition;
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(3) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Disposition; and
(4) the deduction of appropriate amounts to be provided by the
seller as a reserve, in accordance with GAAP, against any liabilities
associated with the assets disposed of in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, listing fees,
discounts or commissions and brokerage, consultant and other fees and charges
actually incurred in connection with such issuance or sale and net of taxes paid
or payable as a result of such issuance or sale (after taking into account any
available tax credit or deductions and any tax sharing arrangements).
"Non-Recourse Indebtedness" means Indebtedness:
(1) as to which neither the Company nor any Restricted Subsidiary
(a) provides any Guarantee or credit support of any kind (including any
undertaking, guarantee, indemnity, agreement or instrument that would
constitute Indebtedness) or (b) is directly or indirectly liable (as a
guarantor or otherwise);
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both)
any holder of any other Indebtedness of the Company or any Restricted
Subsidiary to declare a default under such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity;
and
(3) the explicit terms of which provide there is no recourse against
any of the assets of the Company or its Restricted Subsidiaries.
"Non-U.S. Person" means a person who is not a U.S. person, as
defined in Regulation S.
"Note Register" means the register of Securities, maintained by the
Trustee, pursuant to Section 2.3.
"Obligations" has the meaning ascribed to it in Section 11.1.
"Officer" means the Chairman of the Board, the Chief Operating
Officer, the President, any Vice President, the Treasurer or the Secretary of
the Company.
"Officers' Certificate" means a certificate signed by two Officers
or by an Officer and either an Assistant Treasurer or an Assistant Secretary of
the Company.
"Opinion of Counsel" means a written opinion from legal counsel
delivered to the Trustee. The counsel may be an employee of or counsel to the
Company.
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"Original Securities" means the Company's 11% Senior Subordinated
Notes due 2009 originally issued on the Issue Date.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in:
(1) a Restricted Subsidiary (other than a Securitization Entity) or
a Person which will, upon the making of such Investment, become a
Restricted Subsidiary (other than a Securitization Entity); provided,
however, that the primary business of such Restricted Subsidiary is a
Related Business;
(2) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, the Company or a Restricted Subsidiary
(other than a Securitization Entity); provided, however, that such
Person's primary business is a Related Business;
(3) cash and Cash Equivalents;
(4) receivables owing to the Company or any Restricted Subsidiary
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business;
(6) loans or advances to employees made in the ordinary course of
business consistent with past practices of the Company or such Restricted
Subsidiary;
(7) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments or pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of a debtor;
(8) Investments made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with Section 3.6;
(9) Investments in existence on the Issue Date;
(10) Currency Agreements, Interest Rate Agreements and related
Hedging Obligations, which transactions or obligations are Incurred in
compliance with Section 3.3;
(11) Investments by the Company or any of its Restricted
Subsidiaries, together with all other Investments pursuant to this clause
(11), in an aggregate amount at the time of such Investment not to exceed
$40.0 million outstanding at any one time;
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(12) Guarantees issued in accordance with Section 3.3; and
(13) Investments by the Company or a Restricted Subsidiary in a
Securitization Entity or any Investment by a Securitization Entity in any
other Person, in each case, in connection with a Qualified Securitization
Transaction, provided, however, that any Investment in any such Person is
in the form of a Purchase Money Note, or any equity interest or interests
in Permitted Vehicle Collateral generated by the Company or a Restricted
Subsidiary and transferred to any Person in connection with a Qualified
Securitization Transaction.
"Permitted Liens" means, with respect to any Person:
(1) Liens securing Indebtedness and other obligations under the
Senior Credit Facilities and related Interest Rate Agreements and other
Senior Indebtedness and liens on assets of Restricted Subsidiaries
securing Guarantees of Indebtedness and other obligations under a Senior
Credit Facilities and other Guarantor Senior Indebtedness permitted to be
incurred under this Indenture;
(2) pledges or deposits by such Person under workmen's compensation
laws, unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Person is a party, or
deposits to secure public or statutory obligations of such Person or
deposits or cash or United States government bonds to secure surety or
appeal bonds to which such Person is a party, or deposits as security for
contested taxes or import or customs duties or for the payment of rent, in
each case Incurred in the ordinary course of business;
(3) Liens imposed by law, including carriers', warehousemen's and
mechanics' Liens, in each case for sums not yet due or being contested in
good faith by appropriate proceedings if a reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made in
respect thereof;
(4) Liens for taxes, assessments or other governmental charges not
yet subject to penalties for non-payment or which are being contested in
good faith by appropriate proceedings provided appropriate reserves
required pursuant to GAAP have been made in respect thereof;
(5) Liens in favor of issuers of surety or performance bonds or
letters of credit or bankers' acceptances issued pursuant to the request
of and for the account of such Person in the ordinary course of its
business; provided, however, that such letters of credit do not constitute
Indebtedness;
(6) Liens on any airport concession agreements or permits to secure
loans extended to finance tenant improvements used in connection with the
concession agreement or permit subject to such Lien;
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(7) encumbrances, easements or reservations of, or rights of others
for, licenses, rights of way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other
restrictions as to the use of real properties or liens incidental to the
conduct of the business of such Person or to the ownership of its
properties which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation
of the business of such Person;
(8) Liens securing Hedging Obligations so long as the related
Indebtedness is, and is permitted to be under this Indenture, secured by a
Lien on the same property securing such Hedging Obligation;
(9) leases and subleases of real property which do not materially
interfere with the ordinary conduct of the business of the Company or any
of its Restricted Subsidiaries;
(10) judgment Liens not giving rise to an Event of Default so long
as such Lien is adequately bonded and any appropriate legal proceedings
which may have been duly initiated for the review of such judgment have
not been finally terminated or the period within which such proceedings
may be initiated has not expired;
(11) Liens for the purpose of securing the payment of all or a part
of the purchase price of, or Capitalized Lease Obligations with respect
to, assets or property acquired or constructed in the ordinary course of
business; provided that:
(a) the aggregate principal amount of Indebtedness secured by
such Liens is otherwise permitted to be Incurred under this
Indenture and does not exceed the cost of the assets or property so
acquired or constructed; and
(b) such Liens are created within 180 days of construction or
acquisition of such assets or property and do not encumber any other
assets or property of the Company or any Restricted Subsidiary other
than such assets or property and assets affixed or appurtenant
thereto;
(12) Liens arising solely by virtue of any statutory or common law
provisions relating to banker's Liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a
depositary institution; provided that:
(a) such deposit account is not a dedicated cash collateral
account and is not subject to restrictions against access by the
Company in excess of those set forth by regulations promulgated by
the Federal Reserve Board; and
(b) such deposit account is not intended by the Company or any
Restricted Subsidiary to provide collateral to the depository
institution;
(13) Liens arising from Uniform Commercial Code financing statement
filings regarding operating leases entered into by the Company and its
Restricted Subsidiaries in the ordinary course of business;
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(14) Liens existing on the Issue Date;
(15) Liens on property or shares of stock of a Person at the time
such Person becomes a Restricted Subsidiary; provided, however, that such
Liens are not created, incurred or assumed in connection with, or in
contemplation of, such other Person becoming a Restricted Subsidiary;
provided further, however, that any such Lien may not extend to any other
property owned by the Company or any Restricted Subsidiary;
(16) Liens on property at the time the Company or a Restricted
Subsidiary acquired the property, including any acquisition by means of a
merger or consolidation with or into the Company or any Restricted
Subsidiary; provided, however, that such Liens are not created, incurred
or assumed in connection with, or in contemplation of, such acquisition;
provided further, however, that such Liens may not extend to any other
property owned by the Company or any Restricted Subsidiary;
(17) Liens securing Indebtedness or other obligations of a
Restricted Subsidiary owing to the Company or a Wholly-Owned Subsidiary
(other than a Securitization Entity);
(18) Liens securing the Securities and Subsidiary Guarantees;
(19) Liens securing Refinancing Indebtedness incurred to refinance
Indebtedness that was previously so secured, provided that any such Lien
is limited to all or part of the same property or assets (plus
improvements, accessions, proceeds or dividends or distributions in
respect thereof) that secured (or, under the written arrangements under
which the original Lien arose, could secure) the Indebtedness being
refinanced or is in respect of property that is the security for a
Permitted Lien hereunder;
(20) Liens on assets transferred to a Securitization Entity or on
assets of a Securitization Entity, in either case incurred in connection
with a Qualified Securitization Transaction; and
(21) Liens securing Customer Lease Financing Loans incurred without
violation of this Indenture.
"Permitted Vehicle Collateral" means, as of any Determination Date:
(1) the collateral securing Permitted Vehicle Indebtedness and
consisting of Eligible Vehicles and receivables, or a beneficial interest
therein, arising from the disposition of Eligible Vehicles and the
proceeds thereof;
(2) Eligible Leases and Fleet Receivables, or a beneficial interest
therein, transferred to a Securitization Entity in connection with a
Qualified Securitization Transaction and the proceeds thereof;
(3) any related assets which are customarily transferred, or in
respect of which security interests are customarily granted, in connection
with asset securitizations involving Eligible Vehicles or Eligible Leases;
and
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(4) any proceeds of any of the foregoing.
"Permitted Vehicle Indebtedness" means (1) Indebtedness Incurred to
finance or refinance Eligible Vehicles (but only to the extent actually used to
finance or refinance Eligible Vehicles) and (2) Indebtedness secured by
Permitted Vehicle Collateral; provided, however, that any Indebtedness
redesignated pursuant to Section 3.13(2)(C) shall not constitute Permitted
Vehicle Indebtedness; and provided, further, that the Securities shall be deemed
not to constitute Permitted Vehicle Indebtedness when issued.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company, government or any agency or political subdivision
hereof or any other entity.
"PHH Sub Preferred Stock" is a collective reference to the Series A
Cumulative Participating Redeemable Convertible Preferred Stock, Series B
Cumulative PIK Preferred Stock and Series C Cumulative Redeemable Preferred
Stock of Acquisition Subsidiary and the related Certificates of Designations in
effect on the Issue Date, as each of the same may be amended, supplemented or
otherwise modified from time to time; provided that any such amendment,
supplement or modification is not disadvantageous to the Holders in any material
respect.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Private Exchange Securities" shall have the meaning set forth in
the Exchange and Registration Rights Agreement or a similar agreement relating
to Initial Securities.
"Public Equity Offering" means an offering for cash by the Company
of its common stock, or options, warrants or rights with respect to its common
stock.
A "Public Market" exists at any time with respect to the common
stock of the Company, if:
(1) the common stock of the Company is then registered with the
Securities Exchange Commission pursuant to Section 12(b) or 12(g) of the
Exchange Act and traded either on a national securities exchange or in the
National Association of Securities Dealers Automated Quotation System; and
(2) at least 15% of the total issued and outstanding common stock of
the Company has been and remains distributed prior to such time by means
of an effective registration statement under the Securities Act of 1933,
as amended.
"Purchase Money Note" means a promissory note of a Securitization
Entity evidencing a line of credit, which may be irrevocable, from the Company
or any Restricted Subsidiary of the Company to a Securitization Entity or
representing the deferred purchase price
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for the purchase of assets by such Securitization Entity from the Company or a
Restricted Subsidiary, in each case in connection with a Qualified
Securitization Transaction, to a Securitization Entity, which note is repayable
from cash available to the Securitization Entity, other than amounts required to
be established as reserves pursuant to agreements, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors and
amounts paid in connection with the purchase of Eligible Vehicles, Eligible
Leases, Fleet Receivables or a beneficial interest therein.
"Purchasing Services Agreement" means the purchasing services
agreement dated as of August 1, 1999, between ARACS and Cendant Corporation.
"Qualified Securitization Transaction" means any transaction or
series of transactions that may be entered into by the Company or any of its
Restricted Subsidiaries pursuant to which the Company or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to (1) a Securitization
Entity (in the case of a transfer by the Company or any of its Restricted
Subsidiaries) and (2) any other Person (in the case of a transfer by a
Securitization Entity), or may grant a security interest in, any Permitted
Vehicle Collateral (whether now existing or arising in the future) of the
Company or any of its Restricted Subsidiaries, and any assets related thereto
including, without limitation, the proceeds of such Permitted Vehicle
Collateral.
"QIB" means any "qualified institutional buyer" (as defined in Rule
144A under the Securities Act).
"Redemption Date" means, with respect to any redemption of
Securities, the date of redemption with respect thereto.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinance", "refinances," and
"refinanced" shall have a correlative meaning) any Indebtedness existing on the
date of this Indenture or Incurred in compliance with this Indenture (including
Indebtedness of the Company that refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness, provided, however, that:
(1) (a) if the Stated Maturity of the Indebtedness being refinanced
is earlier than the Stated Maturity of the Securities, the Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of
the Indebtedness being refinanced or (b) if the Stated Maturity of the
Indebtedness being refinanced is later than the Stated Maturity of the
Securities, the Refinancing Indebtedness has a Stated Maturity at least 91
days later than the Stated Maturity of the Securities;
(2) the Refinancing Indebtedness has an Average Life at the time
such Refinancing Indebtedness is Incurred that is equal to or greater than
the Average Life of the Indebtedness being refinanced;
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(3) such Refinancing Indebtedness is Incurred in an aggregate
principal amount (or if issued with original issue discount, an aggregate
issue price) that is equal to or less than the sum of the aggregate
principal amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding (plus, without duplication, accrued
interest, fees and expenses, including any premium and defeasance costs)
of the Indebtedness being refinanced; and
(4) if the Indebtedness being refinanced is subordinated in right of
payment to the Securities or the Subsidiary Guarantee, such Refinancing
Indebtedness is subordinated in right of payment to the Securities or the
Subsidiary Guarantee on terms at least as favorable to the Holders as
those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Registered Exchange Offer" shall have the meaning set forth in the
Exchange and Registration Rights Agreement.
"Registration Rights Agreement" means the registration rights
agreement between Avis Rent A Car and the Franchisor entered into in connection
with the IPO.
"Related Business" means any business which is the same as or
related, ancillary or complementary to any of the businesses of the Company and
its Restricted Subsidiaries on the date of this Indenture after giving effect to
the acquisition of VMS on such date (including WEX Financial).
"Related Business Assets" means assets used or useful in a Related
Business.
"Representative" means any trustee, agent or representative (if any)
of an issue of Senior Indebtedness.
"Reservation Services Agreement" means the reservation service
agreement between Cendant Corporation and ARACS entered into in connection with
the IPO.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Period" means the 40 consecutive days beginning on and
including the later of (A) the day on which the Initial Securities are offered
to persons other than distributors (as defined in Regulation S under the
Securities Act) and (B) the Issue Date.
"Restricted Securities Legend" means the Private Placement Legend
set forth in clause (A) of Section 2.1(c) or the Regulation S Legend set forth
in clause (B) of Section 2.1(c), as applicable.
"Restricted Subsidiary" means (i) any Subsidiary of the Company
other than an Unrestricted Subsidiary and (ii) any Securitization Entity.
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"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Restricted
Subsidiary leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Securities" means the collective reference to the Initial
Securities, Exchange Securities and Private Exchange Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by DTC), or any successor Person thereto and shall
initially be the Trustee.
"Securitization Entity" means a Restricted Subsidiary of the Company
(or another Person in which the Company or any Restricted Subsidiary of the
Company makes an Investment and to which the Company or any Restricted
Subsidiary of the Company transfers Permitted Vehicle Collateral or an interest
in Permitted Vehicle Collateral) which engages in no activities other than in
connection with the ownership, leasing, operation and financing of Eligible
Vehicles and other Permitted Vehicle Collateral and which is designated by the
Board of Directors of the Company (as provided below) as a Securitization Entity
and as to which:
(1) no portion of the Indebtedness or any other obligations
(contingent or otherwise) of which:
(a) is guaranteed by the Company or any Restricted Subsidiary
of the Company (excluding guarantees of Obligations (other than the
principal of, and interest on, Indebtedness) pursuant to Standard
Securitization Undertakings);
(b) is recourse to or obligates the Company or any Restricted
Subsidiary of the Company in any way other than pursuant to Standard
Securitization Undertakings; or
(c) subjects any property or asset of the Company or any
Restricted Subsidiary of the Company, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than
pursuant to Standard Securitization Undertakings;
(2) neither the Company nor any Restricted Subsidiary of the Company
has any material contract, agreement, arrangement or understanding (except
in connection with a Purchase Money Note or Qualified Securitization
Transaction) other than on terms no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from
Persons that are not Affiliates of the Company, other than fees payable in
the ordinary course of business in connection with servicing Permitted
Vehicle Collateral; and
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(3) neither the Company nor any Restricted Subsidiary of the Company
has any obligation to maintain or preserve such entity's financial
condition or cause such entity to achieve certain levels of operating
results.
Any such designation by the Board of Directors of the Company shall
be evidenced to the Trustee by filing with the Trustee a certified copy of the
resolution of the Board of Directors of the Company giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.
"Senior Credit Agreement" means the Credit Agreement, dated as of
the Issue Date among Avis Rent A Car, Inc., the several banks and other
financial institutions and entities from time to time parties thereto, The Chase
Manhattan Bank, as administrative agent for the lenders and Lehman Commercial
Paper Inc., as syndication agent, including any amendments, supplements,
modifications, extensions, renewals, restatements or refundings thereof and any
credit facilities or agreements that replace, refund or refinance any part of
the loans with other Senior Indebtedness of Avis Rent A Car, Inc.
"Senior Credit Facilities" means, with respect to the Company, one
or more debt facilities (including, with limitation, the Senior Credit Agreement
to be entered into among the Company, The Chase Manhattan Bank, as
Administrative Agent, and the lenders parties thereto from time to time) or
commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time (and whether or not with the original
administrative agent and lenders or another administrative agent or agents or
other lenders and whether provided under the original Revolving Credit Facility
and the Term Loan Facilities or any other credit or other agreement or
indenture).
"Senior Indebtedness" means, whether outstanding on the Issue Date
or thereafter issued, created, Incurred or assumed, the Bank Indebtedness and
all other Indebtedness of the Company, including accrued and unpaid interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company at the rate specified
in the documentation with respect thereto whether or not a claim for post filing
interest is allowed in such proceeding) and fees relating thereto; provided,
however, that Senior Indebtedness will not include:
(1) any Indebtedness which, in the instrument creating or evidencing
the same or pursuant to which the same is outstanding, it is provided that
the obligations in respect of such Indebtedness are not superior in right
of, or are subordinate to, payment of the Securities and the Subsidiary
Guarantees;
(2) any obligation of the Company to any Subsidiary;
(3) any liability for Federal, state, foreign, local or other taxes
owed or owing by the Company;
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(4) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including Guarantees thereof
or instruments evidencing such liabilities);
(5) any Indebtedness, Guarantee or obligation of the Company that is
expressly subordinate or junior in right of payment to any other
Indebtedness, Guarantee or obligation of the Company, including, without
limitation, any Senior Subordinated Indebtedness and any Subordinated
Obligations; or
(6) any Capital Stock.
"Senior Subordinated Indebtedness" means the Securities and any
other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank equally with the Securities in right of payment and is
not subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company which is not Senior Indebtedness.
"Separation Agreement" means the Separation Agreement dated as of
June 30, 1997 between HFS Car Rental, Inc. and Avis Rent A Car, Inc.
"Series C Preferred Stock" means the Series C Cumulative Redeemable
Preferred Stock of Acquisition Subsidiary and the related Certificate of
Designation in effect on the Issue Date.
"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Specified Financing Subsidiary" means a direct wholly-owned
subsidiary of Acquisition Subsidiary (into which Acquisition Subsidiary has
contributed only nominal equity) that is solely engaged in the business of
acquiring vehicles for and then leasing such vehicles to, a specified customer
(the "Customer"); provided that (i) such vehicles are purchased solely with the
proceeds of loans made by the Customer to such Specified Financing Subsidiary
(the "Customer Lease Financing Loans"), (ii) neither the Company nor any
Restricted Subsidiary provides the Specified Financing Subsidiary any guarantee
or credit support of any kind (including any undertaking, guarantee, indemnity,
agreement or instrument that would constitute Indebtedness) or is directly or
indirectly liable (as a guarantor or otherwise) for such Customer Lease
Financing Loans and (iii) the explicit terms of such Customer Lease Financing
Loans provide that there shall be no recourse against any of the assets of the
Company or its Restricted Subsidiaries.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Restricted Subsidiary of the Company which are reasonably customary in
securitizations of vehicles and vehicle leases.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision, but shall not include any contingent
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obligations to repay, redeem or repurchase any such principal prior to the date
originally scheduled for the payment thereof.
"Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subsidiary" of any Person means any corporation, trust,
association, partnership, joint venture, limited liability company or other
business entity of which more than 50% of the total voting power of shares of
Capital Stock or other interests (including partnership and joint venture
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (1) such Person, (2) such Person
and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of
such Person. Unless otherwise specified herein, each reference to a Subsidiary
will refer to a Subsidiary of the Company.
"Subsidiary Guarantee" means, individually, any Guarantee of payment
of the Securities by a Subsidiary Guarantor pursuant to the terms of this
Indenture and any supplemental indenture thereto, and, collectively, all such
Guarantees. Each such Subsidiary Guarantee will be in the form prescribed by
this Indenture.
"Subsidiary Guarantor" means each Restricted Subsidiary of the
Company in existence on the Issue Date and any Restricted Subsidiary created or
acquired by the Company after the Issue Date other than in each case an Excluded
Subsidiary.
"Tax Disaffiliation Agreement" means the Tax Disaffiliation
Agreement by and among Cendant Corporation and Avis Rent A Car entered into in
connection with the IPO .
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939
(15 U.S.C. ss.ss. 77aaa-77bbbb), as in effect on the date of this Indenture.
"Total Capital Ratio" has the meaning ascribed to it in Section
3.3(b)(15) of this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" shall mean, when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee, including any
vice president, assistant vice president, assistant secretary, assistant
treasurer, trust officer or any other officer of the Trustee who customarily
performs functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of such person's knowledge of and familiarity with the
particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Unrestricted Subsidiary" means:
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(1) any Subsidiary of the Company that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of Directors
of the Company in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Company may designate any Subsidiary
of the Company (including any newly acquired or newly formed Subsidiary or a
Person becoming a Subsidiary through merger or consolidation or Investment
therein) to be an Unrestricted Subsidiary only if:
(1) such Subsidiary or any of its Subsidiaries does not own any
Capital Stock or Indebtedness of or have any Investment in, or own or hold
any Lien on any property of, any other Subsidiary of the Company which is
not a Subsidiary of the Subsidiary to be so designated or otherwise an
Unrestricted Subsidiary;
(2) all the Indebtedness of such Subsidiary and its Subsidiaries
shall, at the date of designation, and will at all times thereafter,
consist of Non-Recourse Indebtedness;
(3) such designation and the Investment of the Company in such
Subsidiary complies with Section 3.4;
(4) such Subsidiary, either alone or in the aggregate with all other
Unrestricted Subsidiaries, does not operate, directly or indirectly, all or
substantially all of the business of the Company and its Subsidiaries;
(5) such Subsidiary is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation:
(a) to subscribe for additional Capital Stock of such Person;
or
(b) to maintain or preserve such Person's financial condition
or to cause such Person to achieve any specified levels of operating
results; and
(6) on the date such Subsidiary is designated an Unrestricted
Subsidiary, such Subsidiary is not a party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary
with terms substantially less favorable to the Company than those that
might have been obtained from Persons who are not Affiliates of the
Company.
Any such designation by the Board of Directors of the Company shall
be evidenced to the Trustee by filing with the Trustee a resolution of the Board
of Directors of the Company giving effect to such designation and an Officers'
Certificate certifying that such designation complies with the foregoing
conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be Incurred as of such date.
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The Board of Directors of the Company may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that immediately after giving
effect to such designation, no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof and the Company could
incur at least $1.00 of additional Indebtedness under Section 3.3(a) on a pro
forma basis taking into account such designation.
"VMS Acquisition" means the acquisition of the vehicle management
and fuel card businesses of Cendant pursuant to the Merger Agreement.
"VMS Agreements" means the IT Agreement and any transition service
agreement entered into by Cendant or its affiliates in connection with the VMS
Acquisition.
"Voting Stock" of a Person means all classes of Capital Stock of
such Person then outstanding and normally entitled to vote in the election of
directors or Persons discharging comparable functions.
"WEX Financial" means Wright Express Financial Services Corporation,
a licensed industrial loan corporation and any successor thereto.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the
Company, all of the Capital Stock of which (other than directors' qualifying
shares and PHH Sub Preferred Stock) is owned by the Company or another
Wholly-Owned Subsidiary.
SECTION 1.2. Other Definitions.
Defined in
Term Section
- ---- -------
"Affiliate Transaction"............................................. 3.7
"Agent Member"...................................................... 2.1(d)
"Authenticating Agent".............................................. 2.2
"Bankruptcy Law".................................................... 6.1
"Change of Control"................................................. 3.8
"Change of Control Offer"........................................... 3.8
"Change of Control Payment"......................................... 3.8
"Change of Control Payment Date".................................... 3.8
"Company Order"..................................................... 2.2
"covenant defeasance option"........................................ 8.1(b)
"Custodian"......................................................... 6.1
"Definitive Securities"............................................. 2.1(e)
"Determination Date"................................................ 3.13
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"Event of Default".................................................. 6.1
"Excess Proceeds"................................................... 3.6
"Exchange Global Note".............................................. 2.1
"Global Securities"................................................. 2.1(a)
"IAI"............................................................... 2.1
"Institutional Accredited Investor Global Note"..................... 2.1
"legal defeasance option"........................................... 8.1(b)
"Offer"............................................................. 3.6
"Offer Amount"...................................................... 3.6
"Offer Period"...................................................... 3.6
"Paying Agent"...................................................... 2.3
"Private Placement Legend".......................................... 2.1(c)
"Purchase Date"..................................................... 3.6
"Registrar"......................................................... 2.3
"Regulation S"...................................................... 2.1(a)
"Regulation S Certificate".......................................... 2.1
"Regulation S Global Note".......................................... 2.1
"Regulation S Legend"............................................... 2.1
"Regulation S Note"................................................. 2.1
"Regulation S Global Note".......................................... 2.1
"Release Date"...................................................... 2.1
"Resale Restriction Termination Date"............................... 2.6
"Restricted Payment"................................................ 3.4
"Rule 144A"......................................................... 2.1(b)
"Rule 144A Global Note"............................................. 2.1
"Rule 144A Note".................................................... 2.1
"Special Interest Payment Date"..................................... 2.13
"Special Record Date"............................................... 2.13
"Successor Company"................................................. 4.1
"Total Capital Ratio"............................................... 3.3(b)
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SECTION 1.3. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined in the TIA by reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.4. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
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ARTICLE II
The Securities
SECTION 2.1. Form, Dating and Terms. (a) The Original Securities are
being offered and sold by the Company pursuant to a Purchase Agreement, dated
June __, 1999, among the Company, the Subsidiary Guarantors and Chase Securities
Inc. and Lehman Brothers Inc. The Original Securities will be resold initially
only to (A) qualified institutional buyers (as defined in Rule 144A under the
Securities Act ("Rule 144A")) in reliance on Rule 144A ("QIBs") and (B) Persons
other than U.S. Persons (as defined in Regulation S under the Securities Act
("Regulation S")) in reliance on Regulation S. Such Original Securities may
thereafter be transferred to among others, QIBs, purchasers in reliance on
Regulation S and IAIs in accordance with Rule 501 of the Securities Act in
accordance with the procedure described herein.
Initial Securities offered and sold to qualified institutional
buyers in the United States of America in reliance on Rule 144A (the "Rule 144A
Note") will be issued on the Issue Date in the form of a permanent global
Security, without interest coupons, substantially in the form of Exhibit A,
which is hereby incorporated by reference and made a part of this Indenture,
including appropriate legends as set forth in Section 2.1(c) (the "Rule 144A
Global Note"), deposited with the Trustee, as custodian for DTC, duly executed
by the Company and authenticated by the Trustee as hereinafter provided. The
Rule 144A Global Note may be represented by more than one certificate, if so
required by DTC's rules regarding the maximum principal amount to be represented
by a single certificate. The aggregate principal amount of the Rule 144A Global
Note may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for DTC or its nominee, as hereinafter
provided.
Initial Notes offered and sold outside the United States of America
(the "Regulation S Note") in reliance on Regulation S under the Securities Act
("Regulation S") shall be issued in the form of a permanent global Security
substantially in the form of Exhibit A (the "Regulation S Global Note")
deposited with the Trustee, as custodian for the Depositary, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
Regulation S Global Note may be represented by more than one certificate, if so
required by the Depositary's rules regarding the maximum principal amount to be
represented by a single certificate. The aggregate principal amount of the
Regulation S Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depositary
or its nominee, as hereinafter provided.
Initial Securities resold to institutional "accredited investors"
(as defined in Rules 501(a)(1), (2), (3) and (7) under the Securities Act) who
are not QIBs ("IAIs") in the United States of America will be issued in the form
of a fully registered global security, without interest coupons, substantially
in the form set forth in Exhibit A, which is hereby incorporated by reference
and made a part of this Indenture, including appropriate legends as set forth in
Section 2.1(c), duly executed by the Company and authenticated by the Trustee as
hereinafter provided (each, an "Institutional Accredited Investor Global Note").
Upon such issuance, the Trustee shall register such Institutional Accredited
Investor Global Note in the name of the beneficial owner or owners of such note
(or the nominee of such beneficial owner or owners) and deliver the
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certificates for such Institutional Accredited Investor Global Note to the
respective beneficial owner or owners. Upon transfer of such Institutional
Accredited Investor Global Note to a QIB or to a Non-U.S. Person, such
Institutional Accredited Investor Global Note will, unless the Rule 144A Global
Note, in the case of a transfer to a QIB, or the Regulation S Global Note, in
the case of a transfer to a Non-U.S. Person, has previously been exchanged for
Definitive Securities pursuant to Section 2.1(e), be exchanged for an interest
in a Global Security pursuant to the provisions of Section 2.6.
Exchange Securities exchanged for interests in the Rule 144A Note,
the Regulation S Note and the Institutional Accredited Investor Global Note will
be issued in the form of a permanent global Security substantially in the form
of Exhibit B, which is hereby incorporated by reference and made a part of this
Indenture, deposited with the Trustee as hereinafter provided, including the
appropriate legend set forth in Section 2.1(c) (the "Exchange Global Note"). The
Exchange Global Note may be represented by more than one certificate, if so
required by DTC's rules regarding the maximum principal amount to be represented
by a single certificate.
The Rule 144A Global Note, the Regulation S Global Note and the
Exchange Global Note are sometimes collectively herein referred to as the
"Global Securities."
The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Company maintained
for such purpose in The City of New York, or at such other office or agency of
the Company as may be maintained for such purpose pursuant to Section 2.3;
provided, however, that, at the option of the Company, each installment of
interest may be paid by (i) check mailed to addresses of the Persons entitled
thereto as such addresses shall appear on the Note Register or (ii) wire
transfer to an account located in the United States maintained by the payee.
Payments in respect of Securities represented by a Global Note (including
principal, premium and interest) will be made by wire transfer of immediately
available funds to the accounts specified by DTC.
The Private Exchange Securities shall be in the form of Exhibit A.
The Securities may have notations, legends or endorsements required by law,
stock exchange rule or usage, in addition to those set forth on Exhibits A and B
and in Section 2.1(c). The Company and the Trustee shall approve the forms of
the Securities and any notation, endorsement or legend on them. Each Security
shall be dated the date of its authentication. The terms of the Securities set
forth in Exhibit A and Exhibit B are part of the terms of this Indenture and, to
the extent applicable, the Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to be bound by such terms.
(b) Denominations. The Securities shall be issuable only in fully
registered form, without coupons, and only in denominations of $1,000 and any
integral multiple thereof.
(c) Restrictive Legends. Unless and until (i) an Initial Security is
sold under an effective registration statement or (ii) an Initial Security is
exchanged for an Exchange Security in connection with an effective registration
statement, in each case pursuant to the Registration Rights Agreement or a
similar agreement,
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(A) the Rule 144A Global Note and the Institutional Accredited
Investor Global Note shall bear the following legend (the "Private Placement
Legend") on the face thereof:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, ON ITS
OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED
SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A TRANSACTION INVOLVING A MINIMUM PRINCIPAL AMOUNT OF $250,000 OF
SECURITIES, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE
IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE."; and
(B) the Regulation S Global Note shall bear the following legend
(the "Regulation S Legend") on the face thereof:
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"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT
PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT
("REGULATION S"), (2) BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S,
(E) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A TRANSACTION INVOLVING A MINIMUM PRINCIPAL
AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND IN THE
CASE OF THE FOREGOING CLAUSE (E), A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE COMPANY AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED AFTER 40
CONSECUTIVE DAYS BEGINNING ON AND INCLUDING THE LATER OF (A) THE DAY ON WHICH
THE SECURITIES ARE OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN
REGULATION S) AND (B) THE DATE OF THE CLOSING OF THE ORIGINAL OFFERING. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT."
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(C) The Global Securities, whether or not an Initial Security, shall
bear the following legend on the face thereof:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF."
(D) Each Institutional Accredited Investor Global Note shall also
bear the following additional legend on the face thereof:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIED WITH
THE FOREGOING RESTRICTIONS.
(d) Book-Entry Provisions. (i) This Section 2.1(d) shall apply only
to Global Securities deposited with the Trustee, as custodian for DTC.
(ii) Each Global Security initially shall (x) be registered in the
name of DTC for such Global Security or the nominee of DTC, (y) be delivered to
the Trustee as custodian for DTC and (z) bear legends as set forth in Section
2.1(c).
(iii) Members of, or participants in, DTC ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by DTC or by the Trustee as the custodian of DTC or under such
Global Security, and DTC may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by DTC or impair, as
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between DTC and its Agent Members, the operation of customary practices of DTC
governing the exercise of the rights of a holder of a beneficial interest in any
Global Security.
(iv) In connection with any transfer of a portion of the beneficial
interest in a Global Security pursuant to subsection (e) of this Section to
beneficial owners who are required to hold Definitive Securities, the Securities
Custodian shall reflect on its books and records the date and a decrease in the
principal amount of such Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred, and
the Company shall execute, and the Trustee shall authenticate and deliver, one
or more Definitive Securities of like tenor and amount.
(v) In connection with the transfer of an entire Global Security to
beneficial owners pursuant to subsection (e) of this Section, such Global
Security shall be deemed to be surrendered to the Trustee for cancellation, and
the Company shall execute, and the Trustee shall authenticate and deliver, to
each beneficial owner identified by DTC in exchange for its beneficial interest
in such Global Security, an equal aggregate principal amount of Definitive
Securities of authorized denominations.
(vi) The registered holder of a Global Security may grant proxies
and otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
(e) Definitive Securities. (i) Except as provided below, owners of
beneficial interests in Global Securities will not be entitled to receive
Definitive Securities. If required to do so pursuant to any applicable law or
regulation, beneficial owners may obtain Definitive Securities in exchange for
their beneficial interests in a Global Security upon written request in
accordance with DTC's and the Registrar's procedures. In addition, Definitive
Securities shall be transferred to all beneficial owners in exchange for their
beneficial interests in a Global Security if (a) DTC notifies the Company that
it is unwilling or unable to continue as depositary for such Global Security or
DTC ceases to be a clearing agency registered under the Exchange Act, at a time
when DTC is required to be so registered in order to act as depositary, and in
each case a successor depositary is not appointed by the Company within 90 days
of such notice or, (b) the Company executes and delivers to the Trustee and
Registrar an Officers' Certificate stating that such Global Security shall be so
exchangeable or (c) an Event of Default has occurred and is continuing and the
Registrar has received a request from DTC.
(ii) Any Definitive Security delivered in exchange for an interest
in a Global Security pursuant to Section 2.1(d)(iv) or (v) shall, except as
otherwise provided by Section 2.6(c), bear the applicable legend regarding
transfer restrictions applicable to the Definitive Security set forth in Section
2.1(c).
(iii) In connection with the exchange of a portion of a Definitive
Security for a beneficial interest in a Global Security, the Trustee shall
cancel such Definitive Security, and the Company shall execute, and the Trustee
shall authenticate and deliver, to the transferring Holder a new Definitive
Security representing the principal amount not so transferred.
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SECTION 2.2. Execution and Authentication. One Officer shall sign
the Securities for the Company by manual or facsimile signature. If an Officer
whose signature is on a Security no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless,
after giving effect to any exchange of Initial Securities for Exchange
Securities.
A Security shall not be valid until an authorized signatory of the
Trustee manually authenticates the Security. The signature of the Trustee on a
Security shall be conclusive evidence that such Security has been duly and
validly authenticated and issued under this Indenture. A Security shall be dated
the date of its authentication.
At any time and from time to time after the execution and delivery
of this Indenture, the Trustee shall authenticate and make available for
delivery: (1) Original Securities for original issue on the Issue Date in an
aggregate principal amount of $500.0 million and (2) Exchange Securities for
issue only in a Registered Exchange Offer pursuant to the Registration Rights
Agreement, and only in exchange for Initial Securities of an equal principal
amount, in each case upon a written order of the Company signed by two Officers
or by an Officer and either an Assistant Treasurer or an Assistant Secretary of
the Company (the "Company Order"). Such Company Order shall specify the amount
of the Securities to be authenticated and the date on which the original issue
of Securities is to be authenticated and whether the Securities are to be
Initial Securities or Exchange Securities. The aggregate principal amount of
notes which may be authenticated and delivered under this Indenture is limited
to $500.0 million outstanding, except for Securities authenticated and delivered
upon registration or transfer of, or in exchange for, or in lieu of, other
Securities of the same class pursuant to Section 2.6, Section 2.9, Section 2.11,
Section 5.8, Section 9.5 and except for transactions similar to the Registered
Exchange Offer. All Securities issued on the Issue Date shall be identical in
all respects other than issue dates, the date from which interest accrues and
any changes relating thereto. Notwithstanding anything to the contrary contained
in this Indenture, all notes issued under this Indenture shall vote and consent
together on all matters as one class and no series of notes will have the right
to vote or consent as a separate class on any matter.
The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Company to authenticate the Securities. Unless
limited by the terms of such appointment, any such Authenticating Agent may
authenticate Securities whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by the
Authenticating Agent.
In case the Company or any Subsidiary Guarantor, pursuant to Article
IV, shall be consolidated or merged with or into any other Person or shall
convey, transfer, lease or otherwise dispose of its properties and assets
substantially as an entirety to any Person, and the successor Person resulting
from such consolidation, or surviving such merger, or into which the Company or
any Subsidiary Guarantor shall have been merged, or the Person which shall have
received a conveyance, transfer, lease or other disposition as aforesaid, shall
have executed an indenture supplemental hereto with the Trustee pursuant to
Article IV, any of the Securities authenticated or delivered prior to such
consolidation, merger, conveyance, transfer, lease or other disposition may,
from time to time, at the request of the successor Person, be exchanged for
other Securities
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executed in the name of the successor Person with such changes in phraseology
and form as may be appropriate, but otherwise in substance of like tenor as the
Securities surrendered for such exchange and of like principal amount; and the
Trustee, upon Company Order of the successor Person, shall authenticate and
deliver Securities as specified in such order for the purpose of such exchange.
If Securities shall at any time be authenticated and delivered in any new name
of a successor Person pursuant to this Section 2.2 in exchange or substitution
for or upon registration of transfer of any Securities, such successor Person,
at the option of the Holders but without expense to them, shall provide for the
exchange of all Securities at the time outstanding for Securities authenticated
and delivered in such new name.
SECTION 2.3. Registrar and Paying Agent. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Company shall
cause each of the Registrar and the Paying Agent to maintain an office or agency
in the Borough of Manhattan, The City of New York. The Registrar shall keep a
register of the Securities and of their transfer and exchange (the "Note
Register"). The Company may have one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional paying
agent.
The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of each such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.7. The
Company or any of its domestically incorporated Wholly-Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying
Agent for the Securities.
SECTION 2.4. Paying Agent To Hold Money in Trust. By at least 10:00
a.m (New York City time) on the date on which any principal of or interest on
any Security is due and payable, the Company shall deposit with the Paying Agent
a sum sufficient to pay such principal or interest when due. The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that such
Paying Agent shall hold in trust for the benefit of Securityholders or the
Trustee all money held by such Paying Agent for the payment of principal of or
interest on the Securities and shall notify the Trustee in writing of any
default by the Company or any Subsidiary Guarantor in making any such payment.
If the Company or a Subsidiary acts as Paying Agent, it shall segregate the
money held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent (other than the Trustee) to pay
all money held by it to the Trustee and to account for any funds disbursed by
such Paying Agent. Upon complying with this Section, the Paying Agent (if other
than the Company or a Subsidiary) shall have no further liability for the money
delivered to the Trustee. Upon any bankruptcy, reorganization or similar
proceeding with respect to the Company, the Trustee shall serve as Paying Agent
for the Securities.
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SECTION 2.5. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, or to the extent otherwise required under the TIA, the Company shall
furnish to the Trustee, in writing at least seven Business Days before each
interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.
SECTION 2.6. Transfer and Exchange.
(a) The following provisions shall apply with respect to any
proposed transfer of a Rule 144A Note or an Institutional Accredited Investor
Global Note prior to the date which is two years after the later of the date of
its original issue and the last date on which the Company or any affiliate of
the Company was the owner of such Securities (or any predecessor thereto) (the
"Resale Restriction Termination Date"):
(i) a transfer of a Rule 144A Note or an Institutional Accredited
Investor Global Note or a beneficial interest therein to a QIB shall be
made upon the representation of the transferee in the form as set forth on
the reverse of the Security that it is purchasing for its own account or
an account with respect to which it exercises sole investment discretion
and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested
pursuant to Rule 144A or has determined not to request such information
and that it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration provided
by Rule 144A;
(ii) a transfer of a Rule 144A Note or an Institutional Accredited
Investor Global Note or a beneficial interest therein to an IAI shall be
made upon receipt by the Trustee or its agent of a certificate
substantially in the form set forth in Section 2.7 from the proposed
transferee and, if requested by the Company or the Trustee, the delivery
of an opinion of counsel, certification and/or other information
satisfactory to each of them; and
(iii) a transfer of a Rule 144A Note or an Institutional Accredited
Investor Global Note or a beneficial interest therein to a Non-U.S. Person
shall be made upon receipt by the Trustee or its agent of a certificate
substantially in the form set forth in Section 2.8 from the proposed
transferee and, if requested by the Company or the Trustee, the delivery
of an opinion of counsel, certification and/or other information
satisfactory to each of them.
(b) The following provisions shall apply with respect to any
proposed transfer of a Regulation S Note prior to the expiration of the
Restricted Period:
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(i) a transfer of a Regulation S Note or a beneficial interest
therein to a QIB shall be made upon the representation of the transferee,
in the form of assignment on the reverse of the certificate, that it is
purchasing the Security for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such
account is a "qualified institutional buyer" within the meaning of Rule
144A, and is aware that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to claim
the exemption from registration provided by Rule 144A;
(ii) a transfer of a Regulation S Note or a beneficial interest
therein to an IAI shall be made upon receipt by the Trustee or its agent
of a certificate substantially in the form set forth in Section 2.7 from
the proposed transferee and, if requested by the Company or the Trustee,
the delivery of an opinion of counsel, certification and/or other
information satisfactory to each of them; and
(iii) transfer of a Regulation S Note or a beneficial interest
therein to a Non-U.S. Person shall be made upon receipt by the Trustee or
its agent of a certificate substantially in the form set forth in Section
2.8 hereof from the proposed transferee and, if requested by the Company
or the Trustee, receipt by the Trustee or its agent of an opinion of
counsel, certification and/or other information satisfactory to each of
them.
After the expiration of the Restricted Period, interests in the
Regulation S Note may be transferred without requiring certification set forth
in Section 2.7, Section 2.8 or any additional certification.
(c) Restricted Securities Legend. Upon the transfer, exchange or
replacement of Securities not bearing a Restricted Securities Legend, the
Registrar shall deliver Securities that do not bear a Restricted Securities
Legend. Upon the transfer, exchange or replacement of Securities bearing a
Restricted Securities Legend, the Registrar shall deliver only Securities that
bear a Restricted Securities Legend unless there is delivered to the Registrar
an Opinion of Counsel to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(d) The Restricted Period will end on the date that is forty days
after the Closing Date.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.1 or this Section 2.6. The
Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable prior written notice to the Registrar.
(e) Obligations with Respect to Transfers and Exchanges of
Securities.
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(i) To permit registrations of transfers and exchanges, the Company
shall, subject to the other terms and conditions of this Article II,
execute and the Trustee shall authenticate Definitive Securities and
Global Securities at the Registrar's or co-registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any such
transfer taxes, assessments or similar governmental charges payable upon
exchange or transfer pursuant to Sections 3.6, 3.8 or 9.5).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Security for a period
beginning (1) 15 days before the mailing of a notice of an offer to
repurchase or redeem Securities and ending at the close of business on the
day of such mailing or (2) 15 days before an interest payment date and
ending on such interest payment date.
(iv) Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent, the Registrar or
any co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and for
all other purposes whatsoever, whether or not such Security is overdue,
and none of the Company, the Trustee, the Paying Agent, the Registrar or
any co-registrar shall be affected by notice to the contrary.
(v) Any Definitive Security delivered in exchange for an interest in
a Global Security pursuant to Section 2.1(d) shall, except as otherwise
provided by Section 2.6(c), bear the applicable legend regarding transfer
restrictions applicable to the Definitive Security set forth in Section
2.1(c).
(vi) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
(f) No Obligation of the Trustee. (i) The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global Security, a
member of, or a participant in, DTC or other Person with respect to the accuracy
of the records of DTC or its nominee or of any participant or member thereof,
with respect to any ownership interest in the Securities or with respect to the
delivery to any participant, member, beneficial owner or other Person (other
than DTC) of any notice (including any notice of redemption) or the payment of
any amount or delivery of any Securities (or other security or property) under
or with respect to such Securities. All notices and communications to be given
to the Holders and all payments to be made to Holders in respect of the
Securities shall be given or made only to or upon the order of the registered
Holders (which shall be DTC or its nominee in the case of a Global Security).
The rights of beneficial owners in any Global Security shall be exercised only
through DTC subject to the applicable rules and procedures of DTC. The Trustee
may rely and shall be fully protected in
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relying upon information furnished by DTC with respect to its members,
participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security (including any transfers between or among Depositary
participants, members or beneficial owners in any Global Security) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
SECTION 2.7. Form of Certificate to be Delivered in Connection with
Transfers to Institutional Accredited Investors.
[Date]
Avis Rent A Car, Inc.
c/o
The Bank of New York
Attention: Corporate Trust Administration
Dear Sirs:
This certificate is delivered to request a transfer of $
principal amount of the 11% Senior Subordinated Notes due 2009 (the
"Securities") of Avis Rent A Car, Inc. (the "Company").
Upon transfer, the Securities would be registered in the name of the
new beneficial owner as follows:
Name: ___________________________________
Address: ________________________________
Taxpayer ID Number: _____________________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Securities, and we are acquiring the Securities not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act.
We have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risk of our investment in the Securities
and we invest in or purchase
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securities similar to the Securities in the normal course of our business. We
and any accounts for which we are acting are each able to bear the economic risk
of our or its investment.
2. We understand that the Securities have not been registered under
the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf of
any investor account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to the date which is two years after
the later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the
Company, (b) pursuant to a registration statement which has been declared
effective under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act, to a person we reasonably
believe is a qualified institutional buyer under Rule 144A (a "QIB") that
purchases for its own account or for the account of a QIB and to whom notice is
given that the transfer is being made in reliance on Rule 144A, (d) pursuant to
offers and sales that occur outside the United States within the meaning of
Regulation S under the Securities Act, (e) to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is purchasing for its own account or for the account of such
an institutional "accredited investor," in each case in a minimum principal
amount of Securities of $250,000 or (f) pursuant to any other available
exemption from the registration requirements of the Securities Act, subject in
each of the foregoing cases to any requirement of law that the disposition of
our property or the property of such investor account or accounts be at all
times within our or their control and in compliance with any applicable state
securities laws. The foregoing restrictions on resale will not apply subsequent
to the Resale Restriction Termination Date. If any resale or other transfer of
the Securities is proposed to be made pursuant to clause (e) above prior to the
Resale Restriction Termination Date, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the Company and the
Trustee, which shall provide, among other things, that the transferee is an
institutional "accredited investor" (within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act) and that it is acquiring such Securities
for investment purposes and not for distribution in violation of the Securities
Act. Each purchaser acknowledges that the Company and the Trustee reserve the
right prior to any offer, sale or other transfer prior to the Resale Termination
Date of the Securities pursuant to clauses (d), (e) or (f) above to require the
delivery of an opinion of counsel, certifications and/or other information
satisfactory to the Company and the Trustee.
3. One or more of the following statements is accurate as to each
source of funds (each, a "Source") to be used by us to purchase the Securities
as of the date hereof:
(i) we are not acquiring the Securities with the assets of any
employee benefit plan which is subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any
"plan" which is subject to Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code");
(ii) we are an insurance company and the Source is an "insurance
company general account", as such term is defined in U.S. Department of
Labor Prohibited
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Transaction Class Exemption ("PTCE") 95-60 (issued July 12, 1995), and the
purchase and holding of the Securities is exempt under PTCE 95-60; or
(iii) the Source constitutes plan assets that are included in an
"investment fund" (within the meaning of Part V of PTCE 81-1) (issued
March 13, 1984) (the "QPAM Exemption") managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), and the purchase and holding of the Securities is exempt
under PTCE 84-14; or
(iv) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTCE 90-1 (issued January 29, 1990), or
(ii) a bank collective investment fund, within the meaning of PTCE 91-38
(issued July 12, 1991), and the purchase and holding of the Securities is
exempt under either PTCE 90-2 or PTCE 91-38; or
(v) the Source is the assets of one or more employee benefit plans
which are managed by an "in-house asset manager" as that term is defined
in PTCE 96-23 (issued April 10, 1996), and such purchase and holding of
the Securities is exempt under PTCE 96-23.
As used herein, the term "employee benefit plan" shall have the
meaning assigned to such term in Section 3 of ERISA and "plan" shall have the
meaning assigned to such term in Section 4975 of the Code.
TRANSFEREE:______________________
BY:______________________________
SECTION 2.8. Form of Certificate to be Delivered in Connection with
Transfers Pursuant to Regulation S.
[Date]
The Bank of New York
Attention: Corporate Trust Services Division
Re: Avis Rent A Car, Inc.
11% Senior Subordinated Notes due 2009 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(a) the offer of the Securities was not made to a person in the
United States;
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(b) either (i) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (ii) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(c) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(d) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:____________________________
_______________________________|
Authorized Signature
SECTION 2.9. Mutilated, Destroyed, Lost or Stolen Securities. If a
mutilated Security is surrendered to the Registrar or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
the Company shall issue and the Trustee shall authenticate a replacement
Security if the requirements of Section 8-405 of the Uniform Commercial Code are
met and the Holder satisfies any other reasonable requirements of the Trustee.
If required by the Trustee or the Company, such Holder shall furnish an
indemnity bond sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee, the Paying Agent, the Registrar and any
co-registrar from any loss which any of them may suffer if a Security is
replaced, and, in the absence of notice to the Company, any Subsidiary Guarantor
or the Trustee that such Security has been acquired by a bona fide purchaser,
the Company shall execute and upon Company Order the Trustee shall authenticate
and make available for delivery, in exchange for any such mutilated Security or
in lieu of any such destroyed, lost or stolen Security, a new Security of like
tenor and principal amount, bearing a number not contemporaneously outstanding.
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In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, any Subsidiary Guarantor (if
applicable) and any other obligor upon the Securities, whether or not the
mutilated, destroyed, lost or stolen Security shall be at any time enforceable
by anyone, and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.10. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. A Security ceases to be outstanding in the event the
Company or a Subsidiary of the Company holds the Security, provided, however,
that (i) for purposes of determining which are outstanding for consent or voting
purposes hereunder, Securities shall cease to be outstanding in the event the
Company or an Affiliate of the Company holds the Security and (ii) in
determining whether the Trustee shall be protected in making a determination
whether the holders of the requisite principal amount of outstanding Securities
are present at a meeting of holders of Securities for quorum purposes or have
consented to or voted in favor of any request, demand, authorization, direction,
notice, consent, waiver, amendment or modification hereunder, or relying upon
any such quorum, consent or vote, only Securities which a Trust Officer of the
Trustee actually knows to be held by the Company or an Affiliate of the Company
shall not be considered outstanding.
If a Security is replaced pursuant to Section 2.9, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal and interest payable on that date with respect to the
Securities (or portions thereof) to be redeemed or maturing, as the case may be,
and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
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SECTION 2.11. Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
Definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate Definitive Securities. After
the preparation of Definitive Securities, the temporary Securities shall be
exchangeable for Definitive Securities upon surrender of the temporary
Securities at any office or agency maintained by the Company for that purpose
and such exchange shall be without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall execute,
and the Trustee shall authenticate and make available for delivery in exchange
therefor, one or more Definitive Securities representing an equal principal
amount of Securities. Until so exchanged, the Holder of temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as a
holder of Definitive Securities.
SECTION 2.12. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
return to the Company all Securities surrendered for registration of transfer,
exchange, payment or cancellation. The Company may not issue new Securities to
replace Securities it has paid or delivered to the Trustee for cancellation for
any reason other than in connection with a transfer or exchange.
SECTION 2.13. Payment of Interest; Defaulted Interest. Interest on
any Security which is payable, and is punctually paid or duly provided for, on
any interest payment date shall be paid to the Person in whose name such
Security (or one or more predecessor Securities) is registered at the close of
business on the regular record date for such interest at the office or agency of
the Company maintained for such purpose pursuant to Section 2.3.
Any interest on any Security which is payable, but is not paid when
the same becomes due and payable and such nonpayment continues for a period of
30 days shall forthwith cease to be payable to the Holder on the regular record
date by virtue of having been such Holder, and such defaulted interest and (to
the extent lawful) interest on such defaulted interest at the rate borne by the
Securities (such defaulted interest and interest thereon herein collectively
called "Defaulted Interest") shall be paid by the Company, at its election in
each case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
predecessor Securities) are registered at the close of business on a
Special Record Date (as defined below) for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Security and the date (not less than 30 days after such
notice) of the proposed payment (the "Special Interest Payment Date"), and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed
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payment, such money when deposited to be held in trust for the benefit of
the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a record date (the "Special
Record Date") for the payment of such Defaulted Interest which shall be
not more than 15 days and not less than 10 days prior to the Special
Interest Payment Date and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date, and in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date and Special Interest
Payment Date therefor to be given in the manner provided for in Section
13.2, not less than 10 days prior to such Special Record Date. Notice of
the proposed payment of such Defaulted Interest and the Special Record
Date and Special Interest Payment Date therefor having been so given, such
Defaulted Interest shall be paid on the Special Interest Payment Date to
the Persons in whose names the Securities (or their respective predecessor
Securities) are registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of, transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 2.14. Computation of Interest. Interest on the Securities
shall be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 2.15. CUSIP Numbers. The Company in issuing the Securities
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided, however, that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such CUSIP
numbers. The Company shall promptly notify the Trustee of any change in the
CUSIP numbers.
ARTICLE III
Covenants
SECTION 3.1. Payment of Securities. The Company shall promptly pay
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such
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date the Trustee or the Paying Agent holds in accordance with this Indenture
money sufficient to pay all principal and interest then due and the Trustee or
the Paying Agent, as the case may be, is not prohibited from paying such money
to the Securityholders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
SECTION 3.2. SEC Reports and Available Information. Notwithstanding
that the Company may not be subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, to the extent permitted by the Exchange Act, the
Company will file with the Commission, and provide the Trustee and the Holders
of the Securities with, the annual reports and the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) that are specified in
Sections 13 and 15(d) of the Exchange Act within the time periods specified
therein. In the event that the Company is not permitted to file such reports,
documents and information with the Commission pursuant to the Exchange Act, the
Company will nevertheless provide such Exchange Act information to the Trustee
and the holders of the Securities as if the Company were subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act within the
time periods specified therein. The Company shall also comply with the other
provisions of TIA ss. 314(a). Delivery of such reports, information and
documents to the Trustee is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 3.3. Limitation on Indebtedness. (a) The Company will not,
and will not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness; provided, however, that the Company may Incur Indebtedness if on
the date thereof: (1) the Consolidated Coverage Ratio for the Company and its
Restricted Subsidiaries is at least 2.25 to 1.00; and (2) no Default or Event of
Default will have occurred or be continuing or would occur as a consequence
thereof.
(b) Section 3.3(a) will not prohibit the incurrence of the following
Indebtedness: (1) Indebtedness Incurred by the Company pursuant to the Senior
Credit Facilities in an aggregate principal amount up to $1,500,000,000 less the
aggregate principal amount of all scheduled principal repayments when made
unless refinanced on or prior to the date of such repayment under this clause
(1) and all mandatory prepayments of principal thereof permanently reducing the
commitments thereunder; (2) the Subsidiary Guarantees and other Guarantees by
the Subsidiary Guarantors of Indebtedness Incurred in accordance with the
provisions of this Indenture; provided that in the event such Indebtedness that
is being Guaranteed is (a) Senior Subordinated Indebtedness or Guarantor Senior
Subordinated Indebtedness, then the related Guarantee shall
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rank equally in right of payment to the Subsidiary Guarantee or (b) a
Subordinated Obligation or a Guarantor Subordinated Obligation, then the related
Guarantee shall be subordinated in right of payment to the Subsidiary Guarantee;
(3) Indebtedness of the Company owing to and held by any Wholly-Owned Subsidiary
(other than a Securitization Entity) or Indebtedness of a Restricted Subsidiary
owing to and held by the Company or any Wholly-Owned Subsidiary (other than a
Securitization Entity); provided, however, (a) if the Company is the obligor on
such Indebtedness, such Indebtedness is expressly subordinated to the prior
payment in full in cash of all obligations with respect to the Securities; and
(b) (i) any subsequent issuance or transfer of Capital Stock or any other event
which results in any such Indebtedness being beneficially held by a Person other
than the Company or a Wholly-Owned Subsidiary (other than a Securitization
Entity) of the Company; and (ii) any sale or other transfer of any such
Indebtedness to a Person other than the Company or a Wholly-Owned Subsidiary
(other than a Securitization Entity) of the Company shall be deemed, in each
case, to constitute an Incurrence of such Indebtedness by the Company or such
Subsidiary, as the case may be; (4) Indebtedness of Foreign Subsidiaries in an
aggregate principal amount that, when taken together with the principal amount
of all other Indebtedness Incurred pursuant to this clause (4) (and any
Indebtedness Incurred by Foreign Subsidiaries prior to the Issue Date to finance
working capital) and then outstanding, does not exceed $125.0 million; (5)
Indebtedness represented by (a) the Securities, (b) any Indebtedness (other than
the Indebtedness described in clauses (1), (2), (3), (4), (7), (8), (9), (10),
(11), (12) and (13)) outstanding on the Issue Date and (c) any Refinancing
Indebtedness Incurred in respect of any Indebtedness described in this clause
(5) or clause (6) or Incurred pursuant to paragraph (a) above; (6) Indebtedness
of a Restricted Subsidiary Incurred and outstanding on the date on which such
Restricted Subsidiary was acquired by the Company (other than Indebtedness
Incurred (a) to provide all or any portion of the funds utilized to consummate
the transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired
by the Company or (b) otherwise in connection with, or in contemplation of, such
acquisition); provided, however, that at the time such Restricted Subsidiary
(other than WEX Financial) is acquired by the Company, the Company would have
been able to Incur $1.00 of additional Indebtedness pursuant to Section 3.3(a)
after giving effect to the Incurrence of such Indebtedness pursuant to this
clause (6); (7) Indebtedness under Currency Agreements and Interest Rate
Agreements; provided, that in the case of Currency Agreements, such Currency
Agreements are related to business transactions of the Company or its Restricted
Subsidiaries entered into in the ordinary course of business (including in
connection with the incurrence of Permitted Vehicle Indebtedness) or in the case
of Currency Agreements and Interest Rate Agreements, such Currency Agreements
and Interest Rate Agreements are entered into for bona fide hedging purposes of
the Company or its Restricted Subsidiaries or in the case of Permitted Vehicle
Indebtedness corresponding to indebtedness of Restricted Subsidiaries (as
determined in good faith by the Board of Directors or senior management of the
Company) and corresponding to such Indebtedness of the Company or its Restricted
Subsidiaries or in the case of Permitted Vehicle Indebtedness corresponding to
Indebtedness of Restricted Subsidiaries (but not exceeding the notional amount
thereof) Incurred without violation of this Indenture; (8) Permitted Vehicle
Indebtedness and Customer Lease Financing Loans; (9) Indebtedness represented by
Guarantees issued to airports and airport and other governmental authorities for
the construction of airport rental or related facilities to be used by the
Company or any Restricted Subsidiary in the ordinary course of business that do
not exceed for the Company and all Restricted Subsidiaries in the
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aggregate $75.0 million at any time outstanding; (10) the incurrence by the
Company or any of its Restricted Subsidiaries of Indebtedness represented by
Capitalized Lease Obligations, mortgage financings or purchase money obligations
with respect to assets other than Capital Stock or other Investments, in each
case incurred for the purpose of financing all or any part of the purchase price
or cost of construction or improvements of property used in the business of the
Company or such Restricted Subsidiary, in an aggregate principal amount not to
exceed $25.0 million at any time outstanding; (11) Indebtedness incurred in
respect of workers' compensation claims, self-insurance obligations,
performance, surety and similar bonds and completion guarantees provided by the
Company or a Restricted Subsidiary in the ordinary course of business; (12)
Indebtedness arising from agreements of the Company or a Restricted Subsidiary
providing for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or Capital Stock of a Restricted Subsidiary
or incurred in connection with a sale of Capital Stock of the Company, provided
that the maximum aggregate liability in respect of all such Indebtedness shall
at no time exceed the gross proceeds actually received by the Company and its
Restricted Subsidiaries in connection with such disposition or sale; (13)
Indebtedness arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of business,
provided, however, that such Indebtedness is extinguished within five business
days of Incurrence; (14) PHH Sub Preferred Stock with an aggregate liquidation
preference not to exceed $362.0 million; (15) Indebtedness Incurred by WEX
Financial to fund WEX Financial's credit card payables in the ordinary course of
business, in an aggregate principal amount not to exceed $20.0 million; provided
that the total capital ratio determined in accordance with regulations
promulgated by the Board of Governors of the Federal Reserve System (the "Total
Capital Ratio") of WEX Financial on the date of any such Incurrence shall equal
or exceed the Total Capital Ratio of WEX Financial on June 30, 1999 determined
on the equivalent basis; and (16) in addition to the items referred to in
clauses (1) through (15) above, Indebtedness of the Company and its Subsidiary
Guarantors in an aggregate outstanding principal amount which, when taken
together with the principal amount of all other Indebtedness Incurred pursuant
to this clause (16) and then outstanding, will not exceed $50.0 million.
(c) The Company will not Incur any Indebtedness under Section 3.3(b)
if the proceeds thereof are used, directly or indirectly, to refinance any
Subordinated Obligations of the Company unless such Indebtedness will be
subordinated to the Securities to at least the same extent as such Subordinated
Obligations. No Subsidiary Guarantor will incur any indebtedness under Section
3.3(b) if the proceeds thereof are used, directly or indirectly, to refinance
any Guarantor Subordinated Obligations of such Subsidiary Guarantor unless such
Indebtedness will be subordinated to the obligations of such Subsidiary
Guarantor under its Subsidiary Guarantee to at least the same extent as such
refinanced Guarantor Subordinated Obligations. No Subsidiary Guarantor will
incur any Indebtedness under Section 3.3(b) if the proceeds thereof are used,
directly or indirectly, to refinance any Guarantor Senior Subordinated
Indebtedness unless such refinancing Indebtedness is either Guarantor Senior
Subordinated Indebtedness or Guarantor Subordinated Obligations. No Restricted
Subsidiary may directly Incur any Indebtedness under Section 3.3(b) if the
proceeds are used to refinance Indebtedness of the Company.
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(d) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness incurred pursuant to and in
compliance with, this Section 3.3: (1) in the event that Indebtedness meets the
criteria of more than one of the types of Indebtedness described in Section
3.3(a) or (b), the Company, in its sole discretion, will classify such item of
Indebtedness on the date of Incurrence and only be required to include the
amount and type of such Indebtedness in one of such clauses; and (2) the amount
of Indebtedness issued at a price that is less than the principal amount thereof
will be equal to the amount of the liability in respect thereof determined in
accordance with GAAP. Accrual of interest, accrual of dividends, the accretion
of accreted value, the payment of interest in the form of additional
Indebtedness and the payment of dividends in the form of additional shares of
Preferred Stock will not be deemed to be an incurrence of Indebtedness for
purposes of this Section 3.3. The amount of any Indebtedness outstanding as of
any date shall be the accreted value thereof in the case of any Indebtedness
issued with original issue discount. For purposes of determining compliance with
any U.S. dollar-denominated restriction on the Incurrence of Indebtedness, the
U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign
currency shall be calculated based on the relevant currency exchange rate in
effect on the date such Indebtedness was Incurred, in the case of term
Indebtedness, or first committed, in the case of revolving credit Indebtedness;
provided that if such Indebtedness is Incurred to refinance other Indebtedness
denominated in a foreign currency, and such refinancing would cause the
applicable U.S. dollar-dominated restriction to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of such refinancing, such
U.S. dollardominated restriction shall be deemed not to have been exceeded so
long as the principal amount of such refinancing Indebtedness does not exceed
the principal amount of such Indebtedness being refinanced. The principal amount
of any Indebtedness incurred to refinance other Indebtedness, if Incurred in a
different currency from the Indebtedness being refinanced, shall be calculated
based on the currency exchange rate applicable to the currencies in which such
Refinancing Indebtedness is denominated that is in effect on the date of such
refinancing.
(e) The Company will not permit any of its Unrestricted Subsidiaries
to incur any Indebtedness or issue any shares of Disqualified Stock, other than
Non-Recourse Indebtedness. If at any time an Unrestricted Subsidiary becomes a
Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be
Incurred by a Restricted Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be Incurred as of such date under this Section
3.3, the Company shall be in Default of this Section 3.3).
SECTION 3.4. Limitation on Restricted Payments. (a) The Company will
not, and will not permit any of its Restricted Subsidiaries, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company or any of its Restricted
Subsidiaries) except (A) dividends or distributions payable in Capital Stock of
the Company (other than Disqualified Stock) or in options, warrants or other
rights to purchase such Capital Stock of the Company and (B) dividends or
distributions payable to the Company or a Restricted Subsidiary of the Company
(and if such Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its
other holders of common Capital Stock on a pro rata basis); (ii) purchase,
redeem, retire or otherwise acquire for value any Capital Stock of the Company
or any direct or indirect parent of the Company held by Persons other than the
Company or a Restricted Subsidiary of the Company
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(other than in exchange for Capital Stock of the Company (other than
Disqualified Stock)); (iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment, any Subordinated Obligations or Guarantor
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations or Guarantor Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the date of
purchase, repurchase or acquisition) or (iv) make any Restricted Investment in
any Person; (any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Restricted Investment referred to
in clauses (i) through (iv) shall be referred to herein as a "Restricted
Payment"), if at the time the Company or such Restricted Subsidiary makes such
Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom); or
(2) the Company is not able to incur an additional $1.00 of
Indebtedness pursuant to Section 3.3(a) after giving effect to such
Restricted Payment; or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments declared or made subsequent to the Issue Date would
exceed the sum of: (A) 50% of Consolidated Net Income for the period
(treated as one accounting period) from January 1, 2000 to the end of the
most recent fiscal quarter ending prior to the date of such Restricted
Payment for which financial statements are in existence (or, in case such
Consolidated Net Income is a deficit, minus 100% of such deficit); (B) 75%
of the aggregate Net Cash Proceeds received by the Company from the issue
or sale of its Capital Stock (other than Disqualified Stock) or other
capital contributions subsequent to the Issue Date (other than Net Cash
Proceeds received from an issuance or sale of such Capital Stock to a
Subsidiary of the Company or an employee stock ownership plan or similar
trust to the extent such sale to an employee stock ownership plan or
similar trust is financed by loans from or guaranteed by the Company or
any Restricted Subsidiary unless such loans have been repaid with cash on
or prior to the date of determination; provided that 100% of such Net Cash
Proceeds shall be included in the calculation of this clause (3)(B) to the
extent applied to repurchase Securities pursuant to the Equity Clawback);
(C) the amount by which Indebtedness of the Company is reduced on the
Company's balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Issue Date of any
Indebtedness of the Company (other than PHH Sub Preferred Stock)
convertible or exchangeable for Capital Stock (other than Disqualified
Stock) of the Company (less the amount of any cash, or other property,
distributed by the Company upon such conversion or exchange); and (D) the
amount equal to the net reduction in Restricted Investments made by the
Company or any of its Restricted Subsidiaries in any Person resulting
from: (x) repurchases or redemptions of such Restricted Investments by
such Person, proceeds realized upon the sale of such Restricted Investment
to an unaffiliated purchaser, repayments of loans or advances or other
transfers of assets (including by way of dividend or distribution) by such
Person to the Company or any Restricted Subsidiary of the Company; or (y)
the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investment") not to
exceed, in the case of any Unrestricted Subsidiary, the
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amount of Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary, which amount in each case
under this clause (D) was included in the calculation of the amount of
Restricted Payments; provided, however, that no amount will be included
under this clause (D) to the extent it is already included in Consolidated
Net Income.
(b) The provisions of Section 3.4(a) will not prohibit: (1) any
purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary or an employee stock
ownership plan or similar trust to the extent such sale to an employee stock
ownership plan or similar trust is financed by loans from or guaranteed by the
Company or any Restricted Subsidiary unless such loans have been repaid with
cash on or prior to the date of determination); provided, however, that (a) such
purchase or redemption will be excluded in subsequent calculations of the amount
of Restricted Payments and (b) the Net Cash Proceeds from such sale will be
excluded from Section 3.4(a)(3)(B); (2) any purchase or redemption of
Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Obligations of
the Company that qualifies as Refinancing Indebtedness; provided, however, that
such purchase or redemption will be excluded in subsequent calculations of the
amount of Restricted Payments; (3) so long as no Default or Event of Default has
occurred and is continuing, any purchase or redemption of Subordinated
Obligations from Net Available Cash to the extent permitted in Section 3.6;
provided, however, that such purchase or redemption will be excluded in
subsequent calculations of the amount of Restricted Payments; (4) dividends paid
within 60 days after the date of declaration if at such date of declaration such
dividend would have complied with this Section 3.4; provided, however, that such
dividends will be included in subsequent calculations of the amount of
Restricted Payments; (5) so long as no Default or Event of Default has occurred
and is continuing, the declaration and payment of dividends to holders of any
class or series of Disqualified Stock of the Company issued in accordance with
the terms of this Indenture to the extent such dividends are included in the
definition of "Consolidated Interest Expense"; provided that the payment of such
dividends will be excluded from the calculation of the amount of Restricted
Payments; (6) so long as no Default or Event of Default has occurred and is
continuing, the declaration and payment of dividends to holders of the PHH Sub
Preferred Stock issued in accordance with the terms of this Indenture to the
extent such dividends are included in the definition of "Consolidated Interest
Expense"; provided that the payment of such dividends will be excluded from the
calculation of the amount of Restricted Payments; (7) repurchases of Capital
Stock deemed to occur upon the exercise of stock options if such Capital Stock
represents a portion of the exercise price thereof; provided, however, that such
repurchases will be excluded from subsequent calculations of the amount of
Restricted Payments; (8) Restricted Payments in an amount not to exceed $35.0
million; provided that the amount of such Restricted Payments will be included
in the calculation of the amount of Restricted Payments; (9) the redemption of
Series C Preferred Stock issued on the Issue Date in accordance with its terms
but not to exceed $2.0 million; provided that the amount of such Restricted
Payment will be included in the calculation of the amount of Restricted
Payments; and (10) any Restricted Payments made by a Securitization Entity to
holders of its Capital Stock.
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The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of such Restricted Payment of the asset(s) or
securities proposed to be paid, transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.
The fair market value of any cash Restricted Payment shall be its face amount
and any non-cash Restricted Payment shall be determined conclusively by the
Board of Directors acting in good faith whose resolution with respect thereto
shall be delivered to the Trustee, such determination to be based upon an
opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing if such fair market value is estimated to exceed $10.0
million. Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by the covenant "Restricted Payments" were computed,
together with a copy of any fairness opinion or appraisal required by this
Indenture.
SECTION 3.5. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company will not, and will not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or consensual restriction on the ability of
any Restricted Subsidiary to: (1) pay dividends or make any other distributions
on its Capital Stock or pay any Indebtedness or other obligations owed to the
Company or any Restricted Subsidiary; (2) make any loans or advances to the
Company or any Restricted Subsidiary; or (3) transfer any of its property or
assets to the Company or any Restricted Subsidiary. The preceding provisions
will not prohibit: (i) any encumbrance or restriction pursuant to an agreement
or certificates of designation in effect at or entered into on the date of this
Indenture (including, without limitation, this Indenture, the Senior Credit
Facilities, and the PHH Sub Preferred Stock as in effect on such date); (ii) any
encumbrance or restriction with respect to a Restricted Subsidiary pursuant to
an agreement relating to any Indebtedness Incurred by a Restricted Subsidiary on
or prior to the date on which such Restricted Subsidiary was acquired by the
Company (other than Indebtedness Incurred as consideration in, or to provide all
or any portion of the funds utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by the Company or in contemplation
thereof) and outstanding on such date; (iii) any encumbrance or restriction with
respect to a Restricted Subsidiary pursuant to an agreement effecting a
refinancing of Indebtedness Incurred pursuant to an agreement referred to in
Section 3.5(i) or (ii) or this clause (iii) or contained in any amendment to an
agreement referred to in Section 3.5(i) or (ii) or this clause (iii); provided,
however, that the encumbrances and restrictions with respect to such Restricted
Subsidiary contained in any such agreement or amendment are no less favorable in
any material respect to the Holders of the Securities than the encumbrances and
restrictions contained in such agreements referred to in Section 3.5(i) or (ii);
(iv) in the case of clause (3) of Section 3.5, any encumbrance or restriction:
(a) that restricts in a customary manner the subletting, assignment or transfer
of any property or asset that is subject to a lease, license or similar
contract, or the assignment or transfer of any such lease, license or other
contract; (b) contained in mortgages, pledges or other security agreements
permitted under this Indenture securing Indebtedness of the Company or a
Restricted Subsidiary to the extent such encumbrances or restrictions restrict
the transfer of the property subject to such mortgages, pledges or other
security agreements; or (c) pursuant to customary provisions restricting
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dispositions of real property interests set forth in any reciprocal easement
agreements of the Company or any Restricted Subsidiary; (v) purchase money
obligations for property acquired in the ordinary course of business that impose
encumbrances or restrictions of the nature described in clause (3) of this
Section 3.5 on the property so acquired; (vi) any Purchase Money Note or other
Indebtedness or contractual requirements incurred with respect to a Qualified
Securitization Transaction relating exclusively to a Securitization Entity that,
in the good faith determination of the Board of Directors, are necessary to
effect such Qualified Securitization Transaction; (vii) any restriction with
respect to a Restricted Subsidiary (or any of its property or assets) imposed
pursuant to an agreement entered into for the direct or indirect sale or
disposition of all or substantially all the Capital Stock or assets of such
Restricted Subsidiary (or the property or assets that are subject to such
restriction) pending the closing of such sale or disposition; (viii)
restrictions on Foreign Subsidiaries pursuant to arrangements governing
Indebtedness of such Foreign Subsidiaries permitted pursuant to Section
3.3(b)(4); (ix) restrictions on any Specified Financing Subsidiary pursuant to
the terms of the Customer Lease Financing Loans under which it is obligated; and
(x) encumbrances or restrictions arising or existing by reason of applicable law
or any applicable rule, regulation or order, including, without limitation,
restrictions on the payment of dividends on the Company's insurance company
and/or banking Subsidiaries imposed by Federal or state government regulations.
SECTION 3.6. Limitation on Sales of Assets and Subsidiary Stock. (a)
The Company will not, and will not permit any of its Restricted Subsidiaries to,
make any Asset Disposition unless: (1) the Company or such Restricted Subsidiary
receives consideration at the time of such Asset Disposition at least equal to
the fair market value, as determined in good faith by the Board of Directors
(including as to the value of all non-cash consideration), of the shares and
assets subject to such Asset Disposition; (2) at least 75% of the consideration
thereof received by the Company or such Restricted Subsidiary, as the case may
be, is in the form of cash or Cash Equivalents; and (3) an amount equal to 100%
of the Net Available Cash from such Asset Disposition is applied by the Company
or such Restricted Subsidiary, as the case may be: (a) first, to the extent the
Company or any Restricted Subsidiary, as the case may be, elects (or is required
by the terms of any Senior Indebtedness), to prepay, repay or purchase Senior
Indebtedness or Indebtedness (other than any Preferred Stock or Guarantor
Subordinated Obligation) of a Restricted Subsidiary that is a Subsidiary
Guarantor (in each case other than Indebtedness owed to the Company or an
Affiliate of the Company) within 360 days from the later of the date of such
Asset Disposition or the receipt of such Net Available Cash; provided, however,
that, in connection with any prepayment, repayment or purchase of Indebtedness
pursuant to this clause (a), the Company or such Restricted Subsidiary will
retire such Indebtedness and will cause the related commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased; and (b) second, to the extent of the balance of such Net
Available Cash after application in accordance with clause (a), to the extent
the Company or such Restricted Subsidiary elects, to invest in Additional Assets
within 360 days from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash.
(b) Any Net Available Cash from Asset Sales that are not applied
or invested as provided in Section 3.6(a) will be deemed to constitute "Excess
Proceeds." On the 361st day after an Asset Disposition, if the aggregate amount
of Excess Proceeds exceeds $10.0 million, the Company will be required to make
an offer ("Asset Sale Offer") to all holders of Securities and to
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the extent required by the terms thereof, to all holders of other Senior
Subordinated Indebtedness outstanding with similar provisions requiring the
Company to make an offer to purchase such Senior Subordinated Indebtedness with
the proceeds from any Asset Disposition ("Pari Passu Notes"), to purchase the
maximum principal amount of Securities and any such Pari Passu Notes to which
the Asset Sale Offer applies that may be purchased out of the Excess Proceeds,
at an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest to the date of purchase, in accordance
with the procedures set forth in this Indenture or the agreements governing the
Pari Passu Notes, as applicable. To the extent that the aggregate amount of
Securities and Pari Passu Notes so validly tendered and not properly withdrawn
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use any remaining Excess Proceeds for general corporate purposes. If the
aggregate principal amount of Securities surrendered by Holders thereof and
other Pari Passu Notes surrendered by holders or lenders thereof, collectively,
exceeds the amount of Excess Proceeds, the Trustee shall select the Securities
and Pari Passu Notes to be purchased on a pro rata basis on the basis of the
aggregate principal amount of tendered Securities and Pari Passu Notes. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
(c) (1) The Asset Sale Offer will remain open for a period of 20
Business Days following its commencement, except to the extent that a
longer period is required by applicable law (the "Asset Sale Offer
Period"). No later than five Business Days after the termination of the
Asset Sale Offer Period (the "Asset Sale Purchase Date"), the Company will
purchase the principal amount of Securities and Pari Passu Notes required
to be purchased pursuant to this Section 3.5 (the "Asset Sale Offer
Amount") or, if less than the Asset Sale Offer Amount has been so validly
tendered, all Securities and Pari Passu Notes validly tendered in response
to the Asset Sale Offer.
(2) If the Asset Sale Purchase Date is on or after an interest
record date and on or before the related interest payment date, any
accrued and unpaid interest will be paid to the Person in whose name is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who tender Securities pursuant to the
Asset Sale Offer.
(3) On or before the Asset Sale Purchase Date, the Company will, to
the extent lawful, accept for payment, on a pro rata basis to the extent
necessary, the Asset Sale Offer Amount of Securities and Pari Passu Notes
or portions thereof so validly tendered and not properly withdrawn
pursuant to the Asset Sale Offer, or if less than the Asset Sale Offer
Amount has been validly tendered and not properly withdrawn, all
Securities and Pari Passu Notes so validly tendered and not properly
withdrawn. The Company will deliver to the Trustee an Officers'
Certificate stating that such Securities or portions thereof were accepted
for payment by the Company in accordance with the terms of this Section
3.5 and, in addition, the Company will deliver all certificates and notes
required, if any, by the agreements governing the Pari Passu Notes. The
Company or the Paying Agent, as the case may be, will promptly (but in any
case not later than five Business Days after the Asset Sale Purchase Date)
mail or deliver to each tendering Holder of Securities or holder or lender
of Pari Passu Notes, as the case may be, an amount equal to the purchase
price of the Securities or Pari Passu Notes so validly tendered and not
properly
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withdrawn by such Holder or lender, as the case may be, and accepted by
the Company for purchase, and the Company will promptly issue a new
Security, and the Trustee, upon delivery of an Officers' Certificate from
the Company will authenticate and mail or deliver such new Security to
such Holder, in a principal amount equal to any unpurchased portion of the
Security surrendered. In addition, the Company will take any and all other
actions required by the agreements governing the Pari Passu Notes. Any
Security not so accepted will be promptly mailed or delivered by the
Company to the Holder thereof. The Company will publicly announce the
results of the Asset Sale Offer on the Asset Sale Purchase Date.
For the purposes of this Section 3.6, the following will be deemed
to be cash:
(1) the assumption by the transferee of Indebtedness (other than
Subordinated Obligations or Disqualified Stock) of the Company or
Indebtedness (other than Guarantor Subordinated Obligations or Preferred
Stock) of any Restricted Subsidiary of the Company and the release of the
Company or such Restricted Subsidiary from all liability on such
Indebtedness in connection with such Asset Disposition (in which case the
Company will, without further action, be deemed to have applied such
deemed cash to Indebtedness in accordance with clause (a) above); and
(2) securities, notes or other obligations received by the Company
or any Restricted Subsidiary of the Company from the transferee that are
promptly converted by the Company or such Restricted Subsidiary into cash.
(d) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 3.6, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Indenture by virtue thereof.
SECTION 3.7. Limitation on Affiliate Transactions. (a) The Company
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into or conduct any transaction (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Company (an "Affiliate Transaction") unless: (1) the terms of
such Affiliate Transaction are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those that could be obtained in
a comparable transaction at the time of such transaction in arm's-length
dealings with a Person who is not such an Affiliate; (2) in the event such
Affiliate Transaction involves an aggregate amount in excess of $5 million, the
terms of such transaction have been approved by a majority of the members of the
Board of Directors of the Company having no personal stake in such transaction,
if any (and such majority determines that such Affiliate Transaction satisfies
the criteria in clause (1) above); and (3) in the event such Affiliate
Transaction involves an aggregate amount in excess of $10 million, the Company
has received a written opinion from an independent investment banking firm of
nationally recognized standing stating that such Affiliate Transaction is not
materially less favorable to the Company or such Restricted Subsidiary, as the
case may be, than those that might
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reasonably have been obtained in a comparable transaction at such time on an
arm's-length basis with a Person that is not an Affiliate.
(b) Section 3.7(a) will not apply to: (1) any Restricted Payment
(other than a Restricted Investment) permitted to be made pursuant to Section
3.4; (2) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans and other reasonable fees,
compensation, benefits and indemnities paid or entered into by the Company or
its Restricted Subsidiaries in the ordinary course of business to or with
officers, directors or employees of the Company and its Restricted Subsidiaries;
(3) loans or advances to employees in the ordinary course of business of the
Company or any of its Restricted Subsidiaries; (4) any transaction between the
Company and a Restricted Subsidiary (other than a Securitization Entity) or
between Restricted Subsidiaries (other than a Securitization Entity); (5) sales
or other transfers or dispositions of Permitted Vehicle Collateral customarily
transferred in an asset securitization transaction to a Securitization Entity in
a Qualified Securitization Transaction, acquisitions of Permitted Investments in
connection with a Qualified Securitization Transaction and performance of
services in respect of Permitted Vehicle Collateral in connection with a
Qualified Securitization Transaction; (6) transactions under the Separation
Agreement, Master License Agreement, Registration Rights Agreement, Computer
Services Agreement, Reservation Services Agreement, Purchasing Services
Agreement, Tax Disaffiliation Agreement, lease agreements relating to facilities
in Virginia Beach, Virginia, Tulsa, Oklahoma and Garden City, New York and the
VMS Agreements, all as in effect on the Issue Date (including pursuant to any
amendment thereto or any replacement agreement thereof so long as any such
amendment or replacement agreement is not more disadvantageous to the holders of
the Securities in any material respect than the original agreement as in effect
on the Issue Date); or (7) the payment of dividends on the PHH Sub Preferred
Stock and the conversion of the PHH Sub Preferred Stock in accordance with its
terms as in existence on the Issue Date.
SECTION 3.8. Change of Control. Upon the occurrence of any of the
following events (each a "Change of Control"), unless the Company shall have
exercised its right to redeem the Securities as described in Section 5.1, each
Holder will have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Securities at
a purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date) (the "Change of Control Payment"):
(i) any "person" or "group" of related persons (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that such person or group shall be deemed to have "beneficial
ownership" of all shares that any such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of the Company (or its successor by
merger, consolidation or purchase of all or substantially all of its
assets) (for the purposes of this clause, such person or group shall be
deemed to beneficially own any Voting Stock of the Company held by an
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entity, if such person or group "beneficially owns" (as defined above),
directly or indirectly, more than 35% of the voting power of the Voting
Stock of such entity);
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Company, as the case may be, was approved by a vote of at least a majority
of the directors of the Company then still in office who were either
directors at the beginning of such period or whose election or nomination
for election was previously so approved cease for any reason to constitute
a majority of the Board of Directors of the Company then in office;
(iii) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the assets of the
Company and its Restricted Subsidiaries taken as a whole to any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act);
(iv) the adoption by the stockholders of the Company of a plan or
proposal for the liquidation or dissolution of the Company; or
(v) a Change of Control Event as defined under the Master License
Agreement.
Within 30 days following any Change of Control, unless the Company
has mailed a redemption notice with respect to all the outstanding Securities in
connection with such Change of Control as described in Section 5.1, the Company
shall mail a notice to each Holder with a copy to the Trustee stating: (i) that
a Change of Control has occurred and that such Holder has the right to require
the Company pursuant to this Section 3.8 to purchase such Holder's Securities
(the "Change of Control Offer") at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of Holders of record on a record date to
receive interest on the relevant interest payment date); (ii) the repurchase
date (which shall be no earlier than 30 days nor later than 60 days from the
date such notice is mailed); (iii) that any Security not tendered shall continue
to accrue interest, if any; (iv) that, unless the Company defaults in the
payment of principal or interest, all Securities accepted for payment pursuant
to the Change of Control Offer shall cease to accrue interest, if any, after the
Change of Control Payment Date; (v) that Holders electing to have any Securities
purchased pursuant to a Change of Control Offer shall be required to surrender
the Securities to the Paying Agent at the address specified in the notice prior
to the close of business on the third Business Day preceding the date of
purchase for the Change of Control Payment Date; (vi) that Holders shall be
entitled to withdraw their election if the Paying Agent receives, not later than
the close of business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of Securities delivered for
purchase, and a statement that such Holder is withdrawing his election to have
the Securities purchased; and (vii) that Holders whose Securities are being
purchased only in part shall be issued new Securities equal in principal amount
to the unpurchased
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portion of the Securities surrendered, which unpurchased portion must be equal
to $1,000 in principal amount or an integral multiple thereof.
Prior to mailing a Change of Control Offer, and as a condition to
such mailing (i) all Senior Indebtedness must be repaid in full, or the Company
must offer to repay all Senior Indebtedness whose holders accept such offer or
(ii) the requisite holders of each issue of Senior Indebtedness shall have
consented to such Change of Control Offer being made. The Company will effect
such repayment or obtain such consent within 30 days following any Change of
Control, it being a default of this Section 3.8 if the Company fails to so
comply.
On a Business Day that is no earlier than 30 days nor later than 60
days from the date that the Company mails or causes to be mailed notice of the
Change of Control to the holders (the "Change of Control Payment Date"), the
Company shall, to the extent lawful, (i) accept for payment all Securities or
portions thereof properly tendered pursuant to the Change of Control Offer, (ii)
deposit with the Paying Agent an amount equal to the Change of Control Payment
in respect of all the Securities or portions thereof so tendered and (iii)
deliver or cause to be delivered to the Trustee the Securities so accepted
together with an Officers' Certificate stating the aggregate principal amount of
such Securities or portions thereof being purchased by the Company. The Paying
Agent shall promptly mail to each Holder of the Securities so tendered the
Change of Control Payment for such Securities, and the Trustee shall promptly
authenticate and mail (or cause to be transferred by book-entry) to each Holder
a new Security equal in principal amount to any unpurchased portion of the
Securities surrendered, if any; provided that each such new Security shall be in
a principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Company will not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Section 3.8 applicable to a Change of Control Offer made by the
Company and purchases all Securities validly tendered and not withdrawn under
such Change of Control Offer.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 3.8. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Indenture, the Company will comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations described in this Indenture by virtue thereof.
SECTION 3.9. Limitation on Sale of Capital Stock of Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose
of any Voting Stock of any Restricted Subsidiary or to issue any Voting Stock of
any Restricted Subsidiary (other than, if necessary, shares of its Voting Stock
constituting directors' qualifying shares) to any Person except: (1) to the
Company or a Wholly-Owned Subsidiary other than a Securitization Entity; or (2)
in compliance with Section
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3.6 and immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would continue to be a Restricted Subsidiary.
Notwithstanding the preceding paragraph, the Company may sell all
the Voting Stock of a Restricted Subsidiary as long as the Company complies with
the terms of Section 3.6.
SECTION 3.10. Limitation on Liens. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur or suffer to exist any Lien (other than Permitted Liens) upon any
of its property or assets (including Capital Stock), whether owned on the date
of this Indenture or thereafter acquired, securing any Senior Subordinated
Indebtedness, Subordinated Obligations, Guarantor Senior Subordinated
Indebtedness or Guarantor Subordinated Obligations, unless contemporaneously
therewith effective provision is made to secure the Indebtedness due under this
Indenture and the Securities or, in respect of Liens on any Restricted
Subsidiary's property or assets, any Subsidiary Guarantee of such Restricted
Subsidiary, equally and ratably with (or prior to in the case of Liens with
respect to Subordinated Obligations or Guarantor Subordinated Obligations, as
the case may be) the Indebtedness secured by such Lien for so long as such
Indebtedness is so secured.
SECTION 3.11. Future Subsidiary Guarantors. After the Issue Date,
the Company will cause (i) each Restricted Subsidiary, other than an Excluded
Subsidiary, created or acquired by the Company or one or more of its Restricted
Subsidiaries and (ii) each Restricted Subsidiary, at any time such Restricted
Subsidiary ceases to be an Excluded Subsidiary, to execute and deliver to the
Trustee a Subsidiary Guarantee pursuant to which such Restricted Subsidiary will
unconditionally Guarantee, on a joint and several basis, the full and prompt
payment of the principal of, premium, if any and interest on the Securities on a
senior subordinated basis. In addition, a Subsidiary Guarantor will be released
from its obligations under this Indenture and the Subsidiary Guarantee if the
Company designates such Subsidiary as an Unrestricted Subsidiary in accordance
with this Indenture.
SECTION 3.12. Limitation on Lines of Business. The Company will not,
and will not permit any Restricted Subsidiary to, engage in any business other
than a Related Business.
SECTION 3.13. Limitation on Permitted Vehicle Indebtedness. The
aggregate principal amount of outstanding Permitted Vehicle Indebtedness held by
Persons other than the Company and its Restricted Subsidiaries as of the last
calendar day of each month (the "Determination Date") shall not exceed the net
book value of the Permitted Vehicle Collateral securing Permitted Vehicle
Indebtedness held by Persons other than the Company and its Restricted
Subsidiaries on such Determination Date. Notwithstanding the foregoing, if the
Company is not in compliance with the preceding sentence on any Determination
Date, the Company will not be in breach thereof so long as:
(1) within 25 days from the Determination Date (or if such day is
not a Business Day, on the next succeeding Business Day) the Company or
its Restricted Subsidiaries repay sufficient Permitted Vehicle
Indebtedness or deposits as collateral additional Permitted Vehicle
Collateral so that the Company would have been in
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compliance as of the Determination Date assuming such repayment or deposit
had been made on such date; or
(2) the Company delivers to the Trustee an Officers' Certificate
setting forth the amount of the shortfall within 25 days of such
Determination Date (or if such day is not a Business Day, on the next
succeeding Business Day) and within 50 days from the Determination Date
(or if such day is not a Business Day, on the next succeeding Business
Day) the Company (A) repays sufficient Permitted Vehicle Indebtedness, (B)
deposits as collateral additional Permitted Vehicle Collateral or (C)
redesignates sufficient Permitted Vehicle Indebtedness that is not secured
by an actual Lien on Permitted Vehicle Collateral to no longer constitute
Permitted Vehicle Indebtedness, in each case so that the Company would
have been in compliance as of the Determination Date assuming such
repayment, deposit or redesignation had been made on such date; provided,
however, that, in the case of a redesignation pursuant to clause (C)
above, on the date of such redesignation and after giving effect thereto
as if such redesignated Indebtedness were Incurred by the Company on such
date, the Company would have been able to Incur at least $1.00 of
additional Indebtedness pursuant to Section 3.3(a); provided further,
however, that in determining whether the Company would have been able to
Incur such $1.00 of additional Indebtedness, the Company shall be entitled
to exclude an amount of such redesignated Indebtedness equal to the amount
of Indebtedness the Company could have Incurred on such date pursuant to
Section 3.3(b)(16), and such excluded amount shall be deemed to have been
Incurred pursuant to Section 3.3(b)(16).
SECTION 3.14. Maintenance of Office or Agency. The Company will
maintain in The City of New York, an office or agency where the Securities may
be presented or surrendered for payment, where, if applicable, the Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The principal corporate trust office (the "Corporate
Trust Office") of the Trustee shall be such office or agency of the Company,
unless the Company shall designate and maintain some other office or agency for
one or more of such purposes. The Company will give prompt written notice to the
Trustee of any change in the location of any such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Securities
may be presented or surrendered for any or all such purposes and may from time
to time rescind any such designation; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in The City of New York for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and any change in the location of any such other
office or agency.
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SECTION 3.15. Limitation on Layering. The Company will not Incur any
Indebtedness if such Indebtedness is subordinate or junior in ranking in any
respect to any Senior Indebtedness unless such Indebtedness is Senior
Subordinated Indebtedness or is contractually subordinated in right of payment
to Senior Subordinated Indebtedness. No Subsidiary Guarantor will Incur any
Indebtedness if such Indebtedness is contractually subordinate or junior in
ranking in any respect to any Guarantor Senior Indebtedness of such Subsidiary
Guarantor unless such Indebtedness is Guarantor Senior Subordinated Indebtedness
of such Subsidiary Guarantor or is contractually subordinated in right of
payment to Guarantor Senior Subordinated Indebtedness of such Subsidiary
Guarantor.
SECTION 3.16. Corporate Existence. Subject to Article IV and Section
11.2, the Company will do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence and that of each
Restricted Subsidiary and the corporate rights (charter and statutory) licenses
and franchises of the Company and each Restricted Subsidiary; provided, however,
that the Company shall not be required to preserve any such existence (except
the Company), right, license or franchise if the Board of Directors of the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and each of its Restricted
Subsidiaries, taken as a whole, and that the loss thereof is not, and will not
be, disadvantageous in any material respect to the Holders, and provided,
further, the Company may merge in accordance with Sections 4.1 and 11.2.
SECTION 3.17. Payment of Taxes and Other Claims. The Company will
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all material taxes, assessments and governmental charges levied
or imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary and (ii) all lawful claims for labor,
materials and supplies, which, if unpaid, might by law become a material
liability or lien upon the property of the Company or any Restricted Subsidiary;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which appropriate reserves, if necessary (in the
good faith judgment of management of the Company), are being maintained in
accordance with GAAP or where the failure to effect such payment will not be
disadvantageous to the Holders.
SECTION 3.18. Payments for Consent. Neither the Company nor any of
its Restricted Subsidiaries will, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fees or otherwise, to any
Holder of any Securities for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Securities
unless such consideration is offered to be paid or is paid to all Holders of the
Securities that consent, waive or agree to amend in the time frame set forth in
the solicitation documents relating to such consent, waiver or agreement.
SECTION 3.19. Compliance Certificate. The Company shall deliver to
the Trustee within 120 days after the end of each Fiscal Year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default or Event of Default and whether
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or not the signers know of any Default or Event of Default that occurred during
such period. If they do, the certificate shall describe the Default or Event of
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA ss. 314(a)(4).
SECTION 3.20. Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 3.21. Statement by Officers as to Default. The Company shall
deliver to the Trustee, as soon as possible and in any event within five days
after the Company becomes aware of the occurrence of any Event of Default or an
event which, with notice or the lapse of time or both, would constitute an Event
of Default, an Officers' Certificate setting forth the details of such Event of
Default or default and the action which the Company proposes to take with
respect thereto.
ARTICLE IV
Successor Company
SECTION 4.1. Merger and Consolidation. The Company shall not
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation, partnership, trust, limited liability
company or other similar entity organized and existing under the laws of
the United States of America, any State thereof or the District of
Columbia and the Successor Company (if not the Company) shall expressly
assume, by supplemental indenture, executed and delivered to the Trustee,
in form satisfactory to the Trustee, all the obligations of the Company
under the Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the Successor
Company or any Subsidiary of the Successor Company as a result of such
transaction as having been Incurred by the Successor Company or such
Subsidiary at the time of such transaction), no Default or Event of
Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur at least an additional $1.00 of
Indebtedness pursuant to Section 3.3(a) of this Indenture;
(iv) each Subsidiary Guarantor, unless it is the other party to the
transactions described above, in which case clause (i) and Section 11.2
shall apply, shall have by supplemental indenture confirmed that its
Subsidiary Guarantee shall apply for such Person's obligations in respect
of this Indenture and the Securities and its obligations under the
Exchange and Registration Rights Agreement; and
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(v) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture, if any,
comply with this Indenture.
For purposes of this Section 4.1, the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
The Successor Company will succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, but, in
the case of a lease of all or substantially all its assets, the Company will not
be released from the obligation to pay the principal of and interest on the
Securities. Solely for the purpose of computing amounts described in clause 3(A)
of Section 3.4(a), the Successor Company shall only be deemed to have succeeded
and be substituted for the Company with respect to periods subsequent to the
effective time of such merger, consolidation, combination or transfer of assets.
Notwithstanding clause (iii) of the first sentence of this Section
4.1, (x) any Restricted Subsidiary of the Company (other than a Securitization
Entity or a Specified Financing Subsidiary) may consolidate with, merge into or
transfer all or part of its properties and assets to the Company, and (y) the
Company may merge with an Affiliate incorporated solely for the purpose of
reincorporating the Company in another jurisdiction to realize tax or other
benefits.
ARTICLE V
Redemption of Securities
SECTION 5.1. Optional Redemption. The Securities may be redeemed, as
a whole or from time to time in part, subject to the conditions and at the
redemption prices specified in the form of Securities set forth in Exhibits A
and B hereto, which are hereby incorporated by reference and made a part of this
Indenture, together with accrued and unpaid interest to the Redemption Date.
SECTION 5.2. Applicability of Article. Redemption of Securities at
the election of the Company or otherwise, as permitted or required by any
provision of this Indenture, shall be made in accordance with such provision and
this Article.
SECTION 5.3. Election to Redeem; Notice to Trustee. The election of
the Company to redeem any Securities pursuant to Section 5.1 shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company,
the Company shall, upon not less than 30 and not more than 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities to be redeemed and shall deliver to the
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Trustee such documentation and records as shall enable the Trustee to select the
Securities to be redeemed pursuant to Section 5.4.
SECTION 5.4. Selection by Trustee of Securities to Be Redeemed. If
less than all the Securities are to be redeemed at any time pursuant to an
optional redemption, the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Trustee, from the
outstanding Securities not previously called for redemption, in compliance with
the requirements of the principal securities exchange, if any, on which such
Securities are listed, or, if such Securities are not so listed, on a pro rata
basis, by lot or by such other method as the Trustee shall deem fair and
appropriate (and in such manner as complies with applicable legal requirements)
and which may provide for the selection for redemption of portions of the
principal of the Securities; provided, however, that no such partial redemption
shall reduce the portion of the principal amount of a Security not redeemed to
less than $1,000.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.
SECTION 5.5. Notice of Redemption. Notice of redemption shall be
given in the manner provided for in Section 13.2 not less than 30 nor more than
60 days prior to the Redemption Date, to each Holder of Securities to be
redeemed. The Trustee shall give notice of redemption in the Company's name and
at the Company's expense; provided, however, that the Company shall deliver to
the Trustee, at least 45 days prior to the Redemption Date, an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the following items.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the redemption price and the amount of accrued interest to the
Redemption Date payable as provided in Section 5.7, if any,
(3) if less than all outstanding Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Securities to be
redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption,
(4) in case any Security is to be redeemed in part only, the notice
which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the Holder will receive,
without charge, a new Security or Securities of authorized denominations
for the principal amount thereof remaining unredeemed,
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(5) that on the Redemption Date the redemption price (and accrued
interest, if any, to the Redemption Date payable as provided in Section
5.7) will become due and payable upon each such Security, or the portion
thereof, to be redeemed, and, unless the Company defaults in making the
redemption payment, that interest on Securities called for redemption (or
the portion thereof) will cease to accrue on and after said date,
(6) the place or places where such Securities are to be surrendered
for payment of the Redemption Price and accrued interest, if any,
(7) the name and address of the Paying Agent,
(8) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price,
(9) the CUSIP number, and that no representation is made as to the
accuracy or correctness of the CUSIP number, if any, listed in such notice
or printed on the Securities, and
(10) the paragraph of the Securities pursuant to which the
Securities are to be redeemed.
SECTION 5.6. Deposit of Redemption Price. Prior to any Redemption
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 2.4) an amount of money sufficient to pay the redemption
price of, and accrued interest on, all the Securities which are to be redeemed
on that date.
SECTION 5.7. Notes Payable on Redemption Date. Notice of redemption
having been given as aforesaid, the Securities so to be redeemed shall, on the
Redemption Date, become due and payable at the redemption price therein
specified (together with accrued interest, if any, to the Redemption Date), and
from and after such date (unless the Company shall default in the payment of the
Redemption Price and accrued interest) such Securities shall cease to bear
interest. Upon surrender of any such Security for redemption in accordance with
said notice, such Security shall be paid by the Company at the redemption price,
together with accrued interest, if any, to the Redemption Date (subject to the
rights of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date).
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Securities.
SECTION 5.8. Securities Redeemed in Part.
Any Security which is to be redeemed only in part (pursuant to the
provisions of this Article) shall be surrendered at the office or agency of the
Company maintained for such purpose pursuant to Section 3.14 (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the
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Trustee duly executed by, the Holder thereof or such Holder's attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and make available for delivery to the Holder of such Security at
the expense of the Company, a new Security or Securities, of any authorized
denomination as requested by such Holder, in an aggregate principal amount equal
to and in exchange for the unredeemed portion of the principal of the Security
so surrendered, provided, that each such new Security will be in a principal
amount of $1,000 or integral multiple thereof.
ARTICLE VI
Defaults and Remedies
SECTION 6.1. Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest or liquidated
damages (as required by the Exchange and Registration Rights Agreement) on
any Security when the same becomes due and payable, and such default
continues for a period of 30 days (whether or not such payment is
prohibited by Article X);
(2) the Company defaults in the payment of the principal or premium,
if any, of any Security when the same becomes due and payable at its
Stated Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise (whether or not such payment is prohibited by
Article X).
(3) the Company or any Subsidiary Guarantor fails to comply with
Article IV or Section 11.2 of this Indenture;
(4) the Company fails to comply with any of Sections 3.2, 3.3, 3.4,
3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17
and 3.18 (in each case other than a failure to repurchase Securities when
required pursuant to Sections 3.6 or 3.8, which failure shall constitute
an Event of Default under Section 6.1(2) and other than a failure to
comply with Article IV or Section 11.2 which failure shall constitute an
Event of Default under Section 6.1(3)) and such failure continues for 30
days after the notice specified below;
(5) the Company defaults in the performance of or a breach by the
Company of any other covenant or agreement in this Indenture or under the
Securities (other than those referred to in (1), (2), (3) or (4) above)
and such default continues for 60 days after the notice specified below;
(6) there is a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries), other than Indebtedness
owed to the Company or a Restricted Subsidiary, whether such Indebtedness
or guarantee now exists, or is created after the date of this Indenture,
which default (a) is caused by a failure to pay principal of or premium,
if any, on such Indebtedness at final
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maturity after giving effect to any applicable grace periods ("Payment
Default") or (b) results in the acceleration of such Indebtedness prior to
its maturity (the "cross acceleration provision") and, in each case, the
principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $25.0
million or more or its foreign currency equivalent at the time;
(7) the Company or any Significant Subsidiary or a group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its Restricted
Subsidiaries), would constitute a Significant Subsidiary, pursuant to or
within the meaning of any Bankruptcy Law (as defined below):
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian (as defined
below) of it or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary or any group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated financial statements
for the Company and its Restricted Subsidiaries) would constitute a
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or any group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated financial statements
for the Company and its Restricted Subsidiaries) would constitute a
Significant Subsidiary or for any substantial part of their
property; or
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary or any group of Restricted Subsidiaries that,
taken together (as of the latest audited consolidated financial
statements for the Company and its Restricted Subsidiaries) would
constitute a Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order, decree or
relief remains unstayed and in effect for 60 days;
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(9) the Company or any Significant Subsidiary or group of Restricted
Subsidiaries that, taken together (as of the latest audited consolidated
financial statements for the Company and its Restricted Subsidiaries)
would constitute a Significant Subsidiary fails to pay final judgments
aggregating in excess of $25.0 million or its foreign currency equivalent
at the time (net of any amounts with respect to which a reputable and
creditworthy insurance company has acknowledged liability in writing),
which judgments are not paid, discharged or stayed for a period of 60
days; or
(10) any Subsidiary Guarantee of a Significant Subsidiary or of any
group of Restricted Subsidiaries that, taken together (as of the latest
audited consolidated financial statements for the Company and its
Restricted Subsidiaries) would constitute a Significant Subsidiary ceases
to be in full force and effect (except as contemplated by the terms
hereof), or any Subsidiary Guarantee of a Significant Subsidiary or any
group of Restricted Subsidiaries that, taken together (as of the latest
audited consolidated financial statements for the Company and its
Restricted Subsidiaries) would constitute a Significant Subsidiary is
declared in a judicial proceeding to be null and void, or any Subsidiary
Guarantor denies or disaffirms its obligations under the terms of this
Indenture or its Subsidiary Guarantee.
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
Notwithstanding the foregoing, a Default under clause (4) or (5) of
this Section 6.1 will not constitute an Event of Default until the Trustee or
the Holders of more than 25% in principal amount of the outstanding Securities
notify the Company of the Default and the Company does not cure such Default
within the time specified in said clause (4) or (5) after receipt of such
notice. Such notice must specify the Default, demand that it be remedied and
state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Default or Event of Default under clauses (3), (4), (5), (6), (7), (8), (9)
or (10) of this Section 6.1.
SECTION 6.2. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.1(7) or (8)) occurs and is continuing,
the Trustee by notice to the Company, or the Holders of at least 25% in
outstanding principal amount of the Securities by notice to the Company and the
Trustee, may, and the Trustee at the request of such Holders shall, declare the
principal of, premium, if any, and accrued but unpaid interest, on all the
Securities to be due and payable. Upon such a declaration, such principal,
premium, if any, and accrued and unpaid interest shall be immediately due and
payable; provided, however that so long as any
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indebtedness permitted to be incurred under this Indenture as part of the Senior
Credit Facilities (if such Senior Credit Facilities constitute Senior
Indebtedness) shall be outstanding, no such acceleration shall be effective
until the earlier of (x) acceleration of any such Indebtedness under the Senior
Credit Facilities or (y) five business days after the giving of the acceleration
notice to the Company and the administrative agent under the Senior Credit
Facilities of such acceleration. In the event of a declaration of acceleration
because an Event of Default set forth in Section 6.1(6) above has occurred and
is continuing, such declaration of acceleration shall be automatically rescinded
and annulled if the event of default or payment default triggering such Event of
Default pursuant to Section 6.1(6) shall be remedied or cured by the Company
and/or the relevant Restricted Subsidiary or the holders of the relevant
Indebtedness have rescinded the declaration of acceleration in respect of such
Indebtedness within 20 days after the declaration of acceleration with respect
thereto and if (i) the annulment of the acceleration of the Securities would not
conflict with any judgment or decree of a court of competent jurisdiction and
(ii) all existing Events of Default, other than the nonpayment of principal,
premium or interest on the Securities that has become due solely because of such
acceleration, have been cured or waived. If an Event of Default specified in
Section 6.1(7) or (8) occurs, the principal of, premium and accrued and unpaid
interest on all the Securities will become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holders.
No such rescission shall affect any subsequent Default or Event of Default or
impair any right consequent thereto.
SECTION 6.3. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of (or premium, if any) or interest on the Securities or to enforce
the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Securityholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may (a) waive, by
their consent (including, without limitation consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Securities), an
existing Default or Event of Default and its consequences except (i) a Default
or Event of Default in the payment of the principal of or interest on a Security
or (ii) a Default or Event of Default in respect of a provision that under
Section 9.2 cannot be amended without the consent of each Securityholder
affected and (b) rescind any such acceleration with respect to the Securities
and its consequences if (1) rescission would not conflict with any judgment or
decree of a court of competent jurisdiction and (2) all existing Events of
Default, other than the nonpayment of the principal of, premium, if any, and
interest on the Securities that have become due solely by such declaration of
acceleration, have been cured or waived. When a Default or Event of Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any consequent right.
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SECTION 6.5. Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Sections 7.1 and 7.2, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
SECTION 6.6. Limitation on Suits. Subject to Section 6.7, a
Securityholder may not pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in outstanding principal amount of
the Securities make a request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities
do not give the Trustee a direction that, in the opinion of the Trustee,
is inconsistent with such request during such 60-day period.
Subject to certain restrictions, the Holders of a majority in
principal amount of the outstanding Securities are given the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or of exercising any trust or power conferred on the Trustee. The
Trustee, however, may refuse to follow any direction that conflicts with law or
this Indenture or that the Trustee determines is unduly prejudicial to the
rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking any action under this Indenture, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
SECTION 6.7. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture (including, without limitation, Section
6.6), the right of any Holder to receive payment of principal of, premium (if
any) or interest on the Securities held by such Holder, on or after the
respective due dates expressed in the Securities, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
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SECTION 6.8. Collection Suit by Trustee. If an Event of Default
specified in Section 6.1(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.7.
SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its Subsidiaries or
its or their respective creditors or properties and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.7.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Securities for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section. At least 15 days before such record
date, the Company shall mail to each Securityholder and the Trustee a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by the Company, a suit by a Holder pursuant to Section 6.7 or a
suit by Holders of more than 10% in outstanding principal amount of the
Securities.
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SECTION 6.12. Additional Payments. In the case of any Event of
Default occurring by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding payment of
the premium that the Company would have had to pay if the Company then had
elected to redeem the Securities pursuant to the optional redemption provisions
of this Indenture or was required to repurchase the Securities, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Securities. If an Event of Default
occurs prior to May 1, 2004 by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Securities prior to May 1, 2004, the premium
specified in this Indenture shall also become immediately due and payable to the
extent permitted by law upon the acceleration of the Securities.
ARTICLE VII
Trustee
SECTION 7.1. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs; provided that if an Event of
Default occurs and is continuing, the Trustee will be under no obligation to
exercise any of the rights or powers under this Indenture at the request or
direction of any of the Holders unless such Holders have offered to the Trustee
reasonable indemnity or security against loss, liability or expense.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished to the
Trustee, the Trustee shall examine such certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
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(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(j) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity satisfactory to it against the costs, expenses
(including reasonable attorneys' fees and expenses) and liabilities that might
be incurred by it in compliance with such request or direction.
SECTION 7.2. Rights of Trustee. Subject to Section 7.1, (a) The
Trustee may conclusively rely on any document (whether in its original or
facsimile form) reasonably believed by it to be genuine and to have been signed
or presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate and/or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on an
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct or negligence.
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(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
SECTION 7.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.5. Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if a Trust Officer has actual knowledge thereof,
the Trustee shall mail to each Securityholder notice of the Default or Event of
Default within 90 days after it occurs. Except in the case of a Default or Event
of Default in payment of principal of, premium (if any), or interest on any
Security (including payments pursuant to the optional redemption or required
repurchase provisions of such Security, if any), the Trustee may withhold the
notice if and so long as its board of directors, a committee of its board of
directors or a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
SECTION 7.6. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15, following the date of
this Indenture, and in any event prior to August 31 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA ss. 313(a). The Trustee also shall comply with TIA ss. 313(b).
The Trustee shall also transmit by mail all reports required by TIA ss. 313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION 7.7. Compensation and Indemnity. The Company shall pay to
the Trustee from time to time reasonable compensation for its acceptance of this
Indenture and services hereunder as the Company and the Trustee shall from time
to time agree in writing. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, costs of preparing and
reviewing reports, certificates and other documents, costs of preparation and
mailing of notices to
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Securityholders and reasonable costs of counsel retained by the Trustee in
connection with the delivery of an Opinion of Counsel or otherwise, in addition
to the compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. The Company shall indemnify the Trustee
against any and all loss, liability or expense (including reasonable attorneys'
fees and expenses) incurred by it without negligence or bad faith on its part in
connection with the administration of this trust and the performance of its
duties hereunder, including the costs and expenses of enforcing this Indenture
(including this Section 7.7) and of defending itself against any claims (whether
asserted by any Securityholder, the Company or otherwise). The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
may have separate counsel and the Company shall pay the fees and expenses of
such counsel provided that the Company shall not be required to pay such fees
and expenses if it assumes the Trustee's defense, and, in the reasonable
judgment of outside counsel to the Trustee, there is no conflict of interest
between the Company and the Trustee in connection with such defense. The Company
need not reimburse any expense or indemnify against any loss, liability or
expense incurred by the Trustee through the Trustee's own wilful misconduct,
negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities. The Trustee's right to
receive payment of any amounts due under this Section 7.7 shall not be
subordinate to any other liability or Indebtedness of the Company.
The Company's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.1(7) or (8) with respect to
the Company, the expenses are intended to constitute expenses of administration
under any Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Company. The Holders of a majority in principal amount
of the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of the Trustee for any reason (the
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Trustee in such event being referred to herein as the retiring Trustee), the
Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition, at the Company's
expense, any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture, any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a
combined capital and surplus of at least $100 million as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss. 310(b); provided, however, that there shall be excluded from the operation
of TIA ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
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SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
SECTION 7.12. Trustee's Application for Instruction from the
Company. Any application by the Trustee for written instructions from the
Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Securities; Defeasance. (a)
Subject to Section 8.1(c), when (i)(x) the Company delivers to the Trustee all
outstanding Securities (other than Securities replaced pursuant to Section 2.9)
for cancellation or (y) all outstanding Securities not theretofore delivered for
cancellation have become due and payable, whether at maturity or upon redemption
or will become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name and at the expense
of the Company and the Company or any Subsidiary Guarantor irrevocably deposits
or causes to be deposited with the Trustee as trust funds in trust solely for
the benefit of the Holders money in U.S. dollars, non-callable U.S. Government
Obligations, or a combination thereof, in such amounts as will be sufficient
without consideration of any reinvestment of interest to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to the Trustee
for cancellation for principal, premium, if any, and accrued interest to the
date of maturity or redemption, (ii) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit or shall occur as a
result of such deposit and such deposit will not result in a breach or violation
of, or constitute a default under, any other instrument to which the Company or
any Subsidiary Guarantor is a party or by which the Company or any Guarantor is
bound; (iii) the Company or any Subsidiary Guarantor has paid or caused to be
paid all sums payable by it under this Indenture and the Securities; and (iv)
the Company has delivered irrevocable instructions to the Trustee under this
Indenture to apply the deposited money toward the payment of such Securities at
maturity or the Redemption Date, as the case may be, then the Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company (accompanied by an Officers' Certificate and an Opinion of Counsel
stating that all conditions precedent specified herein relating to the
satisfaction and discharge of this Indenture have been complied with) and at the
cost and expense of the Company.
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(b) Subject to Sections 8.1(c) and 8.2, the Company at any time may
terminate (i) all its obligations under the Securities and this Indenture
("legal defeasance option"), and after giving effect to such legal defeasance,
any omission to comply with such obligations shall no longer constitute a
Default or Event of Default or (ii) its obligations under Sections 3.2, 3.3,
3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17,
3.18, 3.19, and 4.1(iii) and the Company may omit to comply with and shall have
no liability in respect of any term, condition or limitation set forth in any
such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply with such covenants shall no longer constitute a Default or
an Event of Default under Section 6.1(3), 6.1(4) and 6.1(5) and the operation of
Sections 6.1(6), 6.1(7), 6.1(8), 6.1(9) and 6.1(10), and the events specified in
such Sections shall no longer constitute an Event of Default (clauses (ii) being
referred to as the "covenant defeasance option"), but except as specified above,
the remainder of this Indenture and the Securities shall be unaffected thereby.
The Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option. If the Company exercises its
covenant defeasance option, the Company may elect to have any Subsidiary
Guarantees in effect at such time terminate.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default, and the
Subsidiary Guarantees in effect at such time shall terminate. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in 6.1(4) (as such Section
relates to Sections 3.2 through 3.18), 6.1(5) (as such Section relates to
Section 3.19), 6.1(6), 6.1(7), 6.1(8), 6.1(9) or 6.1(10) or because of the
failure of the Company to comply with Section 4.1(iii).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding the provisions of Sections 8.1(a) and (b), the
Company's obligations in Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.9, 2.10, 2.11, 3.1,
6.7, 7.7, 7.8 and in this Article 8 shall survive until the Securities have been
paid in full. Thereafter, the Company's obligations in Sections 7.7, 8.4 and 8.5
shall survive.
SECTION 8.2. Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee for
the benefit of the Holders money in U.S. dollars or U.S. Government
Obligations or a combination thereof for the payment of principal,
premium, if any, and interest on the Securities to maturity or redemption,
as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government
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Obligations plus any deposited money without investment will provide cash
at such times and in such amounts as will be sufficient to pay principal
and interest when due on all the Securities to maturity;
(3) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, with respect to certain
bankruptcy or insolvency Events of Default, on the 91st day after such
date of deposit;
(4) such legal defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a Default under, this Indenture or
any other material agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(5) the Company shall have delivered to the Trustee an Opinion of
Counsel (subject to customary assumptions and exclusions) to the effect
that (A) the Securities and (B) assuming no intervening bankruptcy of the
Company between the date of deposit and the 91st day following the deposit
and that no Holder of the Securities is an insider of the Company, after
the 91st day following the deposit, the trust funds will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' right generally;
(6) the deposit does not constitute a default under any other
agreement binding on the Company;
(7) the Company delivers to the Trustee an Opinion of Counsel
(subject to customary assumptions and exclusions) to the effect that the
trust resulting from the deposit does not constitute, or is qualified as,
a regulated investment company under the Investment Company Act of 1940;
(8) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel (subject to customary
assumptions and exclusions) in the United States stating that (i) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of this Indenture there
has been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Securityholders will not recognize income, gain or loss
for federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such legal defeasance had
not occurred;
(9) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel (subject to customary
assumptions and exclusions) in the United States to the effect that the
Securityholders will not recognize income, gain or loss for federal income
tax purposes as a result of such deposit and covenant defeasance and will
be subject to federal income tax on the same amount, in the
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same manner and at the same times as would have been the case if such
deposit and covenant defeasance had not occurred; and
(10) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to
the defeasance and discharge of the Securities and this Indenture as
contemplated by this Article VIII have been complied with.
SECTION 8.3. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.4. Repayment to Company. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any excess money or
securities held by them upon payment of all the obligations under this
Indenture.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal of or interest on the Securities that remains
unclaimed for two years, and, thereafter, Securityholders entitled to the money
must look to the Company for payment as general creditors.
SECTION 8.5. Indemnity for U.S. Government Obligations. The Company
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
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ARTICLE IX
Amendments
SECTION 9.1. Without Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article IV in respect of the assumption by a
Successor Company of an obligation of the Company under this Indenture;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add Guarantees with respect to the Securities or to secure
the Securities;
(5) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(6) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA;
(7) to make any change that does not adversely affect the rights of
any Securityholder; or
(8) to provide for the issuance of the Exchange Securities, which
will have terms substantially identical in all material respects to the
Initial Securities (except that the transfer restrictions contained in the
Initial Securities will be modified or eliminated, as appropriate), and
which will be treated, together with any outstanding Initial Securities,
as a single issue of securities.
However, no amendment may be made to the provisions of Article X
that adversely affect the rights of any holder of Senior Indebtedness then
outstanding unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.2. With Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to any
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Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Securities). However, without the consent of each Securityholder
affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the stated rate of or extend the stated time for payment
of interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption or repurchase of
any Security or change the time at which any Security may or shall be
redeemed or repurchased as described above under Section 3.6, Section 3.8
(including an amendment to the definition of "Change of Control") or
Article V or any similar provision;
(5) make any Security payable in money other than that stated in the
Security;
(6) impair the right of any Holder to receive payment of principal
of premium, if any, and interest on such Holder's Securities on or after
the due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such Holder's Securities; or
(7) make any change to the amendment provisions which require each
Holder's consent or to the waiver provisions.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.3. Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.4. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes
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effective, it shall bind every Securityholder. An amendment or waiver shall
become effective upon receipt by the Trustee of the requisite number of written
consents under Section 9.1 or 9.2 as applicable.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall become
valid or effective more than 120 days after such record date.
SECTION 9.5. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.6. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Sections 7.1 and 7.2) shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture.
ARTICLE X
Subordination
SECTION 10.1. Agreement To Subordinate. The Company agrees, and each
Securityholder by accepting a Security agrees, that the Indebtedness evidenced
by, and all other obligations in respect of, the Securities is subordinated in
right of payment, to the extent and in the manner provided in this Article X, to
the prior payment of all Senior Indebtedness and that the subordination is for
the benefit of and enforceable by the holders of Senior Indebtedness. The
Securities shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of the Company and only Indebtedness of the Company
that is Senior Indebtedness will rank senior to the Securities in accordance
with the provisions set forth herein. All provisions of this Article X shall be
subject to Section 10.12.
SECTION 10.2. Liquidation, Dissolution, Bankruptcy. Upon any payment
or distribution of the assets of the Company to creditors upon a total or
partial liquidation or a total or partial dissolution of the Company or in a
reorganization, bankruptcy, insolvency, receivership
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or similar proceeding relating to the Company or its properties or an assignment
for the benefit of creditors or marshalling of the Company's assets or
liabilities:
(1) holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or Cash Equivalents of all Senior Indebtedness
before Securityholders shall be entitled to receive any payment of
principal of or interest on or other amounts with respect to the
Securities from the Company; and
(2) until the Senior Indebtedness is paid in full in cash or Cash
Equivalents, any payment or distribution to which Securityholders would be
entitled but for this Article X shall be made to holders of Senior
Indebtedness, as their respective interests may appear.
SECTION 10.3. Default on Senior Indebtedness. The Company shall not
pay the principal of, premium (if any) or interest on or other payment
obligations in respect of the Securities or make any deposit pursuant to Section
8.2 or repurchase or, redeem or otherwise retire any Securities (collectively,
"pay the Securities") if (i) any Senior Indebtedness is not paid when due in
cash or Cash Equivalents or (ii) any other default on Senior Indebtedness occurs
and the maturity of such Senior Indebtedness is accelerated in accordance with
its terms unless, in either case, (x) the default has been cured or waived and
any such acceleration has been rescinded in writing or (y) such Senior
Indebtedness has been paid in full in cash or Cash Equivalents; provided,
however, that the Company may pay the Securities, without regard to the
foregoing if the Company and the Trustee receive written notice approving such
payment from the Representative of the Senior Indebtedness with respect to which
either of the events set forth in clause (i) or (ii) of this sentence has
occurred or is continuing. During the continuance of any default (other than a
default described in clause (i) or (ii) of the preceding sentence) with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Securities (except in (i) Capital Stock
(other than Disqualified Stock) issued by the Company to pay interest on the
Securities or issued in exchange for the Securities, (ii) in securities
substantially identical to the Securities issued by the Company in payment of
interest thereon or (iii) in securities issued by the Company which are
subordinated to Senior Indebtedness at least to the same extent as the
Securities and having an Average Life at least equal to the remaining Average
Life of the Securities) for a period (a "Payment Blockage Period") commencing
upon the receipt by the Trustee (with a copy to the Company) of written notice
(a "Blockage Notice") of such default from the Representative(s) of the holders
of such Designated Senior Indebtedness specifying an election to effect a
Payment Blockage Period and ending 179 days thereafter (or earlier if such
Payment Blockage Period is terminated (i) by written notice to the Trustee and
the Company from the Person or Persons who gave such Blockage Notice, (ii)
because the default giving rise to such Blockage Notice is no longer continuing
or (iii) because such Designated Senior Indebtedness has been repaid in full in
cash or Cash Equivalents). Notwithstanding the provisions of the immediately
preceding sentence, unless the holders of such Designated Senior Indebtedness or
the Representative(s) of such holders shall have accelerated the maturity of
such Designated Senior Indebtedness, the Company may resume payments on the
Securities after the end of such Payment Blockage Period. Not more than one
Blockage Notice may be given, and
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not more than one Payment Blockage may occur, in any consecutive 360-day period,
irrespective of the number of defaults with respect to Designated Senior
Indebtedness during such period.
SECTION 10.4. Acceleration of Payment of Securities. If payment of
the Securities is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
(or their Representatives) of the acceleration; provided, however, that the
Company and the Trustee shall be obligated to notify such a Representative only
if such Representative has delivered or caused to be delivered to the Company or
the Trustee an address for service of such a notice (and the Company and the
Trustee shall only be obligated to deliver the notice to the address so
specified). If any Designated Senior Indebtedness is outstanding, the Company
shall not pay the Securities until five Business Days after the holders or
Representative(s) of such Designated Senior Indebtedness receives notice of such
acceleration and, thereafter, may pay the Securities, only if this Article X
otherwise permits payments at that time.
SECTION 10.5. When Distribution Must Be Paid Over. If a distribution
is made to Securityholders that because of this Article X should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of Senior Indebtedness and promptly pay it over to them as
their respective interests may appear.
SECTION 10.6. Subrogation. After all Senior Indebtedness is paid in
full and until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness. A distribution made under this
Article X to holders of Senior Indebtedness which otherwise would have been made
to Securityholders is not, as between the Company and Securityholders, a payment
by the Company of Senior Indebtedness.
SECTION 10.7. Relative Rights. This Article X defines the relative
rights of Securityholders and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company which is absolute and unconditional, to pay principal
of and interest on the Securities in accordance with their terms; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders of Senior Indebtedness to receive distributions otherwise payable to
Securityholders.
SECTION 10.8. Subordination May Not Be Impaired by Company. No right
of any holder of Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or by the failure of any of them to comply with this
Indenture.
SECTION 10.9. Rights of Trustee and Paying Agent. Notwithstanding
Section 10.3, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such
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payments unless, not less than two Business Days prior to the date of such
payment, a Trust Officer of the Trustee receives notice in writing satisfactory
to it that payments may not be made under this Article X. The Company, the
Registrar or co-registrar, the Paying Agent, a Representative or a holder of
Senior Indebtedness may give the notice; provided, however, that, if an issue of
Senior Indebtedness has a Representative, only the Representative may give the
notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article X with respect to any Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article VII shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article X shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.7.
SECTION 10.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative (if
any).
SECTION 10.11. Article X Not To Prevent Events of Default or Limit
Right To Accelerate. The failure to make a payment in respect of the Securities,
by reason of any provision in this Article X, shall not be construed as
preventing the occurrence of a Default or Event of Default. Nothing in this
Article X shall have any effect on the right of the Securityholders or the
Trustee to accelerate the maturity of the Securities.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article VIII by the Trustee
for the payment of principal of premium, if any, and interest on the Securities
shall not be subordinated to the prior payment of any Senior Indebtedness or
subject to the restrictions set forth in this Article X, and none of the
Securityholders shall be obligated to pay over any such amount to the Company,
any holder of Senior Indebtedness, or any other creditor of the Company.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article X, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article X. In the event that the Trustee determines, in good faith, that
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article X, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution
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and other facts pertinent to the rights of such Person under this Article X,
and, if such evidence is not furnished, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment. The provisions of Sections 7.1 and 7.2 shall be applicable
to all actions or omissions of actions by the Trustee pursuant to this Article
X.
SECTION 10.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness as provided in this Article X and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Securityholders or the Company or any
other Person, money or assets to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article X or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Indebtedness on Subordination Provisions. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder of
any Senior Indebtedness, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE XI
Guarantee
SECTION 11.1. Guarantee. Each Subsidiary Guarantor hereby fully,
unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, jointly and severally with each other Subsidiary Guarantor, to each
Holder of the Securities and the Trustee the full and punctual payment when due,
whether at maturity, by acceleration, by redemption or otherwise, of the
principal of, premium, if any, and interest on the Securities and all other
obligations of the Company under this Indenture (all the foregoing being
hereinafter collectively called the "Obligations"). Each Subsidiary Guarantor
further agrees (to the extent permitted by law) that the Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
it, and that it will remain bound under this Article XI notwithstanding any
extension or renewal of any Obligation.
Each Subsidiary Guarantor waives presentation to, demand of payment
from and protest to the Company of any of the Obligations and also waives notice
of protest for nonpayment. Each Subsidiary Guarantor waives notice of any
default under the Securities or the Obligations. The obligations of each
Subsidiary Guarantor hereunder shall not be affected by (a) the failure of any
Holder to assert any claim or demand or to enforce any right or remedy against
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the Company or any other person under this Indenture, the Securities or any
other agreement or otherwise; (b) any extension or renewal of any thereof; (c)
any rescission, waiver, amendment or modification of any of the terms or
provisions of this Indenture, the Securities or any other agreement; (d) the
release of any security held by any Holder or the Trustee for the Obligations or
any of them; (e) the failure of any Holder to exercise any right or remedy
against any other Subsidiary Guarantor; or (f) any change in the ownership of
the Company.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guarantee herein constitutes a Guarantee of payment when due (and not a
Guarantee of collection) and waives any right to require that any resort be had
by any Holder to any security held for payment of the Obligations.
The obligations of each Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason
(other than payment of the Obligations in full), including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense of setoff, counterclaim, recoupment or termination whatsoever or by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Subsidiary Guarantor herein shall not be discharged or impaired or
otherwise affected by the failure of any Holder to assert any claim or demand or
to enforce any remedy under this Indenture, the Securities or any other
agreement, by any waiver or modification of any thereof, by any default, failure
or delay, willful or otherwise, in the performance of the Obligations, or by any
other act or thing or omission or delay to do any other act or thing which may
or might in any manner or to any extent vary the risk of any Subsidiary
Guarantor or would otherwise operate as a discharge of such Subsidiary Guarantor
as a matter of law or equity.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guarantee herein shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of principal of or interest
on any of the Obligations is rescinded or must otherwise be restored by any
Holder upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder has at law or in equity against any Subsidiary Guarantor
by virtue hereof, upon the failure of the Company to pay any of the Obligations
when and as the same shall become due, whether at maturity, by acceleration, by
redemption or otherwise, each Subsidiary Guarantor hereby promises to and will,
upon receipt of written demand by the Trustee, forthwith pay, or cause to be
paid, in cash, to the Holders an amount equal to the sum of (i) the unpaid
amount of such Obligations then due and owing and (ii) accrued and unpaid
interest on such Obligations then due and owing (but only to the extent not
prohibited by law).
Each Subsidiary Guarantor further agrees that, as between such
Subsidiary Guarantor, on the one hand, and the Holders, on the other hand, (x)
the maturity of the Obligations guaranteed hereby may be accelerated as provided
in this Indenture for the purposes of its Subsidiary Guarantee herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby and (y) in the
event of any such declaration of acceleration of such Obligations, such
Obligations (whether or not due
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and payable) shall forthwith become due and payable by the Subsidiary Guarantor
for the purposes of this Subsidiary Guarantee.
Each Subsidiary Guarantor also agrees to pay any and all reasonable
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or the Holders in enforcing any rights under this Section.
SECTION 11.2. Limitation on Liability; Termination, Release and
Discharge. The obligations of each Subsidiary Guarantor hereunder will be
limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor (including,
without limitation, any guarantees under the Senior Credit Agreement) and after
giving effect to any collections from or payments made by or on behalf of any
other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its
contribution obligations under this Indenture, result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law.
Each Subsidiary Guarantor may consolidate with or merge into or sell
its assets to the Company or another Subsidiary Guarantor without limitation.
Each Subsidiary Guarantor may consolidate with or merge into or sell all or
substantially all its assets to a corporation, partnership or trust other than
the Company or another Subsidiary Guarantor (whether or not affiliated with the
Subsidiary Guarantor), except that if the surviving corporation of any such
merger or consolidation is a Subsidiary of the Company, such merger,
consolidation or sale shall not be permitted unless (i) the Person formed by or
surviving any such consolidation or merger assumes all the obligations of such
Subsidiary under the Subsidiary Guarantee pursuant to a supplemental indenture
in form and substance reasonably satisfactory to the Trustee in respect of the
Securities, this Indenture and the Subsidiary Guarantee, (ii) immediately after
giving effect to such transaction, no Default or Event of Default exists; and
(iii) the Company delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel addressed to the Trustee with respect to the foregoing
matters. Upon the sale or disposition of a Subsidiary Guarantor (by merger,
consolidation, the sale of its Capital Stock or the sale of all or substantially
all of its assets) to a Person (whether or not an Affiliate of the Subsidiary
Guarantor) which is not a Subsidiary of the Company, which sale or disposition
is otherwise in compliance with this Indenture (including Section 3.6), such
Subsidiary Guarantor will be deemed released from all its obligations under this
Indenture and its Subsidiary Guarantee and such Subsidiary Guarantee will
terminate; provided, however, that any such termination will occur only to the
extent that all obligations of such Subsidiary Guarantor under the Senior Credit
Agreement and all of its guarantees of, and under all of its pledges of assets
or other security interests which secure, any other Indebtedness of the Company
will also terminate upon such release, sale or transfer.
A Subsidiary Guarantor will be deemed released and relieved of its
obligations under this Indenture and its Subsidiary Guarantee without any
further action required on the part of the Company or such Subsidiary Guarantor
upon the designation of such Subsidiary Guarantor as an Unrestricted Subsidiary
in accordance with the terms of this Indenture.
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SECTION 11.3. Right of Contribution. Each Subsidiary Guarantor
hereby agrees that to the extent that any Subsidiary Guarantor shall have paid
more than its proportionate share of any payment made on the obligations under
the Subsidiary Guarantees, such Subsidiary Guarantor shall be entitled to seek
and receive contribution from and against the Company or any other Subsidiary
Guarantor who has not paid its proportionate share of such payment. Each
Subsidiary Guarantor's right of contribution shall be subject to the terms and
conditions of Section 3.5. The provisions of this Section 11.3 shall in no
respect limit the obligations and liabilities of each Subsidiary Guarantor to
the Trustee and the Holders and each Subsidiary Guarantor shall remain liable to
the Trustee and the Holders for the full amount guaranteed by such Subsidiary
Guarantor hereunder.
SECTION 11.4. No Subrogation. Notwithstanding any payment or
payments made by each Subsidiary Guarantor hereunder, no Subsidiary Guarantor
shall be entitled to be subrogated to any of the rights of the Trustee or any
Holder against the Company or any other Subsidiary Guarantor or any collateral
security or guarantee or right of offset held by the Trustee or any Holder for
the payment of the Obligations, nor shall any Subsidiary Guarantor seek or be
entitled to seek any contribution or reimbursement from the Company or any other
Subsidiary Guarantor in respect of payments made by such Subsidiary Guarantor
hereunder, until all amounts owing to the Trustee and the Holders by the Company
on account of the Obligations are paid in full. If any amount shall be paid to
any Subsidiary Guarantor on account of such subrogation rights at any time when
all of the Obligations shall not have been paid in full, such amount shall be
held by such Subsidiary Guarantor in trust for the Trustee and the Holders,
segregated from other funds of such Subsidiary Guarantor, and shall, forthwith
upon receipt by such Subsidiary Guarantor, be turned over to the Trustee in the
exact form received by such Subsidiary Guarantor (duly indorsed by such
Subsidiary Guarantor to the Trustee, if required), to be applied against the
Obligations.
ARTICLE XII
Subordination of Subsidiary Guarantees
SECTION 12.1. Agreement To Subordinate. Each Subsidiary Guarantor
agrees, and each Securityholder by accepting a Security agrees, that the
Indebtedness evidenced by, and all other obligations in respect of, the
Subsidiary Guarantees are subordinated in right of payment, to the extent and in
the manner provided in this Article XII, to the prior payment of all Guarantor
Senior Indebtedness of the applicable Subsidiary Guarantor and that the
subordination is for the benefit of and enforceable by the holders of Guarantor
Senior Indebtedness of the applicable Subsidiary Guarantor. The Subsidiary
Guarantees shall in all respects rank pari passu with all other Guarantor Senior
Subordinated Indebtedness of the Subsidiary Guarantor and only Indebtedness of
the Subsidiary Guarantor that is Guarantor Senior Indebtedness will rank senior
to the Subsidiary Guarantees in accordance with the provisions set forth herein.
All provisions of this Article XII shall be subject to Section 12.12.
SECTION 12.2. Liquidation, Dissolution, Bankruptcy. Upon any payment
or distribution of the assets of any Subsidiary Guarantor to creditors upon a
total or partial liquidation or a total or partial dissolution of any Subsidiary
Guarantor or in a bankruptcy,
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reorganization, insolvency, receivership or similar proceeding relating to any
Subsidiary Guarantor or its properties:
(1) holders of Guarantor Senior Indebtedness of such Subsidiary
Guarantor shall be entitled to receive payment in full in cash or Cash
Equivalents of all Guarantor Senior Indebtedness of such Subsidiary
Guarantor before Securityholders shall be entitled to receive any payment
of principal of or interest on or other amounts with respect to the
Subsidiary Guarantees from any Subsidiary Guarantor; and
(2) until the Guarantor Senior Indebtedness of such Subsidiary
Guarantor is paid in full in cash or Cash Equivalents, any payment or
distribution to which Securityholders would be entitled but for this
Article XII shall be made to holders of Guarantor Senior Indebtedness of
such Subsidiary Guarantor, as their respective interests may appear.
SECTION 12.3. Default on Guarantor Senior Indebtedness. A Subsidiary
Guarantor shall not pay the principal of, premium (if any) or interest on or
other payment obligations in respect of the Subsidiary Guarantees or make any
deposit pursuant to Section 8.2 or repurchase or, redeem otherwise retire the
Subsidiary Guarantee (collectively, "pay the Securities") if (i) any Senior
Indebtedness or Guarantor Senior Indebtedness of the applicable Subsidiary
Guarantor is not paid when due in cash or Cash Equivalents or (ii) any other
default on Senior Indebtedness or Guarantor Senior Indebtedness of the
applicable Subsidiary Guarantor occurs and the maturity of such Senior
Indebtedness or Guarantor Senior Indebtedness is accelerated in accordance with
its terms unless, in either case, (x) the default has been cured or waived and
any such acceleration has been rescinded in writing or (y) such Senior
Indebtedness or Guarantor Senior Indebtedness of the applicable Subsidiary
Guarantor has been paid in full in cash or Cash Equivalents; provided, however,
that each Subsidiary Guarantor may pay the Securities, without regard to the
foregoing if the Company and the Trustee receive written notice approving such
payment from the Representative of the Senior Indebtedness or Guarantor Senior
Indebtedness of the applicable Subsidiary Guarantor with respect to which either
of the events set forth in clause (i) or (ii) of this sentence has occurred or
is continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the preceding sentence) with respect to any
Designated Senior Indebtedness or Guarantor Senior Indebtedness pursuant to
which the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, each Subsidiary Guarantor may not
pay the Securities for a period (a "Payment Blockage Period") commencing upon
the receipt by the Trustee (with a copy to the Company) of written notice (a
"Blockage Notice") of such default from the Representative(s) of the holders of
such Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (ii) because
the default giving rise to such Blockage Notice is no longer continuing or (iii)
because such Designated Senior Indebtedness or Guarantor Senior Indebtedness has
been repaid in full in cash or Cash Equivalents). Notwithstanding the provisions
of the immediately preceding sentence, unless the holders of such Designated
Senior Indebtedness or Guarantor Senior Indebtedness of the applicable
Subsidiary Guarantor or the Representative(s) of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, such Subsidiary
Guarantor
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may resume payments on the Securities after the end of such Payment Blockage
Period. Not more than one Blockage Notice may be given, and not more than one
Payment Blockage may occur, in any consecutive 360-day period, irrespective of
the number of defaults with respect to Designated Senior Indebtedness or
Guarantor Senior Indebtedness of the applicable Subsidiary Guarantor during such
period.
SECTION 12.4. Acceleration of Payment of Securities. If payment of
the Securities is accelerated because of an Event of Default, each Subsidiary
Guarantor and the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness or Guarantor Senior Indebtedness (or their Representatives)
of the acceleration; provided, however, that the Company and the Trustee shall
be obligated to notify such a Representative only if such Representative has
delivered or caused to be delivered to the Company and the Trustee an address
for service of such a notice (and the Company and the Trustee shall only be
obligated to deliver the notice to the address so specified). If any Designated
Senior Indebtedness or Guarantor Senior Indebtedness is outstanding, each
Subsidiary Guarantor shall not pay the Securities until five Business Days after
the holders or Representative(s) of such Designated Senior Indebtedness or
Guarantor Senior Indebtedness of the applicable Subsidiary Guarantor receives
notice of such acceleration and, thereafter, may pay the Securities, only if
this Article XII otherwise permits payments at that time.
SECTION 12.5. When Distribution Must Be Paid Over. If a distribution
is made to Securityholders that because of this Article XII should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of Guarantor Senior Indebtedness of the applicable Subsidiary
Guarantor and promptly pay it over to them as their respective interests may
appear.
SECTION 12.6. Subrogation. After all Guarantor Senior Indebtedness
is paid in full and until the Securities are paid in full, Securityholders shall
be subrogated to the rights of holders of Guarantor Senior Indebtedness to
receive distributions applicable to Guarantor Senior Indebtedness. A
distribution made under this Article XII to holders of Guarantor Senior
Indebtedness which otherwise would have been made to Securityholders is not, as
between the Company and Securityholders, a payment by the Company of Guarantor
Senior Indebtedness.
SECTION 12.7. Relative Rights. This Article XII defines the relative
rights of Securityholders and holders of Guarantor Senior Indebtedness. Nothing
in this Indenture shall:
(1) impair, as between Subsidiary Guarantor and Securityholders, the
obligation of each Subsidiary Guarantor which is absolute and
unconditional, to guarantee the payment of principal of and interest on
the Securities in accordance with their terms; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders of Guarantor Senior Indebtedness to receive
distributions otherwise payable to Securityholders.
SECTION 12.8. Subordination May Not Be Impaired by Company. No right
of any holder of Guarantor Senior Indebtedness to enforce the subordination of
the Indebtedness
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evidenced by the Subsidiary Guarantees shall be impaired by any act or failure
to act by any Subsidiary Guarantor or by the failure of any of them to comply
with this Indenture.
SECTION 12.9. Rights of Trustee and Paying Agent. Notwithstanding
Section 12.3, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice in writing satisfactory to it that payments may not be made
under this Article XII. Each Subsidiary Guarantor, the Registrar or
co-registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness may give the notice; provided, however, that, if an issue of
Guarantor Senior Indebtedness has a Representative, only the Representative may
give the notice.
The Trustee in its individual or any other capacity may hold
Guarantor Senior Indebtedness with the same rights it would have if it were not
Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article XII with respect to any Guarantor Senior Indebtedness which may at
any time be held by it, to the same extent as any other holder of Guarantor
Senior Indebtedness; and nothing in Article VII shall deprive the Trustee of any
of its rights as such holder. Nothing in this Article XII shall apply to claims
of, or payments to, the Trustee under or pursuant to Section 7.7.
SECTION 12.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Guarantor Senior
Indebtedness, the distribution may be made and the notice given to their
Representative (if any).
SECTION 12.11. Article XII Not To Prevent Events of Default or Limit
Right To Accelerate. The failure to make a payment in respect of the Securities
and the Subsidiary Guarantees, by reason of any provision in this Article XII
shall not be construed as preventing the occurrence of a Default or Event of
Default. Nothing in this Article XII shall have any effect on the right of the
Securityholders or the Trustee to accelerate the maturity of the Securities.
SECTION 12.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article VIII by the Trustee
for the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Guarantor Senior Indebtedness or
subject to the restrictions set forth in this Article X, and none of the
Securityholders shall be obligated to pay over any such amount to the Company,
any holder of Guarantor Senior Indebtedness, or any other creditor of such
Subsidiary Guarantor.
SECTION 12.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article XII, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Guarantor
Senior Indebtedness for the purpose of
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ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Guarantor Senior Indebtedness and other
Indebtedness of the each Subsidiary Guarantor, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article XII. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Guarantor Senior Indebtedness to participate in any
payment or distribution pursuant to this Article XII, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Guarantor Senior Indebtedness held by such Person, the extent
to which such Person is entitled to participate in such payment or distribution
and other facts pertinent to the rights of such Person under this Article XII,
and, if such evidence is not furnished, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment. The provisions of Sections 7.1 and 7.2 shall be applicable
to all actions or omissions of actions by the Trustee pursuant to this Article
XII.
SECTION 12.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Guarantor Senior Indebtedness as provided in this Article XII and appoints the
Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.15. Trustee Not Fiduciary for Holders of Guarantor Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Guarantor Senior Indebtedness and shall not be liable to any such
holders if it shall mistakenly pay over or distribute to Securityholders or any
Subsidiary Guarantor or any other Person, money or assets to which any holders
of Guarantor Senior Indebtedness shall be entitled by virtue of this Article XII
or otherwise.
SECTION 12.16. Reliance by Holders of Guarantor Senior Indebtedness
on Indebtedness on Subordination Provisions. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder of
any Guarantor Senior Indebtedness, whether such Guarantor Senior Indebtedness
was created or acquired before or after the issuance of the Securities, to
acquire and continue to hold, or to continue to hold, such Guarantor Senior
Indebtedness and such holder of Guarantor Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness.
ARTICLE XIII
Miscellaneous
SECTION 13.1. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control. Each Subsidiary Guarantor in addition to performing its
obligations under its Subsidiary Guarantee shall perform such other obligations
as may be imposed upon it with respect to this Indenture under the TIA.
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SECTION 13.2. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Avis Rent A Car, Inc.
900 Old Country Road
Garden City, New York 11530
Attention: Karen Sclafani,
Vice President and General Counsel
With a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: Sean Geary
if to the Trustee:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a registered Securityholder
shall be mailed to the Securityholder at the Securityholder's address as it
appears on the registration books of the Registrar and shall be sufficiently
given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.3. Communication by Holders with other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 13.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
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<PAGE>
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 13.5. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
In giving such Opinion of Counsel, counsel may rely as to factual
matters on an Officers' Certificate or on certificates of public officials.
SECTION 13.6. When Securities Disregarded. In determining whether
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 13.7. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by, or a meeting of,
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 13.8. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or other day on which commercial banking institutions are authorized or
required to be closed in New York City. If a payment date is a Legal Holiday,
payment shall be made on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period. If a regular record
date is a Legal Holiday, the record date shall not be affected.
-102-
<PAGE>
SECTION 13.9. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 13.10. No Recourse Against Others. An incorporator,
director, officer, employee, stockholder or controlling person, as such, of each
of Holdings, the Company or any Subsidiary Guarantor shall not have any
liability for any obligations of the Company under the Securities, this
Indenture or the Subsidiary Guarantees or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
SECTION 13.11. Successors. All agreements of the Company in this
Indenture and the Securities shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 13.12. Multiple Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 13.13. Variable Provisions. The Company initially appoints
the Trustee as Paying Agent and Registrar and custodian with respect to any
Global Securities.
SECTION 13.14. Qualification of Indenture. The Company shall qualify
this Indenture under the TIA in accordance with the terms and conditions of the
Registration Rights Agreement and shall pay all reasonable costs and expenses
(including attorneys' fees and expenses for the Company, the Trustee and the
Holders) incurred in connection therewith, including, but not limited to, costs
and expenses of qualification of this Indenture and the Securities and printing
this Indenture and the Securities. The Trustee shall be entitled to receive from
the Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 13.15. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
AVIS RENT A CAR, INC.
By:______________________________________
Name:
Title:
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<PAGE>
AVIS RENT A CAR SYSTEM, INC.
By:______________________________________
Name:
Title:
AVIS INTERNATIONAL, LTD.
By:______________________________________
Name:
Title:
AVIS MANAGEMENT SERVICES, LTD.
By:______________________________________
Name:
Title:
AVIS CARIBBEAN, LIMITED
By:______________________________________
Name:
Title:
AVIS ASIA AND PACIFIC, LIMITED
By:______________________________________
Name:
Title:
-104-
<PAGE>
AVIS ENTERPRISES, INC.
By:______________________________________
Name:
Title:
AVIS SERVICE, INC.
By:______________________________________
Name:
Title:
AVIS LUBE, INC.
By:______________________________________
Name:
Title:
AVIS LEASING CORPORATION
By:______________________________________
Name:
Title:
RENT-A-CAR COMPANY, INCORPORATED
By:______________________________________
Name:
Title:
-105-
<PAGE>
RESERVE CLAIMS MANAGEMENT CO.
By:______________________________________
Name:
Title:
AVIS FLEET LEASING AND MANAGEMENT CORPORATION
By:______________________________________
Name:
Title:
PHH VEHICLE MANAGEMENT SERVICES LLC
By:______________________________________
Name:
Title:
DEALERS HOLDINGS, INC.
By:______________________________________
Name:
Title:
WILLIAMSBURG MOTORS, INC.
By:______________________________________
Name:
Title:
-106-
<PAGE>
EDENTON MOTORS, INC.
By:______________________________________
Name:
Title:
WRIGHT EXPRESS LLC
By:______________________________________
Name:
Title:
PHH CANADIAN HOLDINGS, INC.
By:______________________________________
Name:
Title:
PHH DEUTSCHLAND, INC.
By:______________________________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By:______________________________________
Name:
Title:
-107-
<PAGE>
Exhibit 4.31
AVIS RENT A CAR, INC.
$500,000,000
11% Senior Subordinated Notes due 2009
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
June 30, 1999
CHASE SECURITIES INC.
LEHMAN BROTHERS INC.
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Avis Rent A Car, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell, the Subsidiary Guarantors named in Schedule 1 hereto
(the "Subsidiary Guarantors") propose to guarantee, and Chase Securities Inc.
("CSI") and Lehman Brothers Inc. (together with CSI, the "Initial Purchasers")
propose to buy, upon the terms and subject to the conditions set forth in a
purchase agreement dated June 25, 1999 (the "Purchase Agreement"), $500,000,000
aggregate principal amount of the Company's 11% Senior Subordinated Notes due
2009 (the "Securities"). Capitalized terms used but not defined herein shall
have the meanings given to such terms in the Purchase Agreement.
As an inducement to the Initial Purchasers to enter into the
Purchase Agreement and in satisfaction of a condition to the obligations of the
Initial Purchasers thereunder, the Company and the Subsidiary Guarantors agree
with the Initial Purchasers, for the benefit of the holders (including the
Initial Purchasers) of the Securities, the Exchange Securities (as defined
herein) and the Private Exchange Securities (as defined herein) (collectively,
the "Holders"), as follows:
1. Registered Exchange Offer. The Company and the Subsidiary
Guarantors shall (i) prepare and, not later than 90 days following the date of
original issuance of the Securities (the "Issue Date"), file with the Commission
a registration statement (the "Exchange Offer Registration Statement") on an
appropriate form under the Securities Act with respect to a proposed offer to
the Holders of the Securities (the "Registered Exchange Offer") to issue and
deliver to such Holders, in exchange for the Securities, a like aggregate
principal amount of debt securities of the Company (the "Exchange Securities")
that are identical in all material respects to the Securities, except for the
transfer restrictions relating to the Securities, (ii) use their
<PAGE>
2
respective reasonable best efforts to cause the Exchange Offer Registration
Statement to become effective under the Securities Act no later than 150 days
after the Issue Date and the Registered Exchange Offer to be consummated no
later than 180 days after the Issue Date and (iii) keep the Exchange Offer
Registration Statement effective for not less than 20 days (or longer, if
required by applicable law) after the date on which notice of the Registered
Exchange Offer is mailed to the Holders (such period being called the "Exchange
Offer Registration Period"). The Exchange Securities will be issued under the
Indenture or an indenture (the "Exchange Securities Indenture") between the
Company, the Subsidiary Guarantors and the Trustee or such other bank or trust
company that is reasonably satisfactory to the Initial Purchasers, as trustee
(the "Exchange Securities Trustee"), such indenture to be identical in all
material respects to the Indenture, except for the transfer restrictions
relating to the Securities (as described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
the Company and the Subsidiary Guarantors shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder electing to exchange Securities for Exchange Securities
(assuming that such Holder (a) is not an affiliate of the Company or an
Exchanging Dealer (as defined herein) not complying with the requirements of the
next sentence, (b) acquires the Exchange Securities in the ordinary course of
such Holder's business and (c) has no arrangements or understandings with any
person to participate in the distribution of the Exchange Securities) and to
trade such Exchange Securities from and after their receipt without any
limitations or restrictions under the Securities Act and without material
restrictions under the securities laws of the several states of the United
States. The Company, the Subsidiary Guarantors, the Initial Purchasers and each
Exchanging Dealer acknowledge that, pursuant to current interpretations by the
Commission's staff of Section 5 of the Securities Act, each Holder that is a
broker-dealer electing to exchange Securities, acquired for its own account as a
result of market-making activities or other trading activities, for Exchange
Securities (an "Exchanging Dealer"), is required to deliver a prospectus
containing substantially the information set forth in Annex A hereto on the
cover, in Annex B hereto in the "Exchange Offer Procedures" section and the
"Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of
Distribution" section of such prospectus in connection with a sale of any such
Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer.
If, prior to the consummation of the Registered Exchange Offer, any
Holder holds any Securities acquired by it that have, or that are reasonably
likely to be determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Registered
Exchange Offer, the Company and the Subsidiary Guarantors shall, upon the
request of any such Holder, simultaneously with the delivery of the Exchange
Securities in the Registered Exchange Offer, issue and deliver to any such
Holder, in exchange for the Securities held by such Holder (the "Private
Exchange"), a like aggregate principal amount of debt securities of the Company
(the "Private Exchange Securities") that are identical in all material respects
to the Exchange Securities, except for the transfer restrictions relating to
such Private Exchange Securities. The Private Exchange Securities will be issued
under the same indenture as the Exchange Securities, and the Company and the
Subsidiary Guarantors shall use their
<PAGE>
3
reasonable best efforts to cause the Private Exchange Securities to bear the
same CUSIP number as the Exchange Securities. The Private Exchange Securities,
however, will carry a restrictive legend.
In connection with the Registered Exchange Offer, the Company and
the Subsidiary Guarantors shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 20
days (or longer, if required by applicable law) after the date on which
notice of the Registered Exchange Offer is mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York City time, on the last business day on
which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws that are
applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer and any Private Exchange, as the case may be, the Company and the
Subsidiary Guarantors shall:
(a) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange;
(b) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the
case may be, promptly to authenticate and deliver to each Holder, Exchange
Securities or Private Exchange Securities, as the case may be, equal in
principal amount to the Securities of such Holder so accepted for
exchange.
The Company and the Subsidiary Guarantors shall use their respective
reasonable best efforts to keep the Exchange Offer Registration Statement
effective and to amend and supplement the prospectus contained therein in order
to permit such prospectus to be used by all persons subject to the prospectus
delivery requirements of the Securities Act for such period of time as such
persons must comply with such requirements in order to resell the Exchange
<PAGE>
4
Securities; provided that (i) in the case where such prospectus and any
amendment or supplement thereto must be delivered by an Exchanging Dealer, such
period shall be the lesser of 180 days and the date on which all Exchanging
Dealers have sold all Exchange Securities held by them and (ii) the Company and
the Subsidiary Guarantors shall make such prospectus and any amendment or
supplement thereto available to any broker-dealer for use in connection with any
resale of any Exchange Securities for a period of not less than 180 days after
the consummation of the Registered Exchange Offer.
The Indenture or the Exchange Securities Indenture, as the case may
be, shall provide that the Securities, the Exchange Securities and the Private
Exchange Securities shall vote and consent together on all matters as one class
and that none of the Securities, the Exchange Securities or the Private Exchange
Securities will have the right to vote or consent as a separate class on any
matter.
Interest on each Exchange Security and Private Exchange Security
issued pursuant to the Registered Exchange Offer and in the Private Exchange
will accrue from the last interest payment date on which interest was paid on
the Securities surrendered in exchange therefor or, if no interest has been paid
on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company and the Subsidiary Guarantors that at the
time of the consummation of the Registered Exchange Offer (i) any Exchange
Securities received by such Holder will be acquired in the ordinary course of
business, (ii) such Holder will have no arrangements or understanding with any
person to participate in the distribution of the Securities or the Exchange
Securities within the meaning of the Securities Act and (iii) such Holder is not
an affiliate of the Company or of the Subsidiary Guarantors or, if it is such an
affiliate, such Holder will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
Notwithstanding any other provisions hereof, the Company and the
Subsidiary Guarantors will ensure that (i) any Exchange Offer Registration
Statement and any amendment thereto and any prospectus forming part thereof and
any supplement thereto complies in all material respects with the Securities Act
and the rules and regulations of the Commission thereunder, (ii) any Exchange
Offer Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any Exchange
Offer Registration Statement, and any supplement to such prospectus, does not,
as of the consummation of the Registered Exchange Offer, include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
2 Shelf Registration. If (i) because of any change in law or
applicable interpretations thereof by the Commission's staff the Company and the
Subsidiary Guarantors are
<PAGE>
5
not permitted to effect the Registered Exchange Offer as contemplated by Section
1 hereof, or (ii) any Securities validly tendered pursuant to the Registered
Exchange Offer are not exchanged for Exchanged Securities within 180 days after
the Issue Date, or (iii) any Initial Purchaser so requests with respect to
Securities or Private Exchange Securities not eligible to be exchanged for
Exchange Securities in the Registered Exchange Offer and held by it following
the consummation of the Registered Exchange Offer, or (iv) any applicable law or
interpretations do not permit any Holder to participate in the Registered
Exchange Offer, or (v) any Holder that participates in the Registered Exchange
Offer does not receive freely transferable Exchange Securities in exchange for
tendered Securities, or (vi) the Company and the Subsidiary Guarantors so elect,
then the following provisions shall apply:
(a) The Company and the Subsidiary Guarantors shall within 90 days
of receipt of written notice thereof (such date of receipt, the "Shelf
Notice Date") file with the Commission, and thereafter shall use their
respective reasonable best efforts to cause to be declared effective, a
shelf registration statement on an appropriate form under the Securities
Act relating to the offer and sale of the Transfer Restricted Securities
by the Holders thereof from time to time in accordance with the methods of
distribution set forth in such registration statement (hereafter, a "Shelf
Registration Statement" and, together with any Exchange Offer Registration
Statement, a "Registration Statement").
(b) The Company and the Subsidiary Guarantors shall use their
respective reasonable best efforts to keep the Shelf Registration
Statement continuously effective in order to permit the prospectus forming
part thereof to be used by Holders of Transfer Restricted Securities for a
period of two years from the Issue Date or such shorter period that will
terminate when all the Transfer Restricted Securities covered by the Shelf
Registration Statement have been sold pursuant thereto (in any such case,
such period being called the "Shelf Registration Period"). The Company and
the Subsidiary Guarantors shall be deemed not to have used their
respective reasonable best efforts to keep the Shelf Registration
Statement effective during the requisite period if they voluntarily take
any action that would result in Holders of Transfer Restricted Securities
covered thereby not being able to offer and sell such Transfer Restricted
Securities during that period, unless such action is required by
applicable law.
(c) Notwithstanding any other provisions hereof, the Company and the
Subsidiary Guarantors will ensure that (i) any Shelf Registration
Statement and any amendment thereto and any prospectus forming part
thereof and any supplement thereto complies in all material respects with
the Securities Act and the rules and regulations of the Commission
thereunder, (ii) any Shelf Registration Statement and any amendment
thereto (in either case, other than with respect to information included
therein in reliance upon or in conformity with written information
furnished to the Company and the Subsidiary Guarantors by or on behalf of
any Holder specifically for use therein (the "Holders' Information")) does
not, when it becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
prospectus forming part of
<PAGE>
6
any Shelf Registration Statement, and any supplement to such prospectus
(in either case, other than with respect to Holders' Information), does
not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
3 Liquidated Damages. (a) The parties hereto agree that the Holders
of Transfer Restricted Securities will suffer damages if the Company or the
Subsidiary Guarantors fail to fulfill their respective obligations under Section
1 or Section 2, as applicable, and that it would not be feasible to ascertain
the extent of such damages. Accordingly, if (i) the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, is not filed
with the Commission on or prior to 90 days after the Issue Date or the Shelf
Notice Date, as the case may be, (ii) the Exchange Offer Registration Statement
or the Shelf Registration Statement, as the case may be, is not declared
effective within 150 days after the Issue Date or the Shelf Notice Date, as the
case may be, (iii) the Registered Exchange Offer is not consummated on or prior
to 180 days after the Issue Date, or (iv) the Shelf Registration Statement is
filed and declared effective within 90 days after the Shelf Notice Date but
shall thereafter cease to be effective (at any time that the Company and the
Subsidiary Guarantors are obligated to maintain the effectiveness thereof)
without being succeeded within 90 days by an additional Registration Statement
filed and declared effective (each such event referred to in clauses (i) through
(iv), a "Registration Default"), the Company and the Subsidiary Guarantors will
be obligated to pay liquidated damages to each Holder of Transfer Restricted
Securities, during the period of one or more such Registration Defaults, in an
amount equal to $0.192 per week per $1,000 principal amount of Transfer
Restricted Securities held by such Holder until (i) the applicable Registration
Statement is filed, (ii) the Exchange Offer Registration Statement is declared
effective, (iii) the Registered Exchange Offer is consummated, (iv) the Shelf
Registration Statement is declared effective or (v) the Shelf Registration
Statement again becomes effective, as the case may be. Following the cure of all
Registration Defaults, the accrual of liquidated damages will cease. As used
herein, the term "Transfer Restricted Securities" means (i) each Security until
the date on which such Security has been exchanged for a freely transferable
Exchange Security in the Registered Exchange Offer, (ii) each Security or
Private Exchange Security until the date on which it has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) each Security or Private Exchange Security until
the date on which it is distributed to the public pursuant to Rule 144 under the
Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.
Notwithstanding anything to the contrary in this Section 3(a), the Company and
the Subsidiary Guarantors shall not be required to pay liquidated damages to a
Holder of Transfer Restricted Securities if such Holder failed to comply with
its obligations to make the representations set forth in the second to last
paragraph of Section 1 or failed to provide the information required to be
provided by it, if any, pursuant to Section 4(n).
(b) The Company shall notify the Trustee and the Paying Agent under
the Indenture immediately upon the happening of each and every Registration
Default. The Company and the Subsidiary Guarantors shall pay the liquidated
damages due on the Transfer Restricted Securities by depositing with the Paying
Agent (which may not be the Company for
<PAGE>
7
these purposes), in trust, for the benefit of the Holders thereof, prior to
10:00 a.m., New York City time, on the next interest payment date specified by
the Indenture and the Securities, sums sufficient to pay the liquidated damages
then due. The liquidated damages due shall be payable on each interest payment
date specified by the Indenture and the Securities to the record holder entitled
to receive the interest payment to be made on such date. Each obligation to pay
liquidated damages shall be deemed to accrue from and including the date of the
applicable Registration Default.
(c) The parties hereto agree that the liquidated damages provided
for in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by Holders of Transfer
Restricted Securities by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to remain effective or (iii) the Exchange Offer
Registration Statement to be declared effective and the Registered Exchange
Offer to be consummated, in each case to the extent required by this Agreement.
4 Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Company and the Subsidiary Guarantors shall (i) furnish to
each Initial Purchaser, prior to the filing thereof with the Commission, a copy
of the Registration Statement and each amendment thereof and each supplement, if
any, to the prospectus included therein and shall use their respective
reasonable best efforts to reflect in each such document, when so filed with the
Commission, such comments as any Initial Purchaser may reasonably propose; (ii)
include the information set forth in Annex A hereto on the cover, in Annex B
hereto in the "Exchange Offer Procedures" section and the "Purpose of the
Exchange Offer" section and in Annex C hereto in the "Plan of Distribution"
section of the prospectus forming a part of the Exchange Offer Registration
Statement, and include the information set forth in Annex D hereto in the Letter
of Transmittal delivered pursuant to the Registered Exchange Offer; and (iii) if
requested by any Initial Purchaser, include the information required by Items
507 or 508 of Regulation S-K, as applicable, in the prospectus forming a part of
the Exchange Offer Registration Statement.
(b) The Company and the Subsidiary Guarantors shall advise each
Initial Purchaser and the Holders (if applicable) (which in the case of clauses
(i) and (ii) below, such advisement shall be rendered only upon request of
Holders other than the Initial Purchasers) and, if requested by any such person,
confirm such advice in writing (which advice pursuant to clauses (ii)-(v) hereof
shall be accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made):
(i) when any Registration Statement and any amendment thereto has
been filed with the Commission and when such Registration Statement or any
post-effective amendment thereto has become effective;
<PAGE>
8
(ii) of any request by the Commission for amendments or supplements
to any Registration Statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of any Registration Statement or the initiation of any
proceedings for that purpose;
(iv) of the receipt by the Company or the Subsidiary Guarantors of
any notification with respect to the suspension of the qualification of
the Securities, the Exchange Securities or the Private Exchange Securities
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event that requires the making of any
changes in any Registration Statement or the prospectus included therein
in order that the statements therein are not misleading and do not omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(c) The Company and the Subsidiary Guarantors will make every
reasonable effort to obtain the withdrawal at the earliest possible time of any
order suspending the effectiveness of any Registration Statement.
(d) The Company and the Subsidiary Guarantors will furnish to each
Holder of Transfer Restricted Securities included within the coverage of any
Shelf Registration Statement, without charge, at least one conformed copy of
such Shelf Registration Statement and any post-effective amendment thereto,
including financial statements and schedules and, if any such Holder so requests
in writing, all exhibits thereto (including those, if any, incorporated by
reference).
(e) The Company and the Subsidiary Guarantors will, during the Shelf
Registration Period, promptly deliver to each Holder of Transfer Restricted
Securities included within the coverage of any Shelf Registration Statement,
without charge, as many copies of the prospectus (including each preliminary
prospectus) included in such Shelf Registration Statement and any amendment or
supplement thereto as such Holder may reasonably request; and the Company and
the Subsidiary Guarantors consent to the use of such prospectus or any amendment
or supplement thereto by each of the selling Holders of Transfer Restricted
Securities in connection with the offer and sale of the Transfer Restricted
Securities covered by such prospectus or any amendment or supplement thereto.
(f) The Company and the Subsidiary Guarantors will furnish to each
Initial Purchaser and each Exchanging Dealer, and to any other Holder who so
requests, without charge, at least one conformed copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules and, if any Initial Purchaser or Exchanging
Dealer or any such Holder so requests in writing, all exhibits thereto
(including those, if any, incorporated by reference).
<PAGE>
9
(g) The Company and the Subsidiary Guarantors will, during the
Exchange Offer Registration Period or the Shelf Registration Period, as
applicable, promptly deliver to each Initial Purchaser, each Exchanging Dealer
and such other persons that are required to deliver a prospectus following the
Registered Exchange Offer, without charge, as many copies of the final
prospectus included in the Exchange Offer Registration Statement or the Shelf
Registration Statement and any amendment or supplement thereto as such Initial
Purchaser, Exchanging Dealer or other persons may reasonably request; and the
Company and the Subsidiary Guarantors consent to the use of such prospectus or
any amendment or supplement thereto by any such Initial Purchaser, Exchanging
Dealer or other persons, as applicable, as aforesaid.
(h) Prior to the effective date of any Registration Statement, the
Company and the Subsidiary Guarantors will use their respective reasonable best
efforts to register or qualify, or cooperate with the Holders of Securities,
Exchange Securities or Private Exchange Securities included therein and their
respective counsel in connection with the registration or qualification of, such
Securities, Exchange Securities or Private Exchange Securities for offer and
sale under the securities or blue sky laws of such jurisdictions as any such
Holder reasonably requests in writing and do any and all other acts or things
necessary or advisable to enable the offer and sale in such jurisdictions of the
Securities, Exchange Securities or Private Exchange Securities covered by such
Registration Statement; provided that the Company and the Subsidiary Guarantors
will not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified or to take any action which would subject it
to general service of process or to taxation in any such jurisdiction where it
is not then so subject.
(i) The Company and the Subsidiary Guarantors will cooperate with
the Holders of Securities, Exchange Securities or Private Exchange Securities to
facilitate the timely preparation and delivery of certificates representing
Securities, Exchange Securities or Private Exchange Securities to be sold
pursuant to any Registration Statement free of any restrictive legends and in
such denominations and registered in such names as the Holders thereof may
request in writing prior to sales of Securities, Exchange Securities or Private
Exchange Securities pursuant to such Registration Statement.
(j) If any event contemplated by Section 4(b)(ii) through (v) occurs
during the period for which the Company and the Subsidiary Guarantors are
required to maintain an effective Registration Statement, the Company and the
Subsidiary Guarantors will promptly prepare and file with the Commission a
post-effective amendment to the Registration Statement or a supplement to the
related prospectus or file any other required document so that, as thereafter
delivered to purchasers of the Securities, Exchange Securities or Private
Exchange Securities from a Holder, the prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(k) Not later than the effective date of the applicable Registration
Statement, the Company and the Subsidiary Guarantors will provide a CUSIP number
for the Securities, the
<PAGE>
10
Exchange Securities and the Private Exchange Securities, as the case may be, and
provide the applicable trustee with printed certificates for the Securities, the
Exchange Securities or the Private Exchange Securities, as the case may be, in a
form eligible for deposit with The Depository Trust Company.
(l) The Company and the Subsidiary Guarantors will comply with all
applicable rules and regulations of the Commission and will make generally
available to its security holders as soon as practicable after the effective
date of the applicable Registration Statement an earning statement satisfying
the provisions of Section 11(a) of the Securities Act; provided that in no event
shall such earning statement be delivered later than 45 days after the end of a
12-month period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company's or the Subsidiary Guarantors' first fiscal quarter
commencing after the effective date of the applicable Registration Statement,
which statement shall cover such 12-month period.
(m) The Company and the Subsidiary Guarantors will cause the
Indenture or the Exchange Securities Indenture, as the case may be, to be
qualified under the Trust Indenture Act as required by applicable law in a
timely manner.
(n) The Company and the Subsidiary Guarantors may require each
Holder of Transfer Restricted Securities to be registered pursuant to any Shelf
Registration Statement to furnish to the Company and the Subsidiary Guarantors
such information concerning the Holder and the distribution of such Transfer
Restricted Securities as the Company and the Subsidiary Guarantors may from time
to time reasonably require for inclusion in such Shelf Registration Statement,
and the Company and the Subsidiary Guarantors may exclude from such registration
the Transfer Restricted Securities of any Holder that fails to furnish such
information within a reasonable time after receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company or the Subsidiary Guarantors pursuant to Section
4(b)(ii) through (v), such Holder will discontinue disposition of such Transfer
Restricted Securities until such Holder's receipt of copies of the supplemental
or amended prospectus contemplated by Section 4(j) or until advised in writing
(the "Advice") by the Company and the Subsidiary Guarantors that the use of the
applicable prospectus may be resumed. If the Company or the Subsidiary
Guarantors shall give any notice under Section 4(b)(ii) through (v) during the
period that the Company and the Subsidiary Guarantors are required to maintain
an effective Registration Statement (the "Effectiveness Period"), such
Effectiveness Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of Transfer Restricted Securities covered by such
Registration Statement shall have received (x) the copies of the supplemental or
amended prospectus contemplated by Section 4(j) (if an amended or supplemental
prospectus is required) or (y) the Advice (if no amended or supplemental
prospectus is required).
<PAGE>
11
(p) In the case of a Shelf Registration Statement, the Company and
the Subsidiary Guarantors shall enter into such customary agreements (including,
if requested, an underwriting agreement in customary form) and take all such
other action, if any, as Holders of a majority in aggregate principal amount of
the Securities, Exchange Securities and Private Exchange Securities being sold
or the managing underwriters (if any) shall reasonably request in order to
facilitate any disposition of Securities, Exchange Securities or Private
Exchange Securities pursuant to such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, the Company and
the Subsidiary Guarantors shall (i) make reasonably available for inspection by
a representative of, and Special Counsel (as defined below) acting for, Holders
of a majority in aggregate principal amount of the Securities, Exchange
Securities and Private Exchange Securities being sold and any underwriter
participating in any disposition of Securities, Exchange Securities or Private
Exchange Securities pursuant to such Shelf Registration Statement, all relevant
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries and (ii) use their respective reasonable best
efforts to have its officers, directors, employees, accountants and counsel
supply all relevant information reasonably requested by such representative,
Special Counsel or any such underwriter (an "Inspector") in connection with such
Shelf Registration Statement.
(r) In the case of a Shelf Registration Statement, the Company and
the Subsidiary Guarantors shall, if requested by Holders of a majority in
aggregate principal amount of the Securities, Exchange Securities and Private
Exchange Securities being sold, their Special Counsel or the managing
underwriters (if any) in connection with such Shelf Registration Statement, use
their respective reasonable best efforts to cause (i) their counsel to deliver
an opinion relating to the Shelf Registration Statement and the Securities,
Exchange Securities or Private Exchange Securities, as applicable, in customary
form, (ii) their officers to execute and deliver all customary documents and
certificates requested by Holders of a majority in aggregate principal amount of
the Securities, Exchange Securities and Private Exchange Securities being sold,
their Special Counsel or the managing underwriters (if any) and (iii) their
independent public accountants to provide a comfort letter in customary form,
subject to receipt of appropriate documentation as contemplated, and only if
permitted, by Statement of Auditing Standards No. 72.
5 Registration Expenses. The Company and the Subsidiary Guarantors
will bear all expenses incurred in connection with the performance of their
obligations under Sections 1, 2, 3 and 4 and the Company and the Subsidiary
Guarantors will reimburse the Initial Purchasers and the Holders for the
reasonable fees and disbursements of one firm of attorneys (in addition to any
local counsel) chosen by the Holders of a majority in aggregate principal amount
of the Securities, the Exchange Securities and the Private Exchange Securities
to be sold pursuant to each Registration Statement (the "Special Counsel")
acting for the Initial Purchasers or Holders in connection therewith.
<PAGE>
12
6 Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Initial Purchaser or Exchanging Dealer, as
applicable, the Company and the Subsidiary Guarantors shall indemnify and hold
harmless each Holder (including, without limitation, any such Initial Purchaser
or Exchanging Dealer), its affiliates, their respective officers, directors,
employees, representatives and agents, and each person, if any, who controls
such Holder within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section 6 and Section 7 as a
Holder) from and against any loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, without limitation, any loss,
claim, damage, liability or action relating to purchases and sales of the
Securities, Exchange Securities or Private Exchange Securities), to which that
Holder may become subject, whether commenced or threatened, under the Securities
Act, the Exchange Act, any other federal or state statutory law or regulation,
at common law or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any such Registration Statement
or any prospectus forming part thereof or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse each Holder promptly upon demand for any legal
or other expenses reasonably incurred by that Holder in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company and
the Subsidiary Guarantors shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of, or is
based upon, an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in conformity
with any Holders' Information; and provided, further, that with respect to any
such untrue statement in or omission from any related preliminary prospectus,
the indemnity agreement contained in this Section 6(a) shall not inure to the
benefit of any Holder from whom the person asserting any such loss, claim,
damage, liability or action received Securities, Exchange Securities or Private
Exchange Securities to the extent that such loss, claim, damage, liability or
action of or with respect to such Holder results from the fact that both (A) a
copy of the final prospectus was not sent or given to such person at or prior to
the written confirmation of the sale of such Securities, Exchange Securities or
Private Exchange Securities to such person and (B) the untrue statement in or
omission from the related preliminary prospectus was corrected in the final
prospectus unless, in either case, such failure to deliver the final prospectus
was a result of non-compliance by the Company or the Subsidiary Guarantors with
Section 4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each Holder
shall indemnify and hold harmless the Company, the Subsidiary Guarantors, their
affiliates, their respective officers, directors, employees, representatives and
agents, and each person, if any, who controls the Company and the Subsidiary
Guarantors within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section 6(b) and Section 7 as the
Company and the Subsidiary Guarantors), from and against any loss, claim, damage
or liability,
<PAGE>
13
joint or several, or any action in respect thereof, to which the Company and the
Subsidiary Guarantors may become subject, whether commenced or threatened, under
the Securities Act, the Exchange Act, any other federal or state statutory law
or regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or any prospectus forming part thereof or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with any Holders' Information furnished to
the Company by such Holder, and shall reimburse the Company and the Subsidiary
Guarantors for any legal or other expenses reasonably incurred by the Company
and the Subsidiary Guarantors in connection with investigating or defending or
preparing to defend against or appearing as a third party witness in connection
with any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that no such Holder shall be liable for any
indemnity claims hereunder in excess of the amount of net proceeds received by
such Holder from the sale of Securities, Exchange Securities or Private Exchange
Securities pursuant to such Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 6 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 6. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
that an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists
<PAGE>
14
(based upon advice of counsel to the indemnified party) between the indemnified
party and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the indemnified
party) or (4) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm of attorneys (in addition to any local counsel) at any one time
for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 6(a) and 6(b), shall
use all reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
7 Contribution. If the indemnification provided for in Section 6 is
unavailable or insufficient to hold harmless an indemnified party under Section
6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company and the Subsidiary Guarantors from the offering
and sale of the Securities, on the one hand, and a Holder with respect to the
sale by such Holder of Securities, Exchange Securities or Private Exchange
Securities, on the other, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company and the Subsidiary Guarantors on the one hand
and such Holder on the other with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Subsidiary Guarantors on the one hand and a
Holder on the other with respect to such offering and such sale shall be deemed
to be in the same proportion as the total net proceeds from the offering of the
Securities (before deducting expenses) received by or on behalf of the Company
and the Subsidiary Guarantors as set forth in the table on the cover of the
Offering Memorandum, on the one hand, bear to the total proceeds received by
such Holder with respect to its sale of Securities, Exchange Securities or
Private Exchange Securities, on the other. The relative fault shall be
determined by reference to, among
<PAGE>
15
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to the
Company and the Subsidiary Guarantors or information supplied by the Company and
the Subsidiary Guarantors on the one hand or to any Holders' Information
supplied by such Holder on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The parties hereto agree that it would not be
just and equitable if contributions pursuant to this Section 7 were to be
determined by pro rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 7 shall be deemed to include, for purposes of this Section 7, any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 7, an indemnifying party that is
a Holder of Securities, Exchange Securities or Private Exchange Securities shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Securities, Exchange Securities or Private Exchange
Securities sold by such indemnifying party to any purchaser exceeds the amount
of any damages which such indemnifying party has otherwise paid or become liable
to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
8 Rules 144 and 144A. The Company and the Subsidiary Guarantors
shall use their respective reasonable best efforts to file the reports required
to be filed by them under the Securities Act and the Exchange Act in a timely
manner and, if at any time the Company and the Subsidiary Guarantors are not
required to file such reports, it will, upon the written request of any Holder
of Transfer Restricted Securities, make publicly available other information so
long as necessary to permit sales of such Holder's securities pursuant to Rules
144 and 144A. The Company and the Subsidiary Guarantors covenant that they will
take such further action as any Holder of Transfer Restricted Securities may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Transfer Restricted Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144 and
144A (including, without limitation, the requirements of Rule 144A(d)(4)). Upon
the written request of any Holder of Transfer Restricted Securities, the Company
shall deliver to such Holder a written statement as to whether it has complied
with such requirements. Notwithstanding the foregoing, nothing in this Section 8
shall be deemed to require the Company and the Subsidiary Guarantors to register
any of their securities pursuant to the Exchange Act.
9 Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal amount of such Transfer Restricted Securities
included in such offering, subject to the consent of the Company
<PAGE>
16
(which shall not be unreasonably withheld or delayed), and such Holders shall be
responsible for all underwriting commissions and discounts in connection
therewith.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
10 Miscellaneous. (a) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the Company
has obtained the written consent of Holders of a majority in aggregate principal
amount of the Securities, the Exchange Securities and the Private Exchange
Securities, taken as a single class. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Securities, Exchange
Securities or Private Exchange Securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities being sold by such Holders pursuant to such Registration
Statement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing next-day delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 10(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy
in like manner to Chase Securities Inc.;
(2) if to the Initial Purchasers, initially at their addresses set
forth in the Purchase Agreement; and
(3) if to the Company or the Subsidiary Guarantors, initially at the
addresses of the Company and the Subsidiary Guarantors set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) Successors and Assigns. This Agreement shall be binding upon the
Company, the Subsidiary Guarantors and their successors and assigns.
<PAGE>
17
(d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
(h) Remedies. In the event of a breach by the Company, and/or the
Subsidiary Guarantors, on the one hand, or by any Holder, on the other hand, of
any of their obligations under this Agreement, each Holder or the Company or the
Subsidiary Guarantors, as the case may be, in addition to being entitled to
exercise all rights granted by law, including recovery of damages (other than
the recovery of damages for a breach by the Company and/or the Subsidiary
Guarantors of their obligations under Sections 1 or 2 hereof for which
liquidated damages have been paid pursuant to Section 3 hereof), will be
entitled to specific performance of its rights under this Agreement. The
Company, the Subsidiary Guarantors and each Holder agree that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby further agree that,
in the event of any action for specific performance in respect of such breach,
it shall waive the defense that a remedy at law would be adequate.
(i) No Inconsistent Agreements. The Company and each of the
Subsidiary Guarantors represents, warrants and agrees that (i) it has not
entered into, shall not, on or after the date of this Agreement, enter into any
agreement that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof, (ii) it has not
previously entered into any agreement which remains in effect granting any
registration rights with respect to any of its debt securities to any person and
(iii) without limiting the generality of the foregoing, without the written
consent of the Holders of a majority in aggregate principal amount of the then
outstanding Transfer Restricted Securities, it shall not grant to any person the
right to request the Company to register any debt securities of the Company
under the Securities Act unless the rights so granted are not in conflict or
inconsistent with the provisions of this Agreement.
<PAGE>
18
(j) No Piggyback on Registrations. Neither the Company, the
Subsidiary Guarantors nor any of their security holders (other than the Holders
of Transfer Restricted Securities in such capacity) shall have the right to
include any securities of the Company and the Subsidiary Guarantors in any Shelf
Registration or Registered Exchange Offer other than Transfer Restricted
Securities.
(k) Severability. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Subsidiary Guarantors and the Initial Purchasers.
Very truly yours,
AVIS RENT A CAR, INC.
By _____________________________________
Name:
Title:
AVIS RENT A CAR SYSTEM, INC.
By _____________________________________
Name:
Title:
AVIS INTERNATIONAL, LTD.
By _____________________________________
<PAGE>
19
Name:
Title:
AVIS MANAGEMENT SERVICES, LTD.
By _____________________________________
Name:
Title:
AVIS CARIBBEAN, LIMITED
By _____________________________________
Name:
Title:
AVIS ASIA AND PACIFIC, LIMITED
By _____________________________________
Name:
Title:
AVIS ENTERPRISES, INC.
By _____________________________________
Name:
Title:
AVIS SERVICE, INC.
By _____________________________________
Name:
Title:
<PAGE>
AVIS LUBE, INC.
By _____________________________________
Name:
Title:
AVIS LEASING CORPORATION
By _____________________________________
Name:
Title:
RENT-A-CAR COMPANY, INCORPORATED
By _____________________________________
Name:
Title:
RESERVE CLAIMS MANAGEMENT CO.
By _____________________________________
Name:
Title:
AVIS FLEET LEASING AND MANAGEMENT
CORPORATION
By _____________________________________
Name:
Title:
PHH VEHICLE MANAGEMENT SERVICES LLC
<PAGE>
By _____________________________________
Name:
Title:
DEALERS HOLDINGS, INC.
By _____________________________________
Name:
Title:
WILLIAMSBURG MOTORS, INC.
By _____________________________________
Name:
Title:
EDENTON MOTORS, INC.
By _____________________________________
Name:
Title:
WRIGHT EXPRESS LLC
By _____________________________________
Name:
Title:
PHH CANADIAN HOLDINGS, INC.
By _____________________________________
Name:
<PAGE>
Title:
PHH DEUTSCHLAND, INC.
By _____________________________________
Name:
Title:
<PAGE>
23
Accepted:
CHASE SECURITIES INC.
By_________________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
One Chase Plaza, 25th Floor
New York, New York 10081
Attention: Legal Department
LEHMAN BROTHERS INC.
By_________________________________
Authorized Signatory
Address for notices pursuant to Section9(c):
3 World Financial Center
New York, New York 10285
Attention: Legal Department
<PAGE>
EXECUTION COPY
CREDIT AGREEMENT
Dated as of June 30, 1999
Among
AVIS RENT A CAR, INC.,
the LENDERS
parties hereto
from time to time,
THE CHASE MANHATTAN BANK,
LEHMAN COMMERCIAL PAPER INC.
And
CHASE SECURITIES INC.,
as Lead Arranger and Book Manager
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I.
Definitions ...........................................................2
SECTION 1.01 Defined Terms................................2
SECTION 1.02 Classification of Loans and Borrowings......29
SECTION 1.03 Terms Generally.............................29
SECTION 1.04 Accounting Terms; GAAP......................29
ARTICLE II.
Amount and Terms of the Revolving Credit Commitments,
Additional Revolving Loans and Term Loan Commitments .................30
SECTION 2.01 Revolving Credit Commitments................30
SECTION 2.02 Revolving Loans and Borrowings..............30
SECTION 2.03 Requests for Revolving Borrowings...........30
SECTION 2.03A Additional Revolving Loans.................31
SECTION 2.04 Term Loan Commitments.......................32
SECTION 2.05 Term Loans and Borrowings...................32
SECTION 2.06 WC Letters of Credit........................33
SECTION 2.07 Funding of Borrowings ......................39
SECTION 2.08 Interest Elections..........................39
SECTION 2.09 Termination and Optional and Mandatory
Reduction of Revolving Credit Commitment....41
SECTION 2.10 Scheduled Repayment of Loans; Evidence
of Debt ....................................41
SECTION 2.11 Optional and Mandatory Prepayment of Loans..43
ARTICLE III.
Amount and Terms of the CE Letters of Credit..........................44
SECTION 3.01 General. ..................................44
SECTION 3.02 Requests for CE Letter of Credit............45
SECTION 3.03 Expiration Date.............................45
SECTION 3.04 Participations..............................45
SECTION 3.05 Reimbursement by Borrower...................46
SECTION 3.06 Replacement of the CE Issuing Bank..........48
SECTION 3.07 Special Liquidity Draw......................48
SECTION 3.08 Conversion of CE Disbursements..............49
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ARTICLE IV.
General Provisions....................................................49
SECTION 4.01 Fees........................................49
SECTION 4.02 Interest....................................50
SECTION 4.03 Alternate Rate of Interest..................51
SECTION 4.04 Increased Costs.............................51
SECTION 4.05 Break Funding Payments......................52
SECTION 4.06 Taxes.......................................53
SECTION 4.07 Payments Generally; Pro Rata Treatment;
Sharing of Set-offs.........................54
SECTION 4.08 Mitigation Obligations; Replacement of
Lenders.....................................56
ARTICLE V.
Representations and Warranties........................................57
SECTION 5.01 Organization; Powers........................57
SECTION 5.02 Authorization; Enforceability...............57
SECTION 5.03 Approvals; No Conflicts.....................57
SECTION 5.04 Financial Condition; No Material Adverse
Change .....................................58
SECTION 5.05 Properties..................................58
SECTION 5.06 Litigation and Environmental Matters........59
SECTION 5.07 Compliance with Laws and Agreements.........59
SECTION 5.08 Investment and Holding Company Status.......59
SECTION 5.09 Taxes.......................................59
SECTION 5.10 ERISA.......................................59
SECTION 5.11 Disclosure..................................60
SECTION 5.12 Federal Regulations.........................60
SECTION 5.13 The Security Documents......................60
SECTION 5.14 Pledged Stock...............................61
SECTION 5.15 Real Estate Matters.........................61
SECTION 5.16 Subsidiaries. ..............................61
SECTION 5.17 Delivery of the Transaction Documents.......61
SECTION 5.18 Representations and Warranties Contained
in the other Transaction Documents. ........61
SECTION 5.19 Labor Matters...............................62
SECTION 5.20 Purpose of Loans............................62
SECTION 5.21 Year 2000 Matters...........................62
ARTICLE VI.
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Conditions ...........................................................63
SECTION 6.01 Closing Date................................63
SECTION 6.02 Each Extension of Credit....................66
ARTICLE VII.
Affirmative Covenants
.....................................................................67
SECTION 7.01 Financial Statements and Other Information..67
SECTION 7.02 Notices of Material Events..................68
SECTION 7.03 Existence; Conduct of Business..............69
SECTION 7.04 Payment of Obligations......................69
SECTION 7.05 Maintenance of Properties; Insurance........69
SECTION 7.06 Books and Records; Inspection Rights........69
SECTION 7.07 Compliance with Laws Generally..............69
SECTION 7.08 Environmental Laws..........................70
SECTION 7.09 Real Property Matters.......................70
SECTION 7.10 After-Acquired Property and Fixtures........72
SECTION 7.11 Foreign Subsidiaries........................73
SECTION 7.12 Further Assurances..........................73
ARTICLE VIII.
Negative Covenants ...................................................73
SECTION 8.01 Financial Condition Covenants...............74
(a) Maintenance of Leverage Ratio.........................74
(b) Maintenance of Interest Coverage Ratio................74
SECTION 8.02 Indebtedness................................75
SECTION 8.03 Liens.......................................76
SECTION 8.04 Limitation on Fundamental Changes...........77
SECTION 8.05 Limitation on Sale of Assets................78
SECTION 8.06 Limitation on Restricted Payments...........78
SECTION 8.07 Limitation on Capital Expenditures..........79
SECTION 8.08 Limitation on Investments, Loans and
Advances....................................79
SECTION 8.09 Limitation on Sale and Leaseback
Transactions................................80
SECTION 8.10 Limitation on Payments and Modifications
of Debt Instruments and Other Documents.....80
SECTION 8.11 Limitation on Changes to Franchise
Agreements or Transaction Documents.........81
SECTION 8.12 Limitation on Changes in Fiscal Year........81
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SECTION 8.13 Limitation on Lines of Business.............81
SECTION 8.14 Limitations on Currency and Commodity
Hedging Transactions........................81
SECTION 8.15 Restrictive Agreements......................82
SECTION 8.16 Limitation on Transactions with Affiliates..82
SECTION 8.17 Limitation on Activities of Certain
Subsidiaries................................82
ARTICLE IX.
Events of Default.....................................................82
ARTICLE X.
The Administrative Agent..............................................86
ARTICLE XI.
Miscellaneous.........................................................88
SECTION 11.01 Notices....................................88
SECTION 11.02 Waivers; Amendments........................89
SECTION 11.03 Expenses; Indemnity; Damage Waiver.........89
SECTION 11.04 Successors and Assigns.....................91
SECTION 11.05 Survival...................................93
SECTION 11.06 Counterparts; Integration; Effectiveness...93
SECTION 11.07 Severability...............................93
SECTION 11.08 Right of Setoff............................94
SECTION 11.09 Governing Law; Jurisdiction; Consent to
Service of Process.........................94
SECTION 11.10 WAIVER OF JURY TRIAL.......................94
SECTION 11.11 Headings...................................95
SECTION 11.12 Confidentiality............................95
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<PAGE>
ANNEX
A Pricing Grid
SCHEDULES
1.01 Guarantor Subsidiaries/Target Subs
2.01 Revolving Credit Commitments
2.04 Term Loan Commitments
2.06(k) Outstanding Letters of Credit
5.03 Required Consents
5.04 Financial Condition
5.06 Disclosed Matters
5.13 Lien Searches
5.15 Material Real Property
5.16 Subsidiaries
8.02 Permitted Indebtedness
8.03 Permitted Liens
8.08(b) Permitted Investments
8.15 Restrictive Agreements
EXHIBITS
A Form of Assignment and Acceptance
B Form of Guarantee and Collateral Agreement
C Form of Mortgage
D-1 Form of New Lender Supplement
D-2 Form of Increased Facility Activation Notice
E Form of CE Letter of Credit
F Form of Notice of Conversion
G Form of Borrowing Certificate
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<PAGE>
CREDIT AGREEMENT, dated as of June 30, 1999, among Avis Rent A Car,
Inc., a Delaware corporation (the "Borrower"), the several banks and other
financial institutions and entities from time to time parties to this Agreement
(the "Lenders"), The Chase Manhattan Bank, a New York banking corporation, as
administrative agent for the Lenders (the "Administrative Agent"), and Lehman
Commercial Paper Inc., a Delaware corporation, as syndication agent for the
Lenders (the "Syndication Agent"; collectively with the Administrative Agent,
the "Agents").
W I T N E S S E T H :
WHEREAS, the Borrower proposes to acquire (the "Acquisition") the
PHH Corporation's vehicle management services business, including the fleet card
business ("VMS Business") from PHH Holding Corporation ("PHH Holdings"), a
subsidiary of Cendant Corporation ("Cendant");
WHEREAS, Avis Fleet Leasing and Management Corporation, a
wholly-owned subsidiary of the Borrower ("Acquiror Sub"), will acquire from PHH
Holdings, an indirect subsidiary of Cendant and a direct subsidiary of PHH
Corporation ("PHH"), all of the outstanding capital stock of the Target Subs;
WHEREAS, the Acquisition will be effected by a merger (the "Merger")
between Acquiror Sub and PHH Holdings in which both entities survive;
WHEREAS, (i) AESOP Funding Corp., a special-purpose, bankruptcy
remote Delaware corporation ("AESOP"), and AESOP Funding II, L.L.C., a
bankruptcy remote, special purpose Delaware limited liability company ("AESOP
II") have used the proceeds from the sale of (a) commercial paper notes (the
"Commercial Paper") by AESOP and (b) medium-term notes (the "Medium Term Notes")
by AESOP II to provide loans to AESOP Leasing L.P., a special purpose
bankruptcy-remote limited partnership ("AESOP Leasing"), and AESOP Leasing Corp.
II, a special purpose bankruptcy-remote entity ("AESOP Leasing II") for their
purchase of a fleet of vehicles to be leased to Avis Rent A Car System, Inc., a
Delaware corporation ("ARACS"), and (ii) AESOP entered into a 364 day revolving
liquidity facility in an amount up to $1,350,000,000 to provide backup liquidity
for the Commercial Paper (the "Liquidity Facility"; collectively with the
Commercial Paper and the Medium Term Notes, the "Fleet Financing Program"); and
WHEREAS, the Borrower has requested that the Agents and the Lenders
enter into this agreement (i) to complete the Acquisition, (ii) to pay the
anticipated expenses to be incurred in connection with the Acquisition, (iii) to
refinance the Credit Agreement, dated as of July 30, 1997 (as amended, modified
or supplemented from time to time, the "Existing Credit Agreement"), among
ARACS, the Borrower, the lenders parties thereto, the Administrative Agent and
the Syndication Agent, (iv) to refinance debt of the VMS Business, (v) to
provide financing for the working capital and other business requirements of the
Borrower and its Subsidiaries and (vi) to provide for the issuance of letters of
credit to support the Fleet Financing Program and to support obligations of
workmans'
<PAGE>
2
compensation and other insurance and bonding requirements and for other general
corporate purposes of the Credit Parties in each case in the ordinary course of
business;
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
ARTICLE I.
Definitions
SECTION 1.01 Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"ABS Offering" means the offering or placement of one or more
tranches of asset- backed securities in an aggregate principal amount of at
least $3.4 billion in connection with the Acquisition (including tranches that
refinance interim arrangements entered into on the Closing Date).
"ABS Offering Documents" means the instruments and agreements
executed in connection with the ABS Offering.
"Acquiror Sub" has the meaning assigned in the recitals to this
Agreement.
"Acquisition" has the meaning assigned in the recitals to this
Agreement.
"Adjusted EBITDA" means, with respect to any period, EBITDA for such
period, plus, to the extent deducted in determining such EBITDA for such period,
any portion of the royalty fees under the Franchise Agreements and accrued
interest thereon the payment of which is deferred minus any such deferred
portion paid in the period.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Adjustment Date" means each date that is the second Business Day
following receipt by the Lenders of both (i) the financial statements required
to be delivered pursuant to Section 7.01(a) or 7.01(b), as applicable, for the
most recently completed fiscal period and (ii) the related compliance
certificate required to be delivered pursuant to Section 7.01(c) with respect to
such fiscal period.
<PAGE>
3
"Administrative Agent" has the meaning assigned in the preamble to
this Agreement.
"Administrative Questionnaire" means an Administrative Questionnaire
in a form supplied by the Administrative Agent.
"AESOP" has the meaning assigned in the recitals to this Agreement.
"AESOP II" has the meaning assigned in the recitals to this
Agreement.
"AESOP Leasing" has the meaning assigned in the recitals to this
Agreement.
"AESOP Leasing II" has the meaning assigned in the recitals to this
Agreement.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified. A
Person having 10% or more of the Voting Stock of another Person shall be deemed
to have Control.
"Agents" has the meaning assigned in the preamble to this Agreement.
"Aggregate Face Amount" has the meaning assigned in the Liquidity
Facility.
"Aggregate Liquidity Commitment" has the meaning assigned in the
Liquidity Facility.
"Agreement" means this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Alternate Base Rate" means, for any day, a rate per annum equal to
the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate
in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Margin": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
ABR Loans Eurodollar Loans
--------- ----------------
Revolving Loans 1.75% 2.75%
Tranche A Term Loans 1.75% 2.75%
Tranche B Term Loans 2.25% 3.25%
Tranche C Term Loans 2.50% 3.50%
<PAGE>
4
; provided, that on and after the first Adjustment Date occurring on or after
the date that is six months after the Closing Date, the Applicable Margin with
respect to Revolving Loans and Tranche A Term Loans will be determined pursuant
to the Pricing Grid.
"Applicable RC Percentage" means, with respect to any Lender, the
percentage of the Total Revolving Credit Commitments represented by such
Lender's Revolving Credit Commitment. If the Revolving Credit Commitments have
terminated or expired, the Applicable RC Percentages shall be determined based
upon the Revolving Credit Commitments most recently in effect, giving effect to
any eligible assignments.
"Applicable TLA Percentage" means, with respect to any Lender,
before the Closing Date, the percentage of the total Tranche A Term Loan
Commitments represented by such Lender's Tranche A Term Loan Commitment and,
after the Closing Date, the percentage of the aggregate Tranche A Term Loans
then outstanding represented by such Lender's Tranche A Term Loan then
outstanding, giving effect to any eligible assignments.
"Applicable TLB Percentage" means, with respect to any Lender,
before the Closing Date, the percentage of the total Tranche B Term Loan
Commitments represented by such Lender's Tranche B Term Loan Commitment and,
after the Closing Date, the percentage of the aggregate Tranche B Term Loans
then outstanding represented by such Lender's Tranche B Term Loan then
outstanding, giving effect to any eligible assignments.
"Applicable TLC Percentage" means, with respect to any Lender,
before the Closing Date, the percentage of the total Tranche C Term Loan
Commitments represented by such Lender's Tranche C Term Loan Commitment and,
after the Closing Date, the percentage of the aggregate Tranche C Term Loans
then outstanding represented by such Lender's Tranche C Term Loan then
outstanding, giving effect to any eligible assignments.
"Approved Fund" means, with respect to any Lender that is a fund
that invests in commercial loans, any other fund that invests in commercial
loans and is managed or advised by the same investment advisor as such Lender or
by an Affiliate of such investment advisor.
"Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.
<PAGE>
5
"Asset Sale" means any sale, issuance, conveyance, transfer, lease
or other disposition (including, without limitation, through a Sale and
Leaseback Transaction or as a result of casualty or condemnation) (a
"Disposition") by the Borrower or any Subsidiary, in one or a series of related
transactions, of any real or personal, tangible or intangible, property
(including, without limitation, Capital Stock of a Subsidiary) of the Borrower
or such Subsidiary to any Person (other than to the Borrower or any of its
Subsidiaries).
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 11.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD
Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Beneficiary" means either the Trustee or the Collateral Agent, as
the case may be.
"Board" means the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrower" has the meaning assigned in the preamble hereto.
"Borrowing" means (a) Revolving Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect or (b) Tranche A Term Loans,
Tranche B Term Loans or Tranche C Term Loans of the same Type made, converted or
continued on the same date and as to which a single Interest Period is in
effect.
"Borrowing Request" means a request by the Borrower for a Revolving
Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
<PAGE>
6
"Capital Expenditures" means with respect to any Person for any
period, the sum of the aggregate of all expenditures by such Person and its
consolidated Subsidiaries during such period which, in accordance with GAAP, are
or should be included in "capital expenditures" which expenditures shall exclude
any amounts spent on vehicles.
<PAGE>
7
"Capital Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
"Cash Collateral Prepayment Account" has the meaning specified in
Section 2.11(c).
"CE" means, with respect to each Credit Document, Credit
Enhancement.
"CE Issuing Bank" means Bayerische Hypo- und Vereinsbank AG (as
successor to Bayerische Vereinsbank AG), New York Branch, or any other financial
institution in its capacity as the issuer of CE Letters of Credit hereunder, and
each such financial institution's successors in such capacity as provided in
Section 3.06.
"CE LC Disbursement" means a payment made by the CE Issuing Bank
pursuant to a CE Letter of Credit.
"CE LC Exposure" means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding CE Letters of Credit at such time plus (b) the
aggregate amount of all CE LC Disbursements that have not yet been reimbursed by
or on behalf of the Borrower at such time. The CE LC Exposure of any Lender at
any time shall be its Applicable RC Percentage of the total CE LC Exposure at
such time.
"CE Letter of Credit" means any letter of credit issued pursuant to
Section 3.01.
"Cendant" has the meaning assigned in the recitals to this
Agreement.
"Cendant Agreements" means (i) the Franchise Agreements, (ii) the
Registration Rights Agreement between the Borrower and Cendant Car Rental, Inc.,
(iii) the Purchasing Service Agreement between ARACS and Cendant, (iv) the
Separation Agreement between Cendant Car Rental, Inc. and the Borrower, (v) the
Tax Disaffiliation Agreement between the Borrower and Cendant, (vi) lease
agreements relating to facilities in Virginia Beach, Virginia, Tulsa, Oklahoma
and Garden City, New York and (vii) the IT Agreement and transitional services
agreements entered into by Cendant and/or its Subsidiaries in connection with
the Acquisition, in each case as in effect on the Closing Date and as the same
may be amended pursuant to the terms thereof and hereof.
<PAGE>
8
"Change in Control" means (a) the acquisition of ownership, directly
or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), other than
Cendant or any Wholly-Owned Subsidiary of Cendant, (i) of shares representing
more than 40% of the aggregate ordinary voting power represented by the issued
and outstanding capital stock of the Borrower at a time when Cendant and its
Wholly-Owned Subsidiaries in the aggregate beneficially, directly or indirectly,
owns shares of such capital stock having at least 20% of such voting power and
(ii) of shares representing more than 35% otherwise; (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of the
Borrower by Persons who were neither (i) nominated by the board of directors of
the Borrower nor (ii) appointed by directors so nominated; or (c) the
acquisition of direct or indirect Control of the Borrower by any Person or group
other than Cendant and its Subsidiaries.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
any Issuing Bank (including for purposes of Section 4.04, by any lending office
of such Lender or by such Lender's or such Issuing Bank's holding company, if
any) with any request, guideline or directive (whether or not having the force
of law) of any Governmental Authority made or issued after the date of this
Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Tranche A Term Loans, Tranche B Term Loans or Tranche C Term Loans.
"Closing Date" means the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 11.02).
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" means all assets (including assets constituting shares
of Capital Stock) of the Credit Parties, now owned or hereafter acquired, upon
which a Lien is purported to be created by any Security Document.
"Collateral Agent" means The Chase Manhattan Bank, or any successor.
"Collateral Agreement" means the collateral agreement by and among
AESOP and the Administrative Agent entered into with the Collateral Agent and
the Liquidity Agent (as defined in the Liquidity Facility).
"Commercial Paper" has the meaning assigned in the recitals to this
Agreement.
<PAGE>
9
"Commitment" means, with respect to each Lender, its Revolving
Credit Commitment, Tranche A Term Loan Commitment, Tranche B Term Loan
Commitment and Tranche C Term Loan Commitment, as applicable.
"Commitment Fee Rate" means .50% per annum; provided that at any
time when the Applicable Margin for Eurodollar Revolving Loans is 1.75% the
Commitment Fee Rate shall be .375%.
"Consolidated" when used in connection with any defined term, and
not otherwise defined, means such term as it applies to any Person and its
Subsidiaries on a consolidated basis, after eliminating all intercompany items.
"Contractual Obligation" means as to any Person, any provision of
any material security issued by such Person or of any material agreement,
instrument or other undertaking to which such Person is a party or by which it
or any of its property is bound.
"Continuing Letter of Credit" means each letter of credit
outstanding on the date hereof that was issued pursuant to the Existing Credit
Agreement by a Lender.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Covered Foreign Fleet Debt" means, with respect to each Foreign
Subsidiary of the Borrower (other than any VMS Subsidiary) at any time the
lesser of (i) the outstanding amount of Indebtedness of such Subsidiary incurred
to finance the acquisition directly or indirectly of vehicles by such Subsidiary
and (ii) 90% of the book value of the vehicles owned by such Subsidiary at such
time.
"CP Program" means the collective reference to the Commercial Paper
and the Liquidity Facility and the related transaction documents.
"Credit Disbursement" has the meaning set forth in Section 3.05.
"Credit Documents" means this Agreement, any notes, and the Security
Documents, each as amended, supplemented, waived or otherwise modified from time
to time.
"Credit Draw" means a drawing in respect of the CE Letter of Credit
resulting from, or as a consequence of, or attributable to, a breach of one or
more of any Credit Party's obligations under the Fleet Financing Program.
"Credit Parties" means the Borrower and each Guarantor Subsidiary;
individually, a "Credit Party".
<PAGE>
10
"Customer Lease Financing Loans" has the meaning assigned in the
definition of "Specified Financing Subsidiary".
"Debt" means, as to the Borrower at the date of any determination
thereof, (a) all Indebtedness of the Borrower and its Subsidiaries determined on
a Consolidated basis that is required to be set forth on a Consolidated balance
sheet of the Borrower on such date plus, to the extent not included in clause
(a) above, (b) the stated amount of all letters of credit as to which the
Borrower or any Subsidiary is the account party (or is the guarantor of the
obligations of the account party thereunder) and (c) the balance sheet
Indebtedness of any third Person as to which the Borrower or any of its
Subsidiaries has a Guarantee Obligation minus any such amounts that constitute
Designated Financing Debt and minus any letters of credit to the extent cash
collateralized.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Designated Financing Debt" means Permitted Vehicle Indebtedness and
Customer Lease Financing Loans.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 5.06.
"dollars" or "$" refers to lawful money of the United States of
America.
"Domestic Subsidiary" means any Subsidiary organized under the laws
of any jurisdiction within the United States of America (including territories),
excluding the Securitization Entities.
"Dow Jones Markets Page 3750" means the display page currently so
designated on the Dow Jones Telerate Service (or on any successor or substitute
page of such Service, or any successor to or substitute for such Service,
providing rate quotations comparable to those currently provided on such page of
such Service, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits
in the London interbank market).
"Downgraded Issuing Bank" has the meaning set forth in Section 3.06.
"EBITDA" means, with respect to any period, the Consolidated Net
Income of the Borrower for such period plus, in each case to the extent deducted
in determining such Consolidated Net Income for such period, the sum of the
following: (i) Consolidated Interest Expense of the Borrower (excluding any such
expense attributable to fleet interest expense), (ii) Consolidated income tax
expense of the Borrower and (iii) Consolidated depreciation and amortization
expense of the Borrower (excluding any such expense attributable to fleet
depreciation).
<PAGE>
11
"Eligible Leases" means open-end and closed-end automobile fleet
leases originated by or on behalf of the Borrower and its Subsidiaries which are
of a type customarily eligible for inclusion in a Qualified Securitization
Transaction.
"Eligible Vehicles" means the motor vehicle inventory of the
Borrower and its Subsidiaries, in each case, whether held for sale, lease or
rental purposes which are of a type customarily eligible for inclusion in a
Qualified Securitization Transaction.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Environmental Permits" means any and all permits, licenses,
registrations, notifications, exemptions and any other authorization required
under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan
<PAGE>
12
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article
IX.
"Excess Cash Flow" means, with respect to any period, the net cash
provided by operating activities (excluding any expense attributable to vehicle
depreciation) as reflected on the consolidated statements of cash flows of the
Borrower for such period minus (i) Capital Expenditures made in accordance with
Section 8.07 during such period (excluding Capital Expenditures that were
financed with the incurrence of Indebtedness), minus (ii) mandatory payments of
principal on Indebtedness (including any mandatory cash collateralization of
Letters of Credit) under this Agreement resulting in the permanent reduction of
such Indebtedness during such period, minus (iii) any increase in
overcollateralization requirements under the Fleet Financing Program during such
period, plus (iv) any reduction in overcollateralization requirements under the
Fleet Financing Program during such period. Any increase or reduction in
overcollateralization requirements shall be determined by comparing such
requirement as in effect as of the first day of such period with such
requirement as in effect on the last day of such period.
"Excluded Subsidiary" means a Securitization Entity, a Specified
Financing Subsidiary or any regulated bank Subsidiary or insurance Subsidiary of
the Borrower.
"Excluded Taxes" means, with respect to the Administrative Agent,
any Lender, any Issuing Bank or any other recipient of any payment to be made by
or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 4.08(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement or is attributable to such Foreign Lender's failure or
inability to comply with Section 4.06(e), except to the extent that such Foreign
Lender's assignor (if any) was
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13
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 4.06(a).
"Existing Issuing Bank" means each Person that has issued one or
more Continuing Letters of Credit.
"Extension of Credit" means, as to any Lender, the making of, or the
issuance of, or participation in, a Loan by such Lender or the issuance of, or
participation in, a Letter of Credit by such Lender.
"Facility" means each of (a) the Tranche A Term Loan Commitments and
the Tranche A Term Loans made thereunder, (b) the Tranche B Term Loan
Commitments and the Tranche B Term Loans made thereunder, (c) the Tranche C Term
Loan Commitments and the Tranche C Term Loans made thereunder and (d) the
Revolving Credit Commitments and the Extensions of Credit made thereunder.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.
"Fleet Financing Program" has the meaning assigned in the recitals
hereto.
"Fleet Receivables" means all receivables generated by the Borrower
and its Subsidiaries from obligors under fleet maintenance contracts, fleet
management contracts and fuel card contracts and any other service contracts
billed together with Eligible Leases, which are of a type customarily eligible
for inclusion in a Qualified Securitization Transaction.
"Foreign Lender" means any Lender that is organized under the laws
of a jurisdiction other than the United States of America, any State thereof or
the District of Columbia.
"Foreign Subsidiary" means any Subsidiary which is organized and
existing under the laws of any jurisdiction outside of the United States of
America.
"Franchise Agreements" means (i) the master license agreement (the
"Master License Agreement") with Cendant Car Rental, Inc. and Wizard Co., Inc.,
an indirect wholly-owned Subsidiary
<PAGE>
14
of Cendant, (ii) the reservation services agreement with Cendant and (iii) the
computer services agreement with WizCom International Ltd., an indirect
wholly-owned Subsidiary of Cendant.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee and Collateral Agreement" means the Guarantee and
Collateral Agreement to be executed and delivered by the Borrower and each of
the Guarantors, substantially in the form of Exhibit B, as the same may be
amended, supplemented or otherwise modified from time to time.
"Guarantee Obligation" of or by any Person (the "guarantor") means
any obligation, contingent or otherwise, of the guarantor guaranteeing or having
the economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee Obligation shall
not include endorsements for collection or deposit in the ordinary course of
business.
"Guarantor" means any Person (other than the Borrower) which is now
or hereafter a party to (a) the Guarantee and Collateral Agreement or (b) any
other guarantee hereafter delivered to the Administrative Agent guaranteeing the
obligations and liabilities of the Borrower hereunder or under any other Credit
Documents.
"Guarantor Subsidiaries" means each direct and indirect Domestic
Subsidiary listed on Schedule 1.01 under the heading "Guarantor Subsidiaries" or
which becomes a party to the Guarantee and Collateral Agreement pursuant to
Section 7.10(b) or Section 8.17.
"Hazardous Materials" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
<PAGE>
15
"Hedging Agreement" means any interest derivative, interest rate
protection agreement, foreign currency exchange agreement, commodity price
protection agreement or other interest or currency exchange rate or commodity
price hedging arrangement.
"High Yield Offering" means the offering or placement of up to $550
million of senior subordinated notes in connection with the Acquisition.
"High Yield Offering Documents" means the instruments and agreements
executed in connection with the High Yield Offering.
"Increased Facility Activation Notice" means a notice substantially
in the form of Exhibit D-2.
"Increased Facility Closing Date" means any Business Day designated
as such in an Increased Facility Activation Notice.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantee Obligations by such Person
of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty, (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances, (k)
all net liabilities of such Person in respect of Permitted Hedging Arrangements
and (l) all obligations of such Person in respect of all classes of preferred
stock of its Subsidiaries. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Insurance Subsidiaries" means each direct or indirect Subsidiary
which is engaged in the insurance business and is regulated by a Governmental
Authority as an insurance company.
<PAGE>
16
"Interest Coverage Ratio" means at the last day of each fiscal
quarter of the Borrower, the ratio of (a) EBITDA to (b) Consolidated Interest
Expense, in each case for the period of four full fiscal quarters ending on such
date (except that at September 30, 1999, such ratio shall be computed for the
period from January 1, 1999 through such date). With respect to fiscal quarters
ending on or prior to March 31, 2000, EBITDA and Consolidated Interest Expense
of the Borrower shall be calculated on a pro forma basis as if the Transactions
had occurred on January 1, 1999.
"Interest Election Request" means a request by the Borrower to
convert or continue a Borrowing in accordance with Section 2.08.
"Interest Expense" of any Person for any period, means (a) the
amount of interest expense, both expensed and capitalized, of such Person and
its Consolidated Subsidiaries determined in accordance with GAAP for such period
minus (b) the amount of interest income of such Person and its Consolidated
Subsidiaries determined in accordance with GAAP for such period. Interest
Expense of the Borrower shall exclude interest expense attributable to
Designated Financing Debt and shall include fees paid in respect of Letters of
Credit.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December, and (b) with respect to
any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period.
"Interest Period" means with respect to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Borrower may elect; provided, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Issuing Bank" means the WC Issuing Bank and/or the CE Issuing Bank,
as applicable.
"LC Disbursement" means a payment made by an Issuing Bank pursuant
to a Letter of Credit.
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17
"L/C Participants" means the collective reference to the Lenders
other than the Issuing Banks; individually, an "L/C Participant".
"Lenders" means the Persons listed on Schedule 2.01 or Schedule 2.04
and any other Person that shall have become a party hereto pursuant to an
Assignment and Acceptance, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Acceptance.
"Letter of Credit" means any letter of credit issued pursuant to
this Agreement.
"Leverage Ratio" means at the last day of each fiscal quarter of the
Borrower, the ratio of (a) Consolidated Debt of the Borrower as of the last day
of such quarter to (b) EBITDA for the period of four full fiscal quarters ending
on such date, except that (i) with respect to the fiscal quarters ending
September 30, 1999, December 31, 1999 and March 31, 2000, Consolidated Debt and
EBITDA of the Borrower shall be calculated on a pro forma basis as if the
Transactions had occurred on January 1, 1999 and (ii) EBITDA for the period of
four fiscal quarters ending September 30, 1999 shall be equal to the sum of
$64,000,000 and such pro forma EBITDA for the three consecutive fiscal quarters
commencing January 1, 1999. Solely for determining Margin Level Status,
following any acquisition of a franchise permitted by Section 8.08, such ratio
shall be calculated on a pro forma basis giving effect to such acquisition as of
the beginning of the relevant measurement period for determining such ratio.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Dow Jones Markets Page 3750 at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent to leading
banks in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Line of Business" has the meaning set forth in Section 8.13.
"Liquidity Disbursement" has the meaning set forth in Section 3.05.
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18
"Liquidity Draw" means a drawing in respect of a CE Letter of Credit
that is not classified as a Credit Draw.
"Liquidity Facility" has the meaning assigned in the recitals to
this Agreement.
"Loans" means the loans made by the Lenders to the Borrower pursuant
to this Agreement.
"Majority Lenders" means, at any time, Lenders the Voting
Percentages of which aggregate more than 50% at such time.
"Majority Revolving Credit Lenders" means, at any time, Lenders the
Applicable RC Percentages of which aggregate more than 50% at such time.
"Majority Tranche A Term Loan Lenders" means, at any time, Lenders
the Applicable TLA Percentages of which aggregate more than 50% at such time.
"Majority Tranche B Term Loan Lenders" means, at any time, Lenders
the Applicable TLB Percentages of which aggregate more than 50% at such time.
"Majority Tranche C Term Loan Lenders" means, at any time, Lenders
the Applicable TLC Percentages of which aggregate more than 50% at such time.
"Margin Level 1 Status" exists on an Adjustment Date if the Leverage
Ratio, as of the last day of the preceding fiscal quarter, was greater than or
equal to 5.0 to 1.0.
"Margin Level 2 Status" exists on an Adjustment Date if the Leverage
Ratio, as of the last day of the preceding fiscal quarter, was greater than or
equal to 4.5 to 1.0 but was less than 5.0 to 1.0.
"Margin Level 3 Status" exists on an Adjustment Date if the Leverage
Ratio, as of the last day of the preceding fiscal quarter, was greater than or
equal to 4.0 to 1.0 but was less than 4.5 to 1.0.
"Margin Level 4 Status" exists on an Adjustment Date if the Leverage
Ratio, as of the last day of the preceding fiscal quarter, was greater than or
equal to 3.5 to 1.0 but was less than 4.0 to 1.0.
"Margin Level 5 Status" exists on an Adjustment Date if none of
Margin Level 1 Status, Margin Level 2 Status, Margin Level 3 Status or Margin
Level 4 Status exists on such date.
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19
"Master License Agreement" has the meaning assigned in the
definition of "Franchise Agreements".
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets or condition, financial or otherwise, of the Borrower and its
Subsidiaries taken as a whole or (b) the validity or enforceability of any of
the Credit Documents or the rights and remedies of the Agents and the Lenders
thereunder.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Borrower and its Subsidiaries in an aggregate
principal amount exceeding $10,000,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of the Borrower or any
Subsidiary in respect of any Hedging Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Borrower or
such Subsidiary would be required to pay if such Hedging Agreement were
terminated at such time.
"Material Real Property" means, as of the Closing Date, the
properties listed on Schedule 5.15 and each other parcel of real estate, a fee
interest in which is acquired by a Credit Party after the Closing Date with a
book value (net of any Indebtedness secured by such parcel) of at least
$1,000,000.
"Medium Term Notes" has the meaning assigned in the recitals to this
Agreement.
"Merger" has the meaning assigned in the recitals to this Agreement.
"Merger Agreement" means the Agreement and Plan of Merger and
Reorganization, dated as of May 22, 1999, by and among PHH, PHH Holdings, the
Borrower and Acquiror Sub, as amended by Amendment No. 1 thereto dated June 30,
1999.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means each Mortgage to be executed and delivered by each
of the applicable Credit Parties, substantially in the form of Exhibit C, as the
same may be amended, supplemented or otherwise modified from time to time.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" means with respect to any Asset Sale, any sale
or issuance of equity securities of the Borrower or any Subsidiary, or the
issuance of any debt securities or any borrowings by the Borrower or any
Subsidiary, an amount equal to the gross proceeds in cash (including cash
equivalents and any cash payments received by way of deferred payment of
principal
<PAGE>
20
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such Asset Sale,
sale, issuance or borrowing, net of (i) attorneys' fees, accountants' fees,
brokerage, consultant and other fees, underwriting commissions and other fees
and expenses actually incurred in connection with such Asset Sale, sale,
issuance or borrowing, (ii) taxes paid or reasonably estimated to be payable as
a result thereof, (iii) amounts provided or to be provided by the Borrower or
any Subsidiary as a reserve, in accordance with GAAP, with respect to any
liabilities associated with such Asset Sale and retained by the Borrower or any
such Subsidiary after such Asset Sale and other amounts to be used by the
Borrower or any Subsidiary to discharge or pay on a current basis any other
liabilities associated with such Asset Sale and (iv) in the case of an Asset
Sale, repayments of the principal amount of Indebtedness (other than the Loans)
secured by such assets required to be made upon the consummation of such
transaction and any related prepayment premiums and penalties.
"Net Income" of any Person for any period, means net income of such
Person and its Consolidated Subsidiaries, determined on a consolidated basis in
accordance with GAAP for such period.
"New Lender" has the meaning set forth in 2.03A(b).
"New Lender Supplement" has the meaning set forth in Section
2.03A(b).
"North Carolina Franchise Letter of Credit" means a WC Letter of
Credit for the account of the Borrower, which WC Letter of Credit shall (a)
support payment obligations of New Hanover Rent-A-Car, Inc. ("New Hanover"), a
franchise in North Carolina, to NationsBank of Texas, N.A. as lender to New
Hanover in connection with the settlement of certain claims made against New
Hanover; and (b) be in a face amount equal to an amount not greater than
$2,500,000.
"Obligations" means the collective reference to the unpaid principal
of and interest on the Loans and LC Disbursements and all other obligations and
liabilities of the Borrower (including, without limitation, interest accruing at
the then applicable rate provided in this Agreement after the maturity of the
Loans and LC Disbursements and interest accruing at the then applicable rate
provided in this Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) to the Administrative Agent or any
Lender (or, in the case of any Hedging Agreement, any Affiliate of any Lender),
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, this Agreement, the other Credit Documents, any Letter of Credit, any
Hedging Agreement or any other document made, delivered or given in connection
with any of the foregoing, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Administrative Agent or to the Lenders that are required to be paid by
the Borrower pursuant to the terms of any of the foregoing agreements).
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21
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes, assessments, levies and other
charges that are not yet due or are being contested in compliance with Section
7.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than 30 days
or are being contested in compliance with Section 7.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business;
(e) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of the Borrower or any Subsidiary; and
(f) Liens arising by reason of any judgement, decree or order of any
court or Governmental Authority which do not, individually or in the aggregate,
give rise to any Event of Default,
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Hedging Arrangement" has the meaning set forth in Section
8.14.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America or the United Kingdom (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United States of
America or the United Kingdom), in each case maturing within one year from the
date of acquisition thereof;
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22
(b) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of acquisition, a
rating of at least A-1 from S&P or P-1 from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof or of the United
Kingdom or any country therein which has a combined capital and surplus and
undivided profits of not less than $250,000,000; and
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in clause (c)
above.
"Permitted Vehicle Collateral" means:
(a) the collateral securing Permitted Vehicle Indebtedness and
consisting of Eligible Vehicles and receivables, or a beneficial interest
therein, arising from the disposition of Eligible Vehicles and the proceeds
thereof;
(b) Eligible Leases and Fleet Receivables, or a beneficial interest
therein, transferred to a Securitization Entity in connection with Qualified
Securitization Transaction and the proceeds thereof;
(c) any related assets which are customarily transferred, or in
respect of which security interests are customarily granted, in connection with
asset securitizations involving Eligible Vehicles or Eligible Leases; and
(d) any proceeds of any of the foregoing.
"Permitted Vehicle Indebtedness" means (i) Indebtedness that
finances or refinances Eligible Vehicles (but only to the extent actually used
to finance or refinance Eligible Vehicles) and (ii) Indebtedness secured by
Permitted Vehicle Collateral; provided, however, that the Permitted Vehicle
Indebtedness of a Foreign Subsidiary (other than a VMS Subsidiary) shall be
limited to the Covered Foreign Fleet Debt of such Subsidiary.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"PHH" has the meaning assigned in the recitals to this Agreement.
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23
"PHH Holdings" has the meaning assigned in the recitals to this
Agreement.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Preferred Stock" means the preferred stock of Acquiror Sub, which
will be issued to PHH in connection with the Acquisition.
"Pricing Grid" means the pricing grid attached hereto as Annex A.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Purchase Money Note" means a promissory note of a Securitization
Entity evidencing a line of credit, which may be irrevocable, from the Borrower
or any Subsidiary of the Borrower to a Securitization Entity or representing the
deferred purchase price for the purchase of assets by such Securitization Entity
from the Borrower or a Subsidiary, in each case in connection with a Qualified
Securitization Transaction, which note is repayable from cash available to the
Securitization Entity, other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest,
principal and other amounts owing to such investors and amounts paid in
connection with the purchase of Eligible Vehicles, Eligible Leases, Fleet
Receivables or a beneficial interest therein.
"Qualified Securitization Transaction" means any transaction or
series of transactions that may be entered into by the Borrower or any of its
Subsidiaries pursuant to which the Borrower or any of its Subsidiaries may sell,
convey or otherwise transfer to (i) a Securitization Entity (in the case of a
transfer by the Borrower or any of its Subsidiaries) and (ii) any other Person
(in the case of a transfer by a Securitization Entity), or may grant a security
interest in, any Permitted Vehicle Collateral (whether now existing or arising
in the future) of the Borrower or any of its Subsidiaries, and any assets
related thereto including, without limitation, the proceeds of such Permitted
Vehicle Collateral.
"Rating Agencies" means the collective reference to Moody's and S&P.
"Register" has the meaning set forth in Section 11.04.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective trustees, directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
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24
"Requirement of Law" means as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, statute, ordinance, code, decree, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
material property or to which such Person or any of its material property is
subject, including, without limitation, laws, ordinances and regulations
pertaining to zoning, occupancy and subdivision of real properties; provided
that the foregoing shall not apply to any non-binding recommendation of any
Governmental Authority.
"Responsible Officer" means as to any Person, any Financial Officer,
the chief executive officer or the president of such Person.
"Revolving Credit Availability Period" means the period from and
including the Closing Date to but excluding the earlier of (a) the Revolving
Maturity Date and (b) in the case of Revolving Loans, WC Letters of Credit or CE
Letters of Credit, the date of termination of the Revolving Credit Commitments.
"Revolving Credit Commitment" means, with respect to each Lender,
the commitment of such Lender to make Revolving Loans and to acquire
participations in WC Letters of Credit and CE Letters of Credit hereunder,
expressed as an amount representing the maximum aggregate amount of such
Lender's Revolving Credit Exposure hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.09, (b) increased from time to
time pursuant to Section 2.03A and (c) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 11.04. The
initial amount of each Lender's Revolving Credit Commitment is set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Revolving Credit Commitment, as applicable.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans, its WC LC Exposure and its CE LC Exposure at such time.
"Revolving Credit Provisions" means Sections 2.01, 2.02, 2.03, 2.06,
2.09, 3.01 through 3.08 and 4.01(a) and (b), the definitions of "Commitment Fee
Rate", "Margin Level 1 Status", "Margin Level 2 Status", "Margin Level 3
Status", "Margin Level 4 Status" and "Margin Level 5 Status" and the Pricing
Grid on Annex A, in each case as they relate to the Revolving Credit Loans.
"Revolving Loan" means a Loan made pursuant to Section 2.03.
"Revolving Maturity Date" means June 30, 2005.
"S&P" means Standard & Poor's Ratings Group.
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25
"Sale and Leaseback Transaction" has the meaning set forth in
Section 8.09.
"Securitization Entity" means a Subsidiary of the Borrower (or
another Person in which the Borrower or any Subsidiary of the Borrower makes an
investment and to which the Borrower or any Subsidiary of the Borrower transfers
Permitted Vehicle Collateral or an interest in Permitted Vehicle Collateral)
which engages in no activities other than in connection with the ownership,
leasing, operation and financing of Eligible Vehicles and other Permitted
Vehicle Collateral and which is designated by the Board of Directors of the
Borrower (as provided below) as a Securitization Entity and as to which:
(i) no portion of the Indebtedness or any other obligations
(contingent or otherwise) of which:
(a) is guaranteed by the Borrower or any Subsidiary of the
Borrower (excluding guarantees of Obligations (other
than the principal of, and interest on, Indebtedness)
pursuant to Standard Securitization Undertakings);
(b) is recourse to or obligates the Borrower or any
Subsidiary of the Borrower in any way other than
pursuant to Standard Securitization Undertakings; or
(c) subjects any property or asset of the Borrower or any
Subsidiary of the Borrower, directly or indirectly,
contingently or otherwise, to the satisfaction thereof,
other than pursuant to Standard Securitization
Undertakings;
(ii) neither the Borrower nor any Subsidiary of the Borrower has
any material contract, agreement, arrangement or understanding
(except in connection with a Purchase Money Note or Qualified
Securitization Transaction) other than on terms no less
favorable to the Borrower or such Subsidiary than those that
might be obtained at the time from Persons that are not
Affiliates of the Borrower, other than fees payable in the
ordinary course of business in connection with servicing
Permitted Vehicle Collateral; and
(iii) neither the Borrower nor any Subsidiary of the Borrower has
any obligation to maintain or preserve such entity's financial
condition or cause such entity to achieve certain levels of
operating results.
"Security Documents" means the collective reference to the
Mortgages, the Guarantee and Collateral Agreement and all other similar security
documents hereafter delivered to the Administrative Agent purporting to grant a
Lien on any asset or assets of any Person to secure the
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26
obligations and liabilities of the Borrower hereunder, under any notes and/or
under any of the other Credit Documents or to secure any guarantee of any such
obligations and liabilities.
"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" of the Borrower within the meaning of Rule 1-02 under
Regulation S-X promulgated by the Securities and Exchange Commission.
"Solvent" and "Solvency" means with respect to any Person on a
particular date, the condition that, on such date, (a) the fair value of the
property of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person, (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
an unreasonably small amount of capital.
"Specified Financing Subsidiary" means a direct wholly-owned
subsidiary of Acquiror Sub (to which Acquiror Sub has contributed only nominal
equity) that is solely engaged in the business of acquiring vehicles for and
then leasing such vehicles to, a specified customer (the "Customer"); provided
that (i) such vehicles are purchased solely with the proceeds of loans made by
the Customer to such Specified Financing Subsidiary (the "Customer Lease
Financing Loans"), (ii) neither the Borrower nor any Subsidiary provides the
Specified Financing Subsidiary any guarantee or credit support of any kind
(including any undertaking, guarantee, indemnity, agreement or instrument that
would constitute Indebtedness) or is directly or indirectly liable (as a
guarantor or otherwise) for such Customer Lease Financing Loans and (iii) the
explicit terms of such Customer Lease Financing Loans provide that there shall
be no recourse against any of the assets of the Borrower or its Subsidiaries.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Borrower or any
Subsidiary of the Borrower which are reasonably customary in securitizations of
vehicles and vehicle leases.
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from
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27
time to time to any Lender under such Regulation D or any comparable regulation.
The Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"Subordinated Note Indenture" means the Indenture entered into by
the Borrower and certain of its Subsidiaries in connection with the issuance of
the Subordinated Notes, together with all instruments and other agreements
entered into by the Borrower or such Subsidiaries in connection therewith, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with Section 8.10.
"Subordinated Notes" means the 11% Senior Subordinated Notes due
2009 of the Borrower in the original principal amount of $500,000,000.
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or, in the case
of a partnership, more than 50% of the general partnership interests are, as of
such date, owned, controlled or held by such Person. All Securitization Entities
shall be deemed to be Subsidiaries of the Borrower.
"Target Subs" means those Subsidiaries listed on Schedule 1.01 under
the heading "Target Subs".
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Term Loans" means the collective reference to the Tranche A Term
Loans, the Tranche B Term Loans and the Tranche C Term Loans.
"Term Loan Commitments": means, with respect to each Lender, the
collective reference to such Lender's Tranche A Term Loan Commitment, Tranche B
Term Loan Commitment and Tranche C Term Loan Commitment, as applicable.
"Term Maturity Date": means, with respect to the Tranche A Term
Loans, June 30, 2005, with respect to the Tranche B Term Loans, June 30, 2006
and, with respect to the Tranche C Term Loans, June 30, 2007.
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a
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28
Business Day, the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day) or, if such
rate is not so reported on such day or such next preceding Business Day, the
average of the secondary market quotations for three-month certificates of
deposit of major money center banks in New York City received at approximately
10:00 a.m., New York City time, on such day (or, if such day is not a Business
Day, on the next preceding Business Day) by the Administrative Agent from three
negotiable certificate of deposit dealers of recognized standing selected by it.
"Total Revolving Credit Commitments" means at any time, the
aggregate amount of the Revolving Credit Commitments then in effect.
"Tranche A Term Lender": each Lender that has a Tranche A Term Loan
Commitment or is the holder of a Tranche A Term Loan.
"Tranche A Term Loan" means a Loan made pursuant to Section 2.04.
"Tranche A Term Loan Commitment" means, with respect to each Lender,
the commitment of such Lender to make a Tranche A Term Loan on the Closing Date.
The initial amount of each Lender's Tranche A Term Loan Commitment is set forth
on Schedule 2.04, or in the Assignment and Acceptance pursuant to which such
Lender shall have assumed its Tranche A Term Loan Commitment, as applicable.
"Tranche B Term Lender": each Lender that has a Tranche B Term Loan
Commitment or is the holder of a Tranche B Term Loan.
"Tranche B Term Loan" means a Loan made pursuant to Section 2.04.
"Tranche B Term Loan Commitment" means, with respect to each Lender,
the commitment of such Lender to make a Tranche B Term Loan on the Closing Date.
The initial amount of each Lender's Tranche B Term Loan Commitment is set forth
on Schedule 2.04, or in the Assignment and Acceptance pursuant to which such
Lender shall have assumed its Tranche B Term Loan Commitment, as applicable.
"Tranche C Term Lender": each Lender that has a Tranche C Term Loan
Commitment or is the holder of a Tranche C Term Loan.
"Tranche C Term Loan" means a Loan made pursuant to Section 2.04.
"Tranche C Term Loan Commitment" means, with respect to each Lender,
the commitment of such Lender to make a Tranche C Term Loan on the Closing Date.
The initial amount of each Lender's Tranche C Term Loan Commitment is set forth
on Schedule 2.04, or in the
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29
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Tranche C Term Loan Commitment, as applicable.
"Transaction Documents" means the collective reference to (i) the
Credit Documents, (ii) the High Yield Offering Documents, (iii) the ABS Offering
Documents and (iv) the instruments and agreements executed and delivered in
connection with (a) the Fleet Financing Program and (b) the Acquisition and the
Merger.
"Transactions" means (i) the execution, delivery and performance by
the Borrower of the Credit Documents, the Extensions of Credit and the use of
the proceeds thereof, (ii) the Acquisition and the Merger, (iii) the execution
and delivery of the High Yield Offering Documents and the ABS Offering Documents
and (iv) the issuance of the Subordinated Notes and the consummation of the ABS
Offering; provided that the Acquisition will be deemed consummated for all
purposes of this Agreement if all conditions to the closing of the Merger are
satisfied but the transfer of the ownership of the capital stock of WEX
Financial is not effected at such time as contemplated by Section 2.7 of the
Merger Agreement.
"Trustee" means Harris Trust and Savings Bank ("Harris"), or any
successor of Harris as the Trustee.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"VMS Business" has the meaning assigned in the recitals to this
Agreement.
"VMS Subsidiary" means each Target Sub and each direct and indirect
Subsidiary of the Target Subs.
"Voting Percentage" means as to any Lender the percentage which (i)
the sum of (x) such Lender's Revolving Credit Commitment (or, after the
Revolving Credit Commitments have terminated, the Revolving Credit Exposure of
such Lender) plus (y) such Lender's Term Loan Commitments (or, after the Term
Loans are made, the outstanding principal amount of such Lender's Term Loans)
then constitutes of (ii) the sum of (x) the Revolving Credit Commitments of all
the Lenders (or, after the Revolving Credit Commitments have terminated, the
Revolving Credit Exposure of all Lenders) plus (y) the Term Loan Commitments of
all the Lenders (or, after the Term Loans are made, the aggregate principal
amount of Term Loans of all the Lenders then outstanding).
"Voting Stock" means with respect to any Person, all classes of
capital stock of such Person then outstanding and normally entitled to vote in
the election of directors or Persons discharging comparable functions.
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30
"WC Issuing Bank" means PNC Bank and any successor in such capacity
as provided in Section 2.06(i). Additional Lenders may from time to time be
designated as "WC Issuing Banks" by the Borrower (with the consent of such
Lender and with the consent (which shall not be unreasonably withheld) of the
Administrative Agent) by written notice to such effect from the Borrower to the
Administrative Agent.
"WC LC Disbursement" means a payment made by the WC Issuing Bank
pursuant to a WC Letter of Credit.
"WC LC Exposure" means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding WC Letters of Credit at such time plus (b) the
aggregate amount of all WC LC Disbursements that have not yet been reimbursed by
or on behalf of the Borrower at such time. The WC LC Exposure of any Lender at
any time shall be its Applicable RC Percentage of the total WC LC Exposure at
such time.
"WC Letter of Credit" means any letter of credit issued pursuant to
Section 2.06.
"WEX Financial" means Wright Express Financial Services Corporation,
a licensed industrial loan corporation or any successor thereto.
"Wholly-Owned" means with respect to any Subsidiary, all of the
outstanding Voting Stock (other than directors' qualifying shares or shares held
pursuant to similar requirements of law in respect of Foreign Subsidiaries) of
which is owned, directly or indirectly, by the Borrower.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02 Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan" or a "Term Loan") or by Type (e.g., a "Eurodollar Loan") or by
Class and Type (e.g., a "Eurodollar Revolving Loan" or a "Eurodollar Term
Loan"). Borrowings also may be classified and referred to by Class (e.g., a
"Revolving Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or by Class
and Type (e.g., a "Eurodollar Revolving Borrowing").
SECTION 1.03 Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time
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31
amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04 Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Majority Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II.
Amount and Terms of the Revolving Credit Commitments,
Additional Revolving Loans and Term Loan Commitments
SECTION 2.01 Revolving Credit Commitments. Subject to the terms and
conditions set forth herein, each Lender with a Revolving Credit Commitment
agrees to make Revolving Loans to the Borrower from time to time during the
Revolving Credit Availability Period in an aggregate principal amount that will
not result in such Lender's Revolving Credit Exposure exceeding such Lender's
Revolving Credit Commitment. Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Revolving Loans.
SECTION 2.02 Revolving Loans and Borrowings. (a) Each Revolving Loan
shall be made as part of a Borrowing consisting of Revolving Loans made by the
Lenders ratably in accordance with their respective Revolving Credit
Commitments. The failure of any Lender to make any Revolving Loan required to be
made by it shall not relieve any other Lender of its obligations hereunder;
provided that the Revolving Credit Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender's failure to make Revolving
Loans as required.
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(b) Subject to Section 4.03, each Revolving Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Lender at its option may make any Eurodollar
Revolving Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $5,000,000. At the time that
each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than $5,000,000;
provided that an ABR Revolving Borrowing may be in an aggregate amount that is
equal to the entire unused balance of the Total Revolving Credit Commitments or
that is required to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.06(e). Revolving Borrowings of more than one Type may
be outstanding at the same time; provided that there shall not at any time be
more than a total of 5 Eurodollar Revolving Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Revolving Borrowing if the Interest Period requested with respect thereto
would end after the Revolving Maturity Date.
SECTION 2.03 Requests for Revolving Borrowings. To request a
Revolving Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Revolving Borrowing, not
later than 11:00 a.m., New York City time, three Business Days before the date
of the proposed Borrowing or (b) in the case of an ABR Revolving Borrowing, not
later than 12:00 noon, New York City time, one Business Day before the date of
the proposed Borrowing; provided that any such notice of an ABR Revolving
Borrowing to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.06(e) may be given not later than 10:00 a.m., New York City time, on
the date of the proposed Borrowing. Each such telephonic Borrowing Request shall
be irrevocable and shall be confirmed promptly by hand delivery or facsimile to
the Administrative Agent of a written Borrowing Request in a form approved by
the Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
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(iv) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period";
and
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the
requirements of Section 2.07.
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing, then
the Borrower shall be deemed to have selected an Interest Period of one month's
duration. Promptly following receipt of a Borrowing Request in accordance with
this Section, the Administrative Agent shall advise in writing each Lender of
the details thereof and of the amount of such Lender's Loan to be made as part
of the requested Borrowing.
SECTION 2.03A Additional Revolving Loans. (a) The Borrower and any
one or more Lenders (including New Lenders) may, with the consent of the
Administrative Agent, at any time after the Closing Date, agree that such
Lenders shall obtain or increase the amount of their Revolving Credit
Commitments by executing and delivering to the Administrative Agent an Increased
Facility Activation Notice specifying (i) the amount of such increase and (ii)
the applicable Increased Facility Closing Date. Notwithstanding the foregoing,
(i) the Total Revolving Credit Commitments may not be increased to more than
$450,000,000, (ii) each increase effected pursuant to this paragraph shall be in
a minimum amount of at least $5,000,000 and (iii) no more than five Increased
Facility Closing Dates may be selected by the Borrower during the term of this
Agreement. No Lender shall have any obligation to participate in any increase
described in this paragraph unless it agrees to do so in its sole discretion.
(b) Any additional bank, financial institution or other entity
which, with the consent of the Borrower and the Administrative Agent (which
consent shall not be unreasonably withheld), elects to become a "Lender" under
this Agreement in connection with any transaction described in Section 2.03A(a)
shall execute a New Lender Supplement (each, a "New Lender Supplement"),
substantially in the form of Exhibit D-1, whereupon such bank, financial
institution or other entity (a "New Lender") shall become a Lender for all
purposes and to the same extent as if originally a party hereto and shall be
bound by and entitled to the benefits of this Agreement.
(c) Unless otherwise agreed by the Administrative Agent, the
Borrower shall borrow Revolving Loans under the increased Revolving Credit
Commitments from each Lender participating in the relevant increase (i) if ABR
Revolving Loans are outstanding on the relevant Increased Facility Closing Date,
in an amount of ABR Revolving Loans that will result in each such participating
Lender having ABR Revolving Loans outstanding in a principal amount equal to its
Applicable RC Percentage of the aggregate outstanding principal amount of ABR
Revolving Loans and (ii) if Eurodollar Revolving Loans are outstanding on the
relevant Increased Facility Closing Date, in an amount of Eurodollar Revolving
Loans on such date (if a Borrowing of Eurodollar Revolving Loans is being
continued for
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34
another Interest Period on such date) and/or such later dates on which
Borrowings of Eurodollar Revolving Loans outstanding on the Increased Facility
Closing Date are continued for another Interest Period that will result, in each
case, in each such participating Lender having Eurodollar Revolving Loans made
by it included in each such extended Borrowing in a principal amount equal to
its Applicable RC Percentage of the aggregate outstanding principal amount of
Eurodollar Revolving Loans included in such Borrowing.
SECTION 2.04 Term Loan Commitments. Subject to the terms and
conditions set forth herein, (a) each Lender with a Tranche A Term Loan
Commitment agrees to make a Tranche A Term Loan to the Borrower on the Closing
Date in an amount equal to such Lender's Tranche A Term Loan Commitment, (b)
each Lender with a Tranche B Term Loan Commitment agrees to make a Tranche B
Term Loan to the Borrower on the Closing Date in an amount equal to such
Lender's Tranche B Term Loan Commitment and (c) each Lender with a Tranche C
Term Loan Commitment agrees to make a Tranche C Term Loan to the Borrower on the
Closing Date in an amount equal to such Lender's Tranche C Term Loan Commitment.
SECTION 2.05 Term Loans and Borrowings. (a) The Term Loans under a
Facility shall be made as part of a Borrowing consisting of Term Loans under
such Facility made by the Lenders ratably in accordance with their respective
Commitments under such Facility. The failure of any Lender to make the Term Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Term Loan Commitments of the Lenders are several
and no Lender shall be responsible for any other Lender's failure to make a Term
Loan as required.
(b) Subject to Section 4.03, the Term Borrowings on the Closing Date
shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith. Each Lender at its option may make any of its
Term Loans by causing any domestic or foreign branch or Affiliate of such Lender
to make such Loan; provided that any exercise of such option shall not affect
the obligation of the Borrower to repay such Loan in accordance with the terms
of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Term Borrowing, each such Borrowing shall be in an aggregate amount that is an
integral multiple of $5,000,000 and not less than $10,000,000. Term Borrowings
of more than one Type may be outstanding at the same time; provided that there
shall not at any time be more than a total of 5 Eurodollar Term Borrowings
outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to elect to convert or continue, any Term
Borrowing if the Interest Period requested with respect thereto would end after
the respective Term Maturity Date.
<PAGE>
35
(e) The Borrower hereby requests Term Borrowings on the Closing Date
in an amount equal to the Term Loan Commitments. On or prior to the Closing
Date, the Borrower will notify the Administrative Agent of the following
information in compliance with Section 2.05(b):
(i) whether each such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing (in which latter case such notification
shall be received by the Administrative at least three
Business Days prior to the Closing Date);
(ii) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period";
and
(iii) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the
requirements of Section 2.07.
If no election as to the Type of Term Borrowing is specified, then the requested
Term Borrowing shall be an ABR Borrowing. If no Interest Period is specified
with respect to any requested Eurodollar Term Borrowing, then the Borrower shall
be deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of the information set forth above in accordance with this
Section, the Administrative Agent shall advise each Term Loan Lender of the
details thereof and of the amount of such Lender's Term Loan to be made as part
of the requested Term Borrowing.
SECTION 2.06 WC Letters of Credit. (a) General. Subject to the terms
and conditions set forth herein, the Borrower may request that the WC Issuing
Bank issue letters of credit for the account of the Borrower, in a form
reasonably acceptable to the Administrative Agent and the WC Issuing Bank, at
any time and from time to time during the Revolving Credit Availability Period.
Each letter of credit issued pursuant to this Section shall be a standby letter
of credit issued to support obligations of a Credit Party in respect of
workmans' compensation and other insurance and bonding requirements of the
Credit Parties and for other general corporate purposes of the Credit Parties in
each case in the ordinary course of business (but may not be used to provide
credit enhancement for the Fleet Financing Program or to support obligations for
borrowed money); provided that (i) up to $10,000,000 in aggregate face amount of
such letters of credit may be used to support borrowings of the Borrower's
Subsidiary in Argentina and (ii) the North Carolina Franchise Letter of Credit
may be issued as a WC Letter of Credit so long as the aggregate liability of the
Lenders under the North Carolina Franchise Letter of Credit shall not exceed
$2,500,000. If there is any inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by a Credit Party to, or entered into
by a Credit Party with, the WC Issuing Bank relating to any Letter of Credit,
the terms and conditions of this Agreement shall control. Each Continuing Letter
of Credit that is a WC Letter of Credit under the Existing Credit Agreement
shall be deemed to be a WC Letter of Credit issued under this Agreement on the
Closing Date (to the extent such Continuing Letter of Credit has not been fully
drawn or has not expired or been terminated as of the Closing Date) and shall be
a WC Letter of Credit for all purposes hereof and
<PAGE>
36
the other Credit Documents. Each Existing Issuing Bank shall be a WC Issuing
Bank for the purposes of this Agreement with respect to Continuing Letters of
Credit issued by it.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a WC Letter of Credit (or the amendment,
renewal or extension of an outstanding WC Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the WC Issuing Bank) to the WC
Issuing Bank and the Administrative Agent (reasonably in advance of the
requested date of issuance, amendment, renewal or extension) a notice requesting
the issuance of a WC Letter of Credit, or identifying the WC Letter of Credit to
be amended, renewed or extended, the date of issuance, amendment, renewal or
extension, the date on which such WC Letter of Credit is to expire (which shall
comply with paragraph (c) of this Section), the amount of such WC Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such WC
Letter of Credit. If requested by the WC Issuing Bank, the Borrower also shall
submit a letter of credit application on the WC Issuing Bank's standard form in
connection with any request for a WC Letter of Credit. The WC Issuing Bank shall
promptly furnish to the Administrative Agent, which shall in turn promptly
furnish to the Lenders, notice of the issuance of each WC Letter of Credit
(including the amount thereof). A WC Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each WC Letter of Credit the Borrower shall be deemed to represent and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the WC LC Exposure shall not exceed $75,000,000 and (ii) the sum
of the total Revolving Credit Exposures shall not exceed the Total Revolving
Credit Commitments.
(c) Expiration Date. Each WC Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year after the
date of the issuance (which date of issuance shall be deemed to be the Closing
Date in the case of a Continuing Letter of Credit) of such Letter of Credit (or,
in the case of any renewal or extension thereof, one year after such renewal or
extension) and (ii) the date that is five Business Days prior to the Revolving
Maturity Date; provided that the WC Letters of Credit supporting bonds issued in
respect of the Denver Airport Facility may have a tenor of two years (subject to
the requirements of clause (ii) above).
(d) Participations. By the issuance of a WC Letter of Credit (or an
amendment to a WC Letter of Credit increasing the amount thereof) and without
any further action on the part of the WC Issuing Bank or the Lenders, the WC
Issuing Bank hereby grants to each Lender that has a Revolving Credit
Commitment, and each such Lender hereby acquires from the WC Issuing Bank, a
participation in such WC Letter of Credit equal to such Lender's Applicable RC
Percentage of the aggregate amount available to be drawn under such WC Letter of
Credit. In consideration and in furtherance of the foregoing, each such Lender
hereby absolutely and unconditionally agrees to pay to the Administrative Agent,
for the account of the WC Issuing Bank, such Lender's Applicable RC Percentage
of each WC LC Disbursement made by the WC Issuing Bank and not reimbursed by the
Borrower on the date due as provided in paragraph (e) of this Section, or of any
reimbursement
<PAGE>
37
payment required to be refunded to the Borrower for any reason. Each such Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of WC Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any WC Letter of Credit or the
occurrence and continuance of a Default or reduction or termination of the
Revolving Credit Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the WC Issuing Bank shall make any WC LC
Disbursement, the Borrower shall reimburse such WC LC Disbursement by paying to
the Administrative Agent an amount equal to such WC LC Disbursement not later
than 12:00 p.m., New York City time, on the date that such WC LC Disbursement is
made, if the Borrower shall have received notice of such WC LC Disbursement
prior to 10:00 a.m., New York City time, on such date, or, then not later than
12:00 p.m., New York City time, on the Business Day immediately following the
day that the Borrower receives such notice; provided that the Borrower may,
subject to the conditions to borrowing set forth herein, request in accordance
with Section 2.03 that such payment be financed with an ABR Revolving Borrowing
in an equivalent amount and, to the extent so financed, the Borrower's
obligation to make such payment shall be discharged and replaced by the
resulting ABR Revolving Borrowing. If the Borrower fails to make such payment
when due, the Administrative Agent shall notify each Lender that participates in
the WC Letters of Credit of the applicable WC LC Disbursement, the payment then
due from the Borrower in respect thereof and such Lender's Applicable RC
Percentage thereof. Promptly following receipt of such notice, each such Lender
shall pay to the Administrative Agent its Applicable RC Percentage of the
payment then due from the Borrower, in the same manner as provided in Section
2.07 with respect to Revolving Loans made by such Lender (and Section 2.07 shall
apply, mutatis mutandis, to the payment obligations of such Lenders), and the
Administrative Agent shall promptly pay to the WC Issuing Bank the amounts so
received by it from such Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the WC
Issuing Bank or, to the extent that Lenders have made payments pursuant to this
paragraph to reimburse the WC Issuing Bank, then to such Lenders and the WC
Issuing Bank as their interests may appear. Any payment made by a Lender
pursuant to this paragraph to reimburse the WC Issuing Bank for any WC LC
Disbursement (other than the funding of ABR Revolving Loans as contemplated
above) shall not constitute a Loan and shall not relieve the Borrower of its
obligation to reimburse such WC LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse WC
LC Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of:
(i) any lack of validity or enforceability of any WC Letter of
Credit or this Agreement, or any term or provision therein;
<PAGE>
38
(ii) any amendment or waiver of or any consent to departure from
all or any of the provisions of any WC Letter of Credit or
this Agreement;
(iii) the existence of any claim, setoff, defense or other right
that the Borrower, any other party guaranteeing, or otherwise
obligated with, the Borrower, any Subsidiary or other
Affiliate thereof or any other Person may at any time have
against the beneficiary under any WC Letter of Credit, the WC
Issuing Bank, the Administrative Agent or any Lender or any
other Person, whether in connection with this Agreement or any
other related or unrelated agreement or transaction;
(iv) any draft or other document presented under a WC Letter of
Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in
any respect;
(v) payment by the WC Issuing Bank under a WC Letter of Credit
against presentation of a draft or other document that does
not comply with the terms of such WC Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of the
WC Issuing Bank, the Lenders, the Administrative Agent or any
other Person or any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might,
but for the provisions of this Section, constitute a legal or
equitable discharge of the Borrower's obligations hereunder.
Neither the Administrative Agent, the Lenders nor the WC Issuing Bank, nor any
of their Related Parties, shall have any liability or responsibility by reason
of or in connection with the issuance or transfer of any WC Letter of Credit or
any payment or failure to make any payment thereunder, including any of the
circumstances specified in clauses (i) through (vi) above, as well as any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any WC Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the WC Issuing Bank; provided that the foregoing shall not be
construed to excuse the WC Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the WC Issuing
Bank's failure to exercise the agreed standard of care (as set forth below) in
determining whether drafts and other documents presented under a WC Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that
the WC Issuing Bank shall have exercised the agreed standard of care in the
absence of gross negligence or wilful misconduct on the part of the WC Issuing
Bank. Without limiting the generality of the foregoing, it is understood that
the WC Issuing Bank may accept documents that appear on their face to be in
substantial compliance with the terms of a WC Letter of
<PAGE>
39
Credit, without responsibility for further investigation, regardless of any
notice or information to the contrary, and may make payment upon presentation of
documents that appear on their face to be in substantial compliance with the
terms of such WC Letter of Credit; provided that the WC Issuing Bank shall have
the right, in its sole discretion, to decline to accept such documents and to
make such payment if such documents are not in strict compliance with the terms
of such WC Letter of Credit.
(g) Disbursement Procedures. The WC Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a WC Letter of Credit. The WC Issuing Bank shall
promptly notify the Administrative Agent and the Borrower by telephone
(confirmed by telecopy) of such demand for payment and whether the WC Issuing
Bank has made or will make a WC LC Disbursement thereunder; provided that any
failure to give or delay in giving such notice shall not relieve the Borrower of
its obligation to reimburse the WC Issuing Bank and the Lenders with respect to
any such WC LC Disbursement.
(h) Interim Interest. If the WC Issuing Bank shall make any WC LC
Disbursement, then, unless the Borrower shall reimburse such WC LC Disbursement
in full on the date such WC LC Disbursement is made, the unpaid amount thereof
shall bear interest, for each day from and including the date such WC LC
Disbursement is made to but excluding the date that the Borrower reimburses such
WC LC Disbursement, at the rate per annum then applicable to ABR Revolving
Loans; provided that, if the Borrower fails to reimburse such WC LC Disbursement
when due pursuant to paragraph (e) of this Section, then Section 4.02(c) shall
apply. Interest accrued pursuant to this paragraph shall be for the account of
the WC Issuing Bank, except that interest accrued on and after the date of
payment by any Lender pursuant to paragraph (e) of this Section to reimburse the
WC Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement of the WC Issuing Bank. The WC Issuing Bank may be
replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced WC Issuing Bank and the successor WC Issuing Bank. The
Administrative Agent shall notify the Lenders of any such replacement of the WC
Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced WC
Issuing Bank pursuant to Section 4.01(b). From and after the effective date of
any such replacement, (i) the successor WC Issuing Bank shall have all the
rights and obligations of the replaced WC Issuing Bank under this Agreement with
respect to WC Letters of Credit to be issued thereafter and (ii) references
herein to the term "WC Issuing Bank" shall be deemed to include and refer to
such successor or to any previous WC Issuing Bank, or to such successor and all
previous WC Issuing Banks, as the context shall require. After the replacement
of the WC Issuing Bank hereunder, the replaced WC Issuing Bank shall remain a
party hereto and shall continue to have all the rights and obligations of the WC
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional WC
Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and
be continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Majority
<PAGE>
40
Lenders or the Majority Revolving Credit Lenders demanding the deposit of cash
collateral pursuant to this paragraph, the Borrower shall deposit in an account
with the Administrative Agent, in the name of the Administrative Agent and for
the benefit of the Lenders, an amount in cash equal to the WC LC Exposure as of
such date plus any accrued and unpaid interest thereon; provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in clause (h) or (i) of Article IX. The
Borrower hereby grants to the Administrative Agent, for the benefit of the
Lenders, a security interest in such account and any and all cash collateral
therein from time to time. The Borrower shall execute and deliver to the
Administrative Agent such further documents and instruments as the
Administrative Agent may request to evidence the creation and perfection of such
security interest in such account and such cash collateral therein. Such deposit
shall be held by the Administrative Agent as collateral for the payment and
performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. The deposits in such account
shall be invested in Permitted Investments at the Borrower's risk and expense,
and other than any interest earned on such Permitted Investments, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall be applied by the
Administrative Agent to reimburse the WC Issuing Bank for the WC Issuing Bank's
LC Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the WC LC Exposure at such time or, if the maturity of the
Loans has been accelerated, be applied to satisfy other obligations of the
Borrower under this Agreement. If the Borrower is required to provide an amount
of cash collateral hereunder as a result of the occurrence of an Event of
Default, such amount (to the extent not applied as aforesaid) shall be returned
to the Borrower within three Business Days after all Events of Default have been
cured or waived.
(k) As of the Closing Date, the letters of credit listed on Schedule
2.06(k) shall be deemed to have been issued hereunder and be deemed to be WC
Letters of Credit for all purposes hereof.
SECTION 2.07 Funding of Borrowings (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds, to
an account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request or
pursuant to Section 2.05(e); provided that ABR Revolving Loans made to finance
the reimbursement of a WC LC Disbursement as provided in Section 2.06(e) shall
be remitted by the Administrative Agent to the WC Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from
a Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative
<PAGE>
41
Agent such Lender's share of such Borrowing, the Administrative Agent may assume
that such Lender has made such share available on such date in accordance with
paragraph (a) of this Section and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to
the Administrative Agent, at (i) in the case of such Lender, the Federal Funds
Effective Rate or (ii) in the case of the Borrower, the interest rate applicable
to ABR Loans. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender's Loan included in such Borrowing.
SECTION 2.08 Interest Elections. (a) Each Borrowing initially shall
be of the Type specified in the applicable Borrowing Request or pursuant to
Section 2.05(e) and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request or pursuant to
Section 2.05(e). Thereafter, the Borrower may elect to convert such Borrowing to
a different Type or to continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this Section.
The Borrower may elect different options with respect to different portions of
the affected Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding the Loans comprising such Borrowing, and the
Loans comprising each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
facsimile to the Administrative Agent of a written Interest Election Request in
a form approved by the Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 or Section
2.05:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to
different portions thereof, the portions thereof to be
allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv)
below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
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42
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect
to such election, which shall be a period contemplated by the
definition of the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each relevant Lender of the details thereof
and of such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the
request of the Majority Revolving Credit Lenders, Majority Tranche A Term Loan
Lenders, Majority Tranche B Term Loan Lenders or Majority Tranche C Term Loan
Lenders, as the case may be, so notifies the Borrower, then, so long as an Event
of Default is continuing (i) no outstanding Borrowing under the respective
Facility may be converted to or continued as a Eurodollar Borrowing and (ii)
unless repaid, each Eurodollar Borrowing under the respective Facility shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.
SECTION 2.09 Termination and Optional and Mandatory Reduction of
Revolving Credit Commitment. (a) Unless previously terminated, the Revolving
Credit Commitments shall terminate on the Revolving Maturity Date.
(b) The Borrower may at any time terminate, or from time to time
permanently reduce, the Revolving Credit Commitments; provided that (i) each
reduction of the Revolving Credit Commitments shall be in an amount that is an
integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the
Borrower shall not terminate or reduce the Revolving Credit Commitments if,
after giving effect to any concurrent prepayment of the Revolving Loans in
accordance with Section 2.11, the Revolving Credit Exposures would exceed the
sum of the Total Revolving Credit Commitments.
(c) The Revolving Credit Commitments shall be reduced permanently by
an amount equal to the amount by which the Net Cash Proceeds described in
clauses (i) through (iv) of Section 2.11(b) exceeds the amount thereof that is
applied to prepay the Term Loans, if any, then outstanding pursuant to such
Section.
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43
(d) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Revolving Credit Commitments under paragraph
(b) of this Section at least three Business Days prior to the effective date of
such termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the relevant Lenders of the contents thereof. Each notice delivered
by the Borrower pursuant to this Section shall be irrevocable; provided that a
notice of termination of the Revolving Credit Commitments delivered by the
Borrower may state that such notice is conditioned upon the effectiveness of
other credit facilities, in which case such notice may be revoked by the
Borrower (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction
of the Revolving Credit Commitments shall be permanent. Each reduction of the
Revolving Credit Commitments shall be made ratably among the Lenders in
accordance with their respective Applicable RC Percentages.
SECTION 2.10 Scheduled Repayment of Loans; Evidence of Debt. (a) The
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of each relevant Lender the then unpaid principal amount of each
Revolving Loan on the Revolving Maturity Date.
(b) (i) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Tranche A Term Lender the Tranche A
Term Loans in twenty-two consecutive quarterly installments, commencing on March
31, 2000 and ending on June 30, 2005, each of which shall be in an amount equal
to such Lender's Applicable TLA Percentage multiplied by the amount set forth
below opposite such installment:
Installment Principal Amount
----------- ----------------
Quarters ending in 2000 $ 3,750,000
Quarters ending in 2001 $ 6,250,000
Quarters ending in 2002 $10,000,000
Quarters ending in 2003 $12,500,000
Quarters ending in 2004 $15,000,000
Quarters ending in 2005 $30,000,000
(ii) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Tranche B Term Lender the Tranche B
Term Loans in twenty-six consecutive quarterly installments, commencing on March
31, 2000 and ending on June 30, 2006, each of which shall be in an amount equal
to such Lender's Applicable TLB Percentage multiplied by the amount set forth
below opposite such installment:
<PAGE>
44
Installment Principal Amount
----------- ----------------
Quarters ending in 2000 through 2005 $ 250,000
Quarters ending in 2006 $184,500,000
(iii) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Tranche C Term Lender the Tranche C
Term Loans in thirty consecutive quarterly installments, commencing on March 31,
2000 and ending on June 30, 2007, each of which shall be in an amount equal to
such Lender's Applicable TLC Percentage multiplied by the amount set forth below
opposite such installment:
Installment Principal Amount
----------- ----------------
Quarters ending in 2000 through 2006 $ 250,000
Quarters ending in 2007 $184,000,000
(c) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(d) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(e) The entries made in the accounts maintained pursuant to
paragraph (c) or (d) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(f) Any Lender may request that the Loans made by it be evidenced by
a promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note for such Loans payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent. Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 11.04) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
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SECTION 2.11 Optional and Mandatory Prepayment of Loans. (a) The
Borrower shall have the right at any time and from time to time to prepay any
Borrowing in whole or in part, subject to prior notice in accordance with
paragraph (d) of this Section and Section 4.05.
(b) The Borrower shall prepay the Term Loans in an amount equal
to:
(i) 100% of the Net Cash Proceeds of the sale or issuance by the
Borrower of its Capital Stock after the Closing Date other
than pursuant to stock options and/or warrants held by
employees or directors;
(ii) 100% of the Net Cash Proceeds of any Indebtedness incurred by
a Credit Party after the Closing Date (excluding Indebtedness
permitted by Section 8.02);
(iii) 100% of the Net Cash Proceeds of any Asset Sale by the
Borrower or any Subsidiary after the Closing Date (excluding
any Asset Sale permitted by Section 8.05 and other Asset Sales
to the extent that the aggregate amount of Net Cash Proceeds
received by the Borrower and its Subsidiaries in respect of
such other Asset Sales has not exceeded $10,000,000); and
(iv) on or prior to the ninetieth day following the end of each
fiscal year of the Borrower ending on or after December 31,
2000, 50% of Excess Cash Flow for such fiscal year.
Prepayments of the Term Loans required by clauses (i) through (iv) of this
paragraph shall be made on or prior to the Business Day following receipt of any
such proceeds.
(c) On any day when the Revolving Credit Commitments are reduced
pursuant to Section 2.09(c), the Borrower shall prepay the Revolving Loans in an
amount equal to the amount, if any, by which the Revolving Credit Exposures
would exceed the Total Revolving Credit Commitments as so reduced. If, after
giving effect to any such prepayment, the Revolving Credit Exposures exceed the
Total Revolving Credit Commitments as so reduced, the Borrower shall, without
notice or demand, immediately deposit in a Cash Collateral Prepayment Account
upon terms reasonably satisfactory to the Administrative Agent an amount equal
to the amount of such remaining excess. The Administrative Agent shall apply any
cash deposited in the Cash Collateral Prepayment Account (to the extent thereof)
to repay any WC LC Disbursement or CE LC Disbursement which becomes due
thereafter; provided that the Administrative Agent shall release to the Borrower
from time to time such portion of the amount on deposit in the Cash Collateral
Prepayment Account which is equal to the amount by which the amount on deposit
therein at such time exceeds the total Revolving Credit Exposures at such time.
"Cash Collateral Prepayment Account" means an account established by the
Borrower with the Administrative Agent and over which the Administrative Agent
shall have exclusive dominion and control, including the right of withdrawal for
application in accordance with this Section.
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(d) The Borrower shall notify the Administrative Agent by telephone
(confirmed by facsimile) of any optional prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment and (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date, Class and the principal
amount of each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Revolving Credit Commitments as contemplated by Section 2.09,
then such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.09. Promptly following receipt of any such
notice relating to a Borrowing, the Administrative Agent shall advise the
relevant Lenders of the contents thereof. Each optional partial prepayment of
any Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $5,000,000. Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing. Prepayments of
the Term Loans shall be applied to reduce the remaining installments of the
Tranche A Term Loans, Tranche B Term Loans and Tranche C Term Loans, as the case
may be, ratably in accordance with the then remaining amounts thereof and may
not be reborrowed. Prepayments shall be accompanied by accrued interest to the
extent required by Section 4.02; provided, however, that any optional
prepayments of the Tranche B Term Loans or Tranche C Term Loans on or prior to
the second anniversary of the Closing Date shall, in addition, be accompanied by
payment for the Tranche B Term Lenders or Tranche C Term Lenders, as the case
may be, of a premium of 2% of the amount prepaid on or prior to the first
anniversary of the Closing Date and 1% of the amount prepaid thereafter.
ARTICLE III.
Amount and Terms of the CE Letters of Credit
SECTION 3.01 General. Subject to the terms and conditions set forth
herein, the CE Issuing Bank hereby agrees to issue to the Beneficiary a letter
of credit, substantially in the form of Exhibit E, in a face amount from time to
time that will not result in the CE LC Exposure exceeding $225,000,000 or the
sum of the total Revolving Credit Exposures exceeding the Total Revolving Credit
Commitments. The Continuing Letter of Credit that is the CE Letter of Credit
under the Existing Credit Agreement shall be deemed to be the CE Letter of
Credit issued under this Agreement on the Closing Date (to the extent such
Continuing Letter of Credit has not been fully drawn or has not expired or been
terminated as of the Closing Date) and shall be the CE Letter of Credit for all
purposes hereof and the other Credit Documents. The Existing Issuing Bank in
respect thereof shall be the CE Issuing Bank on the Closing Date for the
purposes of this Agreement.
SECTION 3.02 Requests for CE Letter of Credit. To request the
issuance of a CE Letter of Credit (or the amendment, renewal or extension
thereof), the Borrower shall notify the
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47
Administrative Agent and the CE Issuing Bank of such request in writing
reasonably in advance of the requested date of issuance, amendment, renewal or
extension a notice requesting the issuance of a CE Letter of Credit, or
providing the details of the requested amendment, renewal or extension (which
details shall comply with Section 3.03). If requested by the CE Issuing Bank,
the Borrower also shall submit a letter of credit application on the CE Issuing
Bank's standard form in connection with any such request. The CE Issuing Bank
shall promptly furnish to the Administrative Agent, which shall in turn promptly
furnish to the Lenders, notice of the issuance of each CE Letter of Credit
(including the amount thereof). The CE Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of the CE Letter of Credit the Borrower shall be deemed to represent
and warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the CE LC Exposure shall not exceed $225,000,000 and (ii) the sum
of the total Revolving Credit Exposures shall not exceed the Total Revolving
Credit Commitments.
SECTION 3.03 Expiration Date. The CE Letter of Credit shall expire
at or prior to the close of business on the earlier of (i) the date one year
after the date of the issuance (which date of issuance shall be deemed to be the
Closing Date in the case of a Continuing Letter of Credit) of such Letter of
Credit (or, in the case of the any renewal or extension thereof, one year after
such renewal or extension) and (ii) the date that is five Business Days prior to
the Revolving Maturity Date.
SECTION 3.04 Participations. By the issuance of the CE Letter of
Credit (or an amendment to the CE Letter of Credit increasing the amount
thereof) and without any further action on the part of the CE Issuing Bank or
the Lenders, the CE Issuing Bank hereby grants to each Lender that has a
Revolving Credit Commitment, and each such Lender hereby acquires from the CE
Issuing Bank, a participation in the CE Issuing Bank's CE Letter of Credit equal
to such Lender's Applicable RC Percentage of the aggregate amount available to
be drawn under the CE Letter of Credit. In consideration and in furtherance of
the foregoing, each such Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the CE Issuing Bank, such
Lender's Applicable RC Percentage of (i) each Credit Disbursement not reimbursed
by the Borrower on the date due as provided in Section 3.05, (ii) each Liquidity
Disbursement made by the CE Issuing Bank and (iii) any reimbursement payment in
respect of a CE LC Disbursement required to be refunded to the Borrower for any
reason. Each such Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of CE Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of the CE Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Revolving Credit Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever. The Administrative Agent shall notify each Lender that participates
in the CE Letter of Credit of the applicable CE LC Disbursement, the payment
then due from the Borrower or AESOP in respect thereof and such Lender's
Applicable RC Percentage thereof. Promptly following receipt of such notice,
each such Lender shall pay to the Administrative Agent, for the account of the
CE Issuing Bank, its Applicable RC Percentage of, in the case of any Credit
Draw, the payment then due from the Borrower, and in the case of any Liquidity
Draw, of the amount of such drawing, in the same manner as provided in
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Section 2.07 with respect to Revolving Loans (and Section 2.07 shall apply,
mutatis mutandis, to the payment obligations of such Lenders), and the
Administrative Agent shall promptly pay to the CE Issuing Bank the amounts so
received by it from such Lenders. Any payment made by a Lender pursuant to this
Section to reimburse the CE Issuing Bank for any CE LC Disbursement shall not
relieve the Borrower of its obligation to reimburse such CE LC Disbursement
pursuant to Section 3.05.
SECTION 3.05 Reimbursement by Borrower (a) The Borrower agrees to
reimburse the CE Issuing Bank on demand, upon receipt by the Borrower of notice
from the CE Issuing Bank (i) of a CE LC Disbursement on account of a Credit Draw
(a "Credit Disbursement") or (ii) that any amount is converted to a Credit
Disbursement pursuant to Section 3.08 for the amount of each Credit Disbursement
so made and any taxes, fees, charges or other costs or expenses reasonably
incurred by the CE Issuing Bank in connection with such payment. Each such
payment shall be made directly to the CE Issuing Bank, at its address for
notices specified herein in immediately available funds, on the date on which
the Borrower receives such notice, if received prior to 12:00 noon, New York
City time, on a Business Day and otherwise on the next succeeding Business Day.
(b) The Borrower agrees to reimburse the CE Issuing Bank (i) on the
Revolving Maturity Date in an amount equal to the unreimbursed amounts of the CE
LC Disbursements of the CE Issuing Bank on account of a Liquidity Draw (a
"Liquidity Disbursement"), and (ii) upon receipt by the Borrower of notice from
the CE Issuing Bank of each Liquidity Disbursement by the CE Issuing Bank, for
any taxes, fees, charges or other costs or expenses reasonably incurred by the
CE Issuing Bank in connection with each Liquidity Disbursement by the CE Issuing
Bank. In addition Liquidity Disbursements shall be reimbursed as and to the
extent provided pursuant to the terms of the Collateral Agreement.
(c) Promptly following receipt by the CE Issuing Bank of any payment
from the Borrower pursuant to this Section, the CE Issuing Bank shall distribute
such payment, to the extent that Lenders have made payments pursuant to Section
3.04 to reimburse the CE Issuing Bank, to such Lenders.
(d) If the CE Issuing Bank shall make a CE LC Disbursement, then,
unless the Borrower shall reimburse such CE LC Disbursement in full on the date
such CE LC Disbursement is made, the unpaid amount thereof shall bear interest,
for each day from and including the date such CE LC Disbursement is made to but
excluding the date that the Borrower reimburses such CE LC Disbursement, at the
rate per annum then applicable to ABR Revolving Loans; provided that, if the
Borrower fails to reimburse such CE LC Disbursement when due pursuant to
paragraph (a) or (b) of this Section, as applicable, then Section 4.02(c) shall
apply. Interest accrued pursuant to this paragraph shall be for the account of
the CE Issuing Bank, except that interest accrued on and after the date of
payment by any Lender pursuant to Section 3.04 to reimburse the CE Issuing Bank
shall be for the account of such Lender to the extent of such payment.
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(e) The Borrower's obligation to reimburse CE LC Disbursements as
provided in this Section shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement under
any and all circumstances whatsoever and irrespective of:
(i) any lack of validity or enforceability of the CE Letter of
Credit or this Agreement, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure from
all or any of the provisions of the CE Letter of Credit or
this Agreement;
(iii) the existence of any claim, setoff, defense or other right
that the Borrower, any other party guaranteeing, or otherwise
obligated with, the Borrower, any Subsidiary or other
Affiliate thereof or any other Person may at any time have
against the Beneficiary, the CE Issuing Bank, the
Administrative Agent or any Lender or any other Person,
whether in connection with this Agreement or any other related
or unrelated agreement or transaction;
(iv) any draft or other document presented under the CE Letter of
Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in
any respect;
(v) payment by the CE Issuing Bank under the CE Letter of Credit
against presentation of a draft or other document that does
not comply with the terms of the CE Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of the
CE Issuing Bank, the Lenders, the Administrative Agent or any
other Person or any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might,
but for the provisions of this Section, constitute a legal or
equitable discharge of the Borrower's obligations hereunder.
Neither the Administrative Agent, the Lenders nor the CE Issuing Bank, nor any
of their Related Parties, shall have any liability or responsibility by reason
of or in connection with the issuance or transfer of the CE Letter of Credit or
any payment or failure to make any payment thereunder, including any of the
circumstances specified in clauses (i) through (vi) above, as well as any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to the CE Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the CE Issuing Bank; provided that the foregoing shall not be
construed to excuse the CE Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the CE Issuing
Bank's failure to exercise
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the agreed standard of care (as set forth below) in determining whether drafts
and other documents presented under the CE Letter of Credit comply with the
terms thereof. The parties hereto expressly agree that the CE Issuing Bank shall
have exercised the agreed standard of care in the absence of gross negligence or
wilful misconduct on the part of the CE Issuing Bank. Without limiting the
generality of the foregoing, it is understood that the CE Issuing Bank may
accept documents that appear on their face to be in substantial compliance with
the terms of the CE Letter of Credit, without responsibility for further
investigation, regardless of any notice or information to the contrary, and may
make payment upon presentation of documents that appear on their face to be in
substantial compliance with the terms of the CE Letter of Credit; provided that
the CE Issuing Bank shall have the right, in its sole discretion, to decline to
accept such documents and to make such payment if such documents are not in
strict compliance with the terms of the CE Letter of Credit.
(f) The CE Issuing Bank shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment
under the CE Letter of Credit. The CE Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by facsimile) of
such demand for payment and whether the CE Issuing Bank has made or will make a
CE LC Disbursement thereunder; provided that any failure to give or delay in
giving such notice shall not relieve the Borrower of its obligation to reimburse
the CE Issuing Bank and the Lenders with respect to any such CE LC Disbursement.
SECTION 3.06 Replacement of the CE Issuing Bank. The CE Issuing Bank
may be replaced at any time by written agreement among the Borrower, the
Administrative Agent, the replaced CE Issuing Bank and the successor CE Issuing
Bank. In addition, if at any time, the CE Issuing Bank's short-term credit
ratings are lowered to below "A-1" by S&P or "P- 1" by Moody's (a "Downgraded
Issuing Bank"), then the Borrower shall use its best efforts to replace the CE
Issuing Bank. The appointment of any successor CE Issuing Bank shall not be
effective until approved by the Rating Agencies. The Administrative Agent shall
notify the Lenders of any replacement of the CE Issuing Bank. At the time any
such replacement shall become effective, the Borrower shall pay all unpaid fees
accrued for the account of the replaced CE Issuing Bank pursuant to Section
4.01. From and after the effective date of any such replacement, (i) the
successor CE Issuing Bank shall have all the rights and obligations of the
replaced CE Issuing Bank under this Agreement and (ii) references herein to the
term "CE Issuing Bank" shall be deemed to refer to such successor or to any
previous CE Issuing Banks, or to such successor, and all previous CE Issuing
Banks, as the context shall require.
SECTION 3.07 Special Liquidity Draw. If a replacement CE Issuing
Bank has not been appointed within 60 days after the existing CE Issuing Bank
becomes a Downgraded Issuing Bank, then and at any time thereafter until such a
replacement has been appointed or such extension is effected, the Beneficiary
shall have the right to immediately request a Liquidity Draw, in accordance with
Section 5.07 of the Collateral Agreement, in an amount equal to the aggregate
undrawn amount of the CE Letter of Credit (such disbursement referred to as a
"Special Liquidity Draw"). The Beneficiary shall, in accordance with Section
5.07 of the Collateral Agreement, deposit the amount of the Special
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Liquidity Draw into the CE cash collateral account and shall use such funds in
the same manner as the CE Letter of Credit would be used hereunder.
SECTION 3.08 Conversion of CE Disbursements. Upon receipt from the
Beneficiary of a Notice of Conversion substantially in the form of Exhibit F,
the CE Issuing Bank shall, on such date, to the extent permitted by applicable
law, decrease the amount of the outstanding Liquidity Disbursements and increase
the amount of the outstanding Credit Disbursements of the CE Issuing Bank by the
amount specified in such Notice of Conversion.
ARTICLE IV.
General Provisions
SECTION 4.01 Fees. (a) The Borrower agrees to pay to the
Administrative Agent, for the account of each Lender, a commitment fee which fee
shall accrue at the Commitment Fee Rate on the average daily amount of the
excess of (a) the sum of the Revolving Credit Commitment of such Lender over (b)
the sum of the Revolving Credit Exposure of such Lender, during the period for
which payment is made. Accrued commitment fees shall be payable in arrears on
the last day of March, June, September and December of each year and on the date
on which the Revolving Credit Commitments terminate, commencing on the first
such date to occur after the date hereof. All commitment fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay (i) to the Administrative Agent, for
the account of each Lender with a Revolving Credit Commitment, a participation
fee with respect to its participations in WC Letters of Credit and CE Letters of
Credit, which shall accrue at a rate per annum equal to the Applicable Margin
applicable to interest on Eurodollar Revolving Loans on the average daily amount
of such Lender's WC LC Exposure and CE LC Exposure (excluding any portion
thereof attributable to unreimbursed WC LC Disbursements and CE LC
Disbursements) during the period from and including the Closing Date to but
excluding the later of the date on which such Lender's Revolving Credit
Commitment terminates and the date on which such Lender ceases to have any WC LC
Exposure or CE LC Exposure, as the case may be, and (ii) to the WC Issuing Bank
and CE Issuing Bank a fronting fee, which shall accrue at the rate as separately
agreed to on the average daily amount of the WC LC Exposure and the CE LC
Exposure, respectively (excluding any portion thereof attributable to
unreimbursed WC LC Disbursements and CE LC Disbursements, as the case may be)
during the period from and including the Closing Date to but excluding the later
of the date of termination of the Revolving Credit Commitments and the date on
which there ceases to be any WC LC Exposure or CE LC Exposure, as the case may
be, as well as the WC Issuing Bank's and the CE Issuing Bank's standard fees
with respect to the issuance, amendment, renewal or extension of any WC Letter
of Credit or CE Letter of Credit, as the case may be, or processing of drawings
thereunder. Participation fees and fronting fees accrued through and including
the last day of March, June, September and
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December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Closing Date;
provided that all such fees shall be payable on the date on which the Revolving
Credit Commitments terminate and any such fees accruing after the date on which
the Revolving Credit Commitments terminate shall be payable on demand. Any other
fees payable to the WC Issuing Bank or the CE Issuing Bank pursuant to this
paragraph shall be payable within 10 days after demand. All participation fees
and fronting fees shall be computed on the basis of a year of 360 days and shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the WC Issuing
Bank or the CE Issuing Bank, in the case of fees payable to it) for
distribution, in the case of commitment fees and participation fees, to the
Lenders owed such fees. Fees paid shall not be refundable under any
circumstances.
SECTION 4.02 Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at a rate per annum equal to the Alternate Base Rate plus
the Applicable Margin.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at a rate per annum equal to the Adjusted LIBO Rate for the Interest
Period in effect for such Borrowing plus the Applicable Margin.
(c) Notwithstanding the foregoing, if any principal of or interest
on any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided above or (ii) in the case of
any other amount, 2% plus the rate applicable to ABR Loans as provided above.
(d) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan; provided that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment of
an ABR Revolving Loan prior to the end of the Revolving Credit Availability
Period), accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment, (iii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion and (iv) all accrued interest on Revolving Loans shall
be payable upon termination of the Revolving Credit Commitments.
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(e) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate and
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 4.03 Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall
be conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Majority Revolving
Credit Lenders, Majority Tranche A Term Loan Lenders, Majority Tranche B Term
Loan Lenders or Majority Tranche C Term Loan Lenders, as the case may be, that
the Adjusted LIBO Rate for their respective Eurodollar Loans for such Interest
Period will not adequately and fairly reflect the cost to such Lenders of making
or maintaining their Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
relevant Lenders by telephone or facsimile as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrower and the relevant
Lenders that the circumstances giving rise to such notice no longer exist, (i)
any Interest Election Request that requests the conversion of any Borrowing to,
or continuation of any Borrowing as, a Eurodollar Borrowing shall be
ineffective, and (ii) if any Borrowing Request requests a Eurodollar Borrowing,
such Borrowing shall be made as an ABR Borrowing.
SECTION 4.04 Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit
or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any
such reserve requirement reflected in the Adjusted LIBO Rate)
or an Issuing Bank; or
(ii) impose on any Lender or an Issuing Bank or the London
interbank market any other condition affecting this Agreement
or Eurodollar Loans made by such Lender or any WC Letter of
Credit, CE Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the
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cost to such Lender or an Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by such Lender or an Issuing Bank hereunder (whether of principal,
interest or otherwise), then the Borrower will pay to such Lender or such
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or such Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.
(b) If any Lender or an Issuing Bank determines that any Change in
Law regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender's or such Issuing Bank's capital or on the capital
of such Lender's or such Issuing Bank's holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in WC
Letters of Credit or CE Letters of Credit held by, such Lender, or Letters of
Credit issued by an Issuing Bank, to a level below that which such Lender or
such Issuing Bank or such Lender's or such Issuing Bank's holding company could
have achieved but for such Change in Law (taking into consideration such
Lender's or such Issuing Bank's policies and the policies of such Lender's or
such Issuing Bank's holding company with respect to capital adequacy), then from
time to time the Borrower will pay to such Lender or such Issuing Bank, as the
case may be, such additional amount or amounts as will compensate such Lender or
such Issuing Bank or such Lender's or such Issuing Bank's holding company for
any such reduction suffered.
(c) A certificate of a Lender or an Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or such Issuing Bank or
its holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or such Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.
(d) Failure or delay on the part of any Lender or an Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or such Issuing Bank's right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or an Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than six months prior to the date that such Lender or such Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or such Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the six-month period referred to above shall be extended to include the period
of retroactive effect thereof.
SECTION 4.05 Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Eurodollar Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice is permitted to be
revocable under Section 2.11(d) and is revoked in accordance herewith), or (d)
the assignment of any Eurodollar Loan other than on the last day of the Interest
Period
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55
applicable thereto as a result of a request by the Borrower pursuant to Section
3.08 or Section 4.08, then, in any such event, the Borrower shall compensate
each Lender for the loss, cost and expense attributable to such event. In the
case of a Eurodollar Loan, the loss to any Lender attributable to any such event
shall be deemed to include an amount determined by such Lender to be equal to
the excess, if any, of (i) the amount of interest that such Lender would pay for
a deposit equal to the principal amount of such Loan for the period from the
date of such payment, conversion, failure or assignment to the last day of the
then current Interest Period for such Loan (or, in the case of a failure to
borrow, convert or continue, the duration of the Interest Period that would have
resulted from such borrowing, conversion or continuation) if the interest rate
payable on such deposit were equal to the Adjusted LIBO Rate for such Interest
Period, over (ii) the amount of interest that such Lender would earn on such
principal amount for such period if such Lender were to invest such principal
amount for such period at the interest rate that would be bid by such Lender (or
an affiliate of such Lender) for dollar deposits from other banks in the
eurodollar market at the commencement of such period. A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.
SECTION 4.06 Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, any Lender
or the Issuing Bank (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each
Lender and each Issuing Bank, within 10 days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) paid by the Administrative Agent, such Lender or such
Issuing Bank, as the case may be, and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or an Issuing Bank,
or by the Administrative Agent on its own behalf or on behalf of a Lender or an
Issuing Bank, shall be conclusive absent manifest error.
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56
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law or reasonably requested by the Borrower, such properly completed and
executed documentation prescribed by applicable law as will permit such payments
to be made without withholding or at a reduced rate. Without limiting the
foregoing, each Foreign Lender shall deliver to the Borrower on or prior to the
Closing Date (in the case of any Foreign Lender listed on Schedule 2.01 or 2.04
at such time) or on or prior to the date of the Assignment and Acceptance
pursuant to which it becomes a Lender (in the case of each other Foreign
Lender), and at such other times as may be necessary in the determination of the
Borrower (each in the reasonable exercise of its discretion), (i) two original
copies of Internal Revenue Service Form 1001 or 4224 (or any successor forms),
properly completed and duly executed by such Foreign Lender, together with any
other certificate or statement of exemption required under the Code or the
regulations issued thereunder to establish that such Foreign Lender is not
subject to deduction or withholding of the United States federal income tax with
respect to any payments to such Foreign Lender of principal, interest, fees or
other amounts payable under any of the Credit Documents or (ii) if such Foreign
Lender is not a "bank" or other Person described in Section 881(c)(3) of the
Code and cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (i) above, a certificate of non-bank status together with two
original copies of Internal Revenue Service Form W-8 (or any successor form),
properly completed and duly executed by such Foreign Lender, together with any
other certificate or statement of exemption required under the Code or the
regulations issued thereunder to establish that such Foreign Lender is not
subject to deduction or withholding of United States federal income tax with
respect to any payments to such Foreign Lender of interest payable under any of
the Credit Documents.
SECTION 4.07 Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or reimbursement of LC
Disbursements, or under Section 4.04, 4.05, 4.06 or 11.03, or otherwise) prior
to 12:00 noon, New York City time, on the date when due, in immediately
available funds, without set-off or counterclaim. Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative Agent at its offices at 270 Park Avenue, New York, New York,
except payments to be made directly to them as expressly provided herein and
except that payments pursuant to Sections 4.04, 4.05, 4.06 and 11.03 shall be
made directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the
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57
appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, unreimbursed
LC Disbursements, interest and fees then due hereunder, such funds shall be
applied (i) first, to pay interest and fees then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, to pay principal and unreimbursed LC
Disbursements then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements then
due to such parties.
(c) If any Lender shall, while an Event of Default has occurred and
is continuing, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Loans or
participations in LC Disbursements resulting in such Lender receiving payment of
a greater proportion of the aggregate amount of its Loans and participations in
LC Disbursements and accrued interest thereon than the proportion received by
any other Lender, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the Loans and participations
in LC Disbursements of other Lenders to the extent necessary so that the benefit
of all such payments shall be shared by the Lenders ratably in accordance with
the aggregate amount of principal of and accrued interest on their respective
Loans and participations in LC Disbursements; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, unless the
Lender from which such excess payment is recovered is required to pay interest
thereon, in which case each Lender returning funds to such Lender shall pay its
pro rata share of such interest, and (ii) the provisions of this paragraph shall
not be construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any
of its Loans or participations in LC Disbursements to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or an Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or such
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58
Issuing Bank, as the case may be, the amount due. In such event, if the Borrower
has not in fact made such payment, then each of the Lenders or such Issuing
Bank, as the case may be, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender or Issuing Bank
with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, at the Federal Funds Effective Rate.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.06(d) or (e), 2.07(b), 3.04 or 4.07(d), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
SECTION 4.08 Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 4.04, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 4.06, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 4.04 or 4.06, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 4.04, or if
the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 4.06,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 11.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 4.04 or payments required
to be made pursuant to Section 4.06, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
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59
ARTICLE V.
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
SECTION 5.01 Organization; Powers. Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 5.02 Authorization; Enforceability. Each Credit Party has
the corporate power and authority, and the legal right, to make, deliver and
perform the Credit Documents and the other Transaction Documents to which it is
a party and, in the case of the Borrower, to obtain Extensions of Credit
hereunder, and each such Credit Party has taken all necessary corporate action
to authorize the execution, delivery and performance of the Credit Documents and
the other Transaction Documents to which it is a party and, in the case of the
Borrower, to authorize the Extensions of Credit on the terms and conditions of
this Agreement. This Agreement has been duly executed and delivered by the
Borrower, and each other Credit Document and other Transaction Document to which
any Credit Party is a party will be duly executed and delivered on behalf of
such Credit Party. This Agreement constitutes, and each other Credit Document
and other Transaction Document to which any Credit Party is a party when
executed and delivered will constitute, a legal, valid and binding obligation of
such Credit Party, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
SECTION 5.03 Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority or any other Person, except such as have
been obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Borrower or any of its Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Borrower or any of its
Subsidiaries or its assets, or give rise to a right thereunder to require any
payment to be made by the Borrower or any of its Subsidiaries except (i) as
described in Schedule 5.03 or (ii) for any such violation or default that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, and (d) will not result in the creation or imposition
of any Lien on any asset of the Borrower or any of its Subsidiaries except
pursuant to the Security Documents or as otherwise permitted by Section 8.03.
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SECTION 5.04 Financial Condition; No Material Adverse Change. (a)
The audited consolidated Statement of Financial Position of the Borrower and its
consolidated Subsidiaries as of December 31, 1997 and December 31, 1998 and the
audited consolidated statements of operations, statements of shareholders'
equity and statements of cash flows for the years ended December 31, 1997 and
1998, and the unaudited condensed consolidated statement of financial position
of the Borrower and its Subsidiaries at March 31, 1999 and the related unaudited
condensed consolidated statements of operations and cash flows for the three
months ended March 31, 1998 and 1999 certified by a Responsible Officer, have
heretofore been furnished to each Lender. Such financial statements present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its consolidated Subsidiaries as
of such dates and for such periods in accordance with GAAP, subject to normal
year-end audit adjustments and the absence of notes in the case of the unaudited
statements referred to above. During the period from December 31, 1998 to and
including the Closing Date, there has been no sale, transfer or other
disposition by the Borrower and its Subsidiaries of any material part of the
business or property of the Borrower and its Subsidiaries, taken as a whole, and
no purchase or other acquisition by any of them of any business or property
(including any Capital Stock of any other Person) material in relation to the
financial condition of the Borrower and its Subsidiaries, taken as a whole, in
each case, which is not reflected in the foregoing financial statements or in
the notes thereto or that is not set forth on Schedule 5.04.
(b) The pro forma combined balance sheet as of March 31, 1999 of the
Borrower and its consolidated Subsidiaries (the "Pro Forma Balance Sheet")
certified by a Financial Officer of the Borrower, copies of which have
heretofore been furnished to each Lender, is the pro forma combined balance
sheet of the Borrower and its Consolidated Subsidiaries adjusted to give effect
(as if such events had occurred on March 31, 1998) to the Transactions and the
financings contemplated thereby. The Pro Forma Balance Sheet was prepared in
accordance with Article 11 (Pro Forma Financial Information) of Regulation S-X
under the Securities Act.
(c) Since December 31, 1998 there has been no material adverse
change in the business, assets, property, operations or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole, from that
reflected in the Pro Forma Balance Sheet. As of the Closing Date, after giving
effect to the consummation of the Transactions, the Borrower is, and the Credit
Parties taken as a whole are, Solvent.
SECTION 5.05 Properties. (a) Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for minor defects in
title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes,
and none of such property is subject to any Lien, except for Liens permitted by
Section 8.03.
(b) Each of the Borrower and its Subsidiaries owns, or is licensed
to use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and
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the use thereof by the Borrower and its Subsidiaries does not infringe upon the
rights of any other Person, except for any such infringements that, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.06 Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither the Borrower nor any of
its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in
the status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 5.07 Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority or Requirement of Law applicable to it or
its property and all indentures, agreements, other instruments and other
Contractual Obligations binding upon it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default or Event of Default
has occurred and is continuing.
SECTION 5.08 Investment and Holding Company Status. Neither the
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 5.09 Taxes. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
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SECTION 5.10 ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $808,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $808,000 the fair market value of
the assets of all such underfunded Plans.
SECTION 5.11 Disclosure. The Borrower has disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to which it or
any of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements, certificates
or other information furnished by or on behalf of the Borrower to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time.
SECTION 5.12 Federal Regulations. No part of the proceeds of any
Extensions of Credit will be used for any purpose which violates the provisions
of the Regulations of the Board, including, without limitation, Regulation U,
Regulation T or Regulation X of the Board. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 or such other similar form referred to in Regulation
U, Regulation T or Regulation X of the Board, as the case may be.
SECTION 5.13 The Security Documents. (a) The Guarantee and
Collateral Agreement is effective to create in favor of the Administrative
Agent, for the benefit of the Lenders, a legal, valid and enforceable security
interest in the Collateral described therein and proceeds thereof. In the case
of the Pledged Stock described in the Guarantee and Collateral Agreement, as to
which perfection is effected by possession, when stock certificates representing
such Pledged Stock are delivered to the Administrative Agent, and in the case of
the other Collateral described in the Guarantee and Collateral Agreement, when
financing statements and other filings specified on Schedule 5.13 in appropriate
form are filed in the offices specified on Schedule 5.13, the Guarantee and
Collateral Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Credit Parties in such
Collateral and the proceeds thereof, as security for the Obligations (as
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63
defined in the Guarantee and Collateral Agreement), in each case prior and
superior in right to any other Person (except, in the case of Collateral other
than Pledged Stock as to which perfection is effected by possession, Liens
permitted by Section 8.03).
(b) When executed and delivered, each Mortgage will be effective to
create in favor of the Administrative Agent, a legal, valid and enforceable Lien
on all right, title and interest of the Credit Party thereto, in the Material
Real Property thereunder. When each Mortgage and the related fixture filings are
duly recorded in the appropriate office or offices and the mortgage recording
fees and taxes in respect thereof are paid and compliance is otherwise had with
the formal requirements of state law applicable to the recording of real estate
mortgages generally, such Mortgage shall constitute a fully perfected Lien on
and security interest in such Material Real Property (prior to all mortgages on
the Material Real Property), subject only to the encumbrances and exceptions to
title expressly set forth or referred to in such Mortgage, and to Liens
permitted by Section 8.03(a).
SECTION 5.14 Pledged Stock. On the Closing Date, the shares of
Capital Stock listed on Schedule 2 to the Guarantee and Collateral Agreement
will constitute all the issued and outstanding shares of Capital Stock (or, in
the case of Capital Stock of a Foreign Subsidiary, 65% of the issued and
outstanding shares of such Capital Stock) of the issuers thereof listed on said
Schedule owned by the Credit Parties; all such shares have been duly and validly
issued and are fully paid and nonassessable; the relevant Pledgor of said shares
is the record and beneficial owner of said shares; and said shares are free of
any Liens or options in favor of, or claims of, any other Person, except the
Lien of the Guarantee and Collateral Agreement and Liens permitted under Section
8.03(a).
SECTION 5.15 Real Estate Matters. The real property described on
Schedule 5.15 constitutes each of the real estate owned in fee by the Credit
Parties on the Closing Date with each such parcel having a net book value of at
least $1,000,000.
SECTION 5.16 Subsidiaries. Schedule 5.16 sets forth all the
Subsidiaries of the Borrower at the Closing Date, the jurisdiction of their
incorporation and the direct or indirect ownership interest of the Borrower
therein.
SECTION 5.17 Delivery of the Transaction Documents. The
Administrative Agent has received for itself and for each Lender a complete
photocopy of each of the Transaction Documents, other than the Credit Documents
(including all exhibits, schedules and disclosure letters referred to therein or
delivered pursuant thereto, if any) and all amendments thereto, waivers relating
thereto and other side letters or agreements affecting the terms thereof in any
material respect.
SECTION 5.18 Representations and Warranties Contained in the other
Transaction Documents. Each of the Transaction Documents, other than the Credit
Documents, will have been duly executed and delivered by each of the Credit
Parties which is a party thereto prior to the Closing Date and, to the knowledge
of the Borrower, all other parties thereto, and will be in full force and effect
on the Closing Date. As of the Closing Date, the representations and warranties
of each Credit Party,
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and, to the knowledge of the Borrower, any of the other parties thereto
contained in any of the Transaction Documents, other than the Credit Documents
(after giving effect to any amendments, supplements, waivers or other
modifications of any of the Transaction Documents, other than the Credit
Documents, prior to the Closing Date in accordance with this Agreement when made
or deemed made) are true and correct in all material respects, when made or
deemed made, except as otherwise disclosed to the Administrative Agent in
writing prior to the Closing Date.
SECTION 5.19 Labor Matters. There are no strikes pending or, to the
knowledge of the Borrower, reasonably expected to be commenced against the
Borrower or any Subsidiary which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. The hours worked and
payments made to employees of the Borrower and its Subsidiaries have not been in
violation of any applicable laws, rules or regulations, except where such
violations would not reasonably be expected to have a Material Adverse Effect.
The consummation of the Transactions will not give rise to a right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any Credit Party (or any predecessor)
is a party or by which the Borrower or any Subsidiary (or any predecessor) is
bound.
SECTION 5.20 Purpose of Loans. The proceeds of the Revolving Credit
Loans shall be used for general corporate purposes, including to finance the
working capital needs of the Borrower and its Subsidiaries in the ordinary
course of business, and to refinance the obligations of ARACS under the Existing
Credit Agreement and, in an amount not to exceed $75,000,000, to the finance the
Transactions. The proceeds of the Term Loans shall be used to finance the
Transactions. The WC Letters of Credit (other than the North Carolina Franchise
Letter of Credit) shall be available to support workers' compensation and other
insurance and bonding requirements of the Credit Parties and for other general
corporate purposes of the Credit Parties, in each case in the ordinary course of
business, but shall not be used to provide credit enhancement for the Fleet
Financing Program or to support obligations for borrowed money. The CE Letters
of Credit will be available to fund Credit Draws and Liquidity Draws.
SECTION 5.21 Year 2000 Matters. Any reprogramming required to permit
the proper functioning (but only to the extent that such proper functioning
would otherwise be impaired by the occurrence of the year 2000) in and following
the year 2000 of material computer systems and other equipment containing
embedded microchips, in either case owned or operated by the Borrower or any of
its Subsidiaries or used or relied upon in the conduct of their business
(including any such systems and other equipment supplied by others or with which
the computer systems of the Borrower or any of its Subsidiaries interface), and
the testing of all such systems and other equipment as so reprogrammed, will be
completed by September 30, 1999. The costs to the Borrower and its Subsidiaries
that have not been incurred as of the date hereof for such reprogramming and
testing and for the other reasonably foreseeable consequences to them of any
improper functioning of other computer systems and equipment containing embedded
microchips due to the occurrence of the year 2000 are not reasonably expected to
result in a Material Adverse Effect. Except for any reprogramming referred to
above, the computer systems of the Borrower and its Subsidiaries are and,
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with ordinary course upgrading and maintenance, are reasonably expected to
continue for the term of this Agreement to be sufficient for the conduct of
their business as currently conducted.
ARTICLE VI.
Conditions
SECTION 6.01 Closing Date. The obligations of the Lenders to make
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 11.02):
(a) Credit Agreement. The Administrative Agent shall have received
from each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the Administrative
Agent (which may include facsimile transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this Agreement.
(b) Security Documents. The Administrative Agent shall have received
the Guarantee and Collateral Agreement, executed and delivered by a duly
authorized officer of each Credit Party, with a copy for each applicable Lender.
(c) The Transactions. The Transactions shall have been consummated
pursuant to satisfactory documentation, and no provision of the Transaction
Documents shall have been waived, amended, supplemented or otherwise modified
without the consent of the Administrative Agent.
(d) Fees. The Administrative Agent shall have received, for its own
account and the account of the Lenders, all fees and other amounts due and
payable on or prior to the Closing Date, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower hereunder.
(e) Approvals. All governmental and third party approvals (including
landlords' and other consents) necessary or reasonably advisable in connection
with the consummation of the Transactions, the financing contemplated hereby and
the continuing operations of the Credit Parties shall have been obtained and be
in full force and effect, and all applicable waiting periods under applicable
law shall have expired without any action being taken or threatened by any
competent authority which would restrain, prevent or otherwise impose material
adverse conditions on the Transactions or the financing contemplated hereby.
(f) Environmental Compliance. The Administrative Agent shall be
reasonably satisfied with the Credit Parties internal compliance policies in
respect of environmental laws and regulations.
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(g) Lien Searches. The Administrative Agent shall have received the
results of a recent search by a Person reasonably satisfactory to the
Administrative Agent of the Uniform Commercial Code, judgment and tax lien
filings which may have been filed with respect to personal property of each
Credit Party in any of the jurisdictions set forth in Part I of Schedule 5.13,
and the results of such search shall not reveal any liens other than liens
permitted by Section 8.03 or liens to be discharged on or prior to the Closing
Date pursuant to documentation satisfactory to the Administrative Agent.
(h) Legal Opinions. The Administrative Agent shall have received,
with a photocopy for each Lender, the following executed legal opinions:
(i) the executed legal opinion of counsel to the Borrower and the
other Credit Parties, in form and substance, and from counsel,
satisfactory to the Administrative Agent;
(ii) the executed legal opinion of such counsel to the parties to
the Transaction Documents as requested by, and in form and
substance satisfactory to, the Administrative Agent; and
(iii) the executed legal opinion of any special and local counsel as
requested by, and in form and substance satisfactory to, the
Administrative Agent.
(i) Actions to Perfect Liens. The Administrative Agent shall have
received evidence in form and substance reasonably satisfactory to it that all
filings, recordings, registrations and other actions, including, without
limitation, the filing of duly executed financing statements on Form UCC-1 in
each jurisdiction set forth on Schedule 5.13, necessary or, in the reasonable
opinion of the Administrative Agent, advisable to perfect the Liens created by
the Security Documents shall have been completed or shall be ready to be
completed promptly following the Closing Date, and all agreements, statements
and other documents relating thereto shall be in form and substance reasonably
satisfactory to the Administrative Agent.
(j) Pledged Stock; Stock Powers; Pledged Notes; Endorsements. The
Administrative Agent shall have received:
(i) the certificates representing the Pledged Stock under (and as
defined in) the Guarantee and Collateral Agreement, as to
which perfection is effected by possession, together with an
undated stock power for each such certificate executed in
blank by a duly authorized officer of the pledgor thereof; and
(ii) the promissory notes representing each of the Pledged Notes
under (and as defined in) the Guarantee and Collateral
Agreement, duly endorsed as required by the Guarantee and
Collateral Agreement.
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The Credit Parties shall have taken such other action as is reasonably
satisfactory to the Administrative Agent to perfect the security interests
created by the Security Documents.
(k) Borrowing Certificate. The Administrative Agent shall have
received, with a photocopy for each Lender, a certificate of the Borrower, dated
the Closing Date, substantially in the form of Exhibit G with appropriate
insertions and attachments, reasonably satisfactory in form and substance to the
Administrative Agent, executed by a Responsible Officer and the Secretary or any
Assistant Secretary of the Borrower.
(l) Corporate Proceedings of the Credit Parties. The Administrative
Agent shall have received, with a photocopy for each Lender, a copy of the
resolutions, in form and substance reasonably satisfactory to the Administrative
Agent, of the board of directors of each Credit Party authorizing, as
applicable, (i) the execution, delivery and performance of this Agreement, any
notes and the other Credit Documents and the other Transaction Documents to
which it is or will be a party as of the Closing Date, (ii) in the case of the
Borrower, the Extensions of Credit to the Borrower and (iii) the granting by it
of the Liens to be created pursuant to the Security Documents to which it is or
will be a party as of the Closing Date, certified by the Secretary or an
Assistant Secretary of such Credit Party as of the Closing Date, which
certificate shall be in form and substance reasonably satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified have
not been amended, modified (except as any later such resolution may modify any
earlier such resolution), revoked or rescinded and are in full force and effect.
(m) Incumbency Certificates of the Credit Parties. The
Administrative Agent shall have received, with a photocopy for each Lender, a
certificate of each Credit Party, dated the Closing Date, as to the incumbency
and signature of the officers of such Credit Party executing any Credit
Document, reasonably satisfactory in form and substance to the Administrative
Agent, executed by a Responsible Officer and the Secretary or any Assistant
Secretary of such Credit Party.
(n) Governing Documents. The Administrative Agent shall have
received, with a photocopy for each Lender, copies of the certificate or
articles of incorporation and by-laws (or other similar governing documents
serving the same purpose) of each Credit Party, certified as of the Closing Date
as complete and correct copies thereof by the Secretary or an Assistant
Secretary of such Credit Party.
(o) Insurance. The Administrative Agent shall have received evidence
in form and substance reasonably satisfactory to it that all of the requirements
of Section 7.05 shall have been satisfied.
(p) High Yield Offering. The Borrower shall have received at least
$500,000,000 in gross proceeds from the issuance of the Subordinated Notes, on
terms set forth in the Preliminary
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68
Offering Circular, dated June 14, 1999 in respect thereof and otherwise
satisfactory to the Administrative Agent.
(q) Preferred Stock. The Preferred Stock shall have the terms set
forth in the term sheet heretofore delivered to the Administrative Agent and
otherwise shall be satisfactory in all respects to the Administrative Agent.
(r) ABS Offering. The VMS Subsidiaries and related Securitization
Entities shall have issued at least $3.4 billion of asset-backed obligations
supported by their fleet vehicles and leases on terms satisfactory to the
Administrative Agent and shall have repaid all of the existing fleet debt that
is required to be repaid as a consequence of the Transactions.
(s) Existing Credit Agreement. Subject to the provisions hereof in
respect of Continuing Letters of Credit, all amounts owing under the Existing
Credit Agreement shall have been repaid (or are concurrently repaid) and the
commitments thereunder shall have been terminated and the related security
interests shall have been released.
(t) Liquidity Facility. The current expiration date of the
commitments under the Liquidity Facility shall have been extended to a date that
is at least 364 days from the effective date of such extension.
(u) Financial Statements; Pro Forma Balance Sheet. The Lenders shall
have received the financial statements referred to in Section 5.04.
The Administrative Agent shall notify the Borrower and the Lenders of the
Closing Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Banks to issue Letters of Credit hereunder shall not become effective unless
each of the foregoing conditions is satisfied (or waived pursuant to Section
11.02) at or prior to 5:00 p.m., New York City time, on September 30, 1999 (and,
in the event such conditions are not so satisfied or waived, the Commitments
shall terminate at such time).
SECTION 6.02 Each Extension of Credit. The obligation of each Lender
to make a Loan, and of an Issuing Bank to issue, amend, renew or extend any
Letter of Credit, is subject to the satisfaction of the following conditions:
(a) Representations and Warranties. The representations and
warranties of each Credit Party in or pursuant to this Agreement or any other
Credit Document shall be true and correct in all material respects on and as of
the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable.
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69
(b) No Default. At the time of and immediately after giving effect
to such Loan or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
Each Extension of Credit shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section.
ARTICLE VII.
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lenders that:
SECTION 7.01 Financial Statements and Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the
Borrower, its audited consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by Deloitte & Touche LLP or other
independent public accountants of recognized national standing (without a "going
concern" or like qualification or exception and without any qualification or
exception as to the scope of such audit or other material qualification or
exception) to the effect that such consolidated financial statements present
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower its consolidated balance sheet and
related statements of operations, stockholders' equity and cash flows as of the
end of and for such fiscal quarter (and limited to the Borrower and its
Subsidiaries that are not VMS Subsidiaries for the quarter ended June 30, 1999)
and the then elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Borrower and
its consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of notes;
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(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Borrower
(i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Section 8.01 and (iii) stating whether any change
in GAAP or in the application thereof has occurred since the date of the audited
financial statements referred to in Section 5.04 and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) as soon as available, but in any event not later than the 90th
day after the beginning of each fiscal year of the Borrower, a copy of the
projections by the Borrower of the operating budget and cash flow budget of the
Borrower and its Subsidiaries for such fiscal year, such projections to be
accompanied by a certificate of a Financial Officer of the Borrower to the
effect that such Financial Officer believes such projections to have been
prepared on the basis of reasonable assumptions;
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Borrower or any Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by the
Borrower to its shareholders generally, as the case may be; and
(g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of this Agreement, as
the Administrative Agent or any Lender may reasonably request.
SECTION 7.02 Notices of Material Events. The Borrower as soon as
possible after a Responsible Officer of a Credit Party knows or reasonably
should know thereof, will furnish to the Administrative Agent and each Lender
prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
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71
(c) any litigation or proceeding affecting a Credit Party in which
the amount involved (not covered by insurance) is $1,000,000 or more or in which
injunctive or similar relief is sought that could reasonably be expected to
result in a Material Adverse Effect;
(d) the occurrence of any default under any of the Franchise
Agreements or the Transaction Documents;
(e) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $5,000,000; and
(f) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
SECTION 7.03 Existence; Conduct of Business. The Borrower will, and
will cause each of its Subsidiaries to, continue to engage in business of the
same general type as conducted by the Borrower and its Subsidiaries on the
Closing Date, after giving effect to the Acquisition and taken as a whole, and
do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence and the rights, licenses, permits,
privileges and franchises material to the conduct of its business; provided that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 8.04.
SECTION 7.04 Payment of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 7.05 Maintenance of Properties; Insurance. The Borrower
will, and will cause each of its Subsidiaries to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations; and furnish to
the Administrative Agent, upon written request, information in reasonable detail
as to the insurance carried.
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SECTION 7.06 Books and Records; Inspection Rights. The Borrower
will, and will cause each of its Subsidiaries to, keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Administrative Agent or the Required Lenders, upon reasonable prior notice,
to visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested.
SECTION 7.07 Compliance with Laws Generally. The Borrower will, and
will cause each of its Subsidiaries to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 7.08 Environmental Laws. (a) The Borrower will, and will
cause each of its Subsidiaries to, (i) comply substantially with, and require
substantial compliance by all tenants, subtenants and contractors with, all
applicable Environmental Laws; (ii) obtain, comply substantially with and
maintain any and all Environmental Permits necessary for its operations as
conducted and as planned; and (iii) require that all tenants, subtenants and
contractors obtain, comply substantially with and maintain any and all
Environmental Permits necessary for their operations as conducted and as
planned, with respect to any property leased or subleased from, or operated by
any Credit Party.
(b) The Borrower will, and will cause each of its Subsidiaries to,
conduct and complete or cause to be conducted and completed all investigations,
studies, sampling and testing, and all remedial, removal, and other actions
required under applicable Environmental Laws; and promptly comply with all
orders and directives of all Governmental Authorities regarding Environmental
Laws, (i) except where non-compliance with any such order or directive could not
reasonably be expected to have a Material Adverse Effect or (ii) other than any
such order or directive as to which an appeal or other appropriate contest is or
has been timely and properly taken, is being diligently pursued in good faith,
and as to which appropriate reserves have been established in accordance with
GAAP, and, if the effectiveness of such order or directive has not been stayed,
the pendency of such appeal or other appropriate contest could not reasonably be
expected to have a Material Adverse Effect.
(c) The Borrower will, and will cause each of its Subsidiaries to,
maintain, update as appropriate, and implement in all material respects an
ongoing program to ensure that all their respective properties and operations
are regularly and reasonably reviewed by competent professionals to identify and
promote compliance with and to reasonably and prudently manage any liabilities
or potential liabilities under any Environmental Law that may affect any of the
Credit Parties, including, without limitation, compliance and liabilities
relating to: discharges to air and water; acquisition, transportation, storage
and use of hazardous materials; waste disposal; repair, maintenance and
improvement of properties; employee health and safety; species protection; and
recordkeeping (the "Environmental Program").
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SECTION 7.09 Real Property Matters. (a) No later than 60 days
following the Closing Date, the Borrower will, and will cause each of its
applicable Subsidiaries to (i) provide to the Administrative Agent executed
copies of each of the Mortgages, executed and delivered by a duly authorized
officer of the Credit Party thereto, with respect to each Material Real Property
and (ii) take all actions necessary or, in the opinion of the Administrative
Agent, desirable to cause the Liens created by the Mortgages to be duly
perfected in accordance with all applicable Requirements of Law.
(b) At or prior to the time the Mortgages are delivered to the
Administrative Agent pursuant to Section 7.09(a), the Borrower will, and will
cause each of its applicable Subsidiaries to provide to the Administrative
Agent, and the title insurance company issuing the policy referred to in Section
7.09(c) (the "Title Insurance Company"), maps or plats of an as-built survey of
the sites of each of the Material Real Properties certified to the
Administrative Agent and the Title Insurance Company in a manner reasonably
satisfactory to them, dated a date reasonably satisfactory to the Administrative
Agent and the Title Insurance Company by an independent professional licensed
land surveyor reasonably satisfactory to the Administrative Agent and the Title
Insurance Company, which maps or plats and the surveys on which they are based
shall be made in accordance with the Minimum Standard Detail Requirements for
Land Title Surveys jointly established and adopted by the American Land Title
Association and the American Congress on Surveying and Mapping in 1992, and,
without limiting the generality of the foregoing, there shall be surveyed and
shown on such maps, plats or surveys the following: (i) the locations on such
sites of all the buildings, structures and other improvements and the
established building setback lines; (ii) the lines of streets abutting the sites
and width thereof; (iii) all access and other easements appurtenant to the sites
necessary to use the sites; (iv) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances affecting the
sites, whether recorded, apparent from a physical inspection of the sites or
otherwise known to the surveyor; (v) any encroachments on any adjoining property
by the building structures and improvements on the sites; and (vi) if the site
is described as being on a filed map, a legend relating the survey to said map.
(c) At or prior to the time the Mortgages are delivered to the
Administrative Agent pursuant to Section 7.09(a), the Borrower will, and will
cause each of its applicable Subsidiaries, to provide to the Administrative
Agent in respect of each of the Material Real Properties a mortgagee's title
policy (or policies) or marked up unconditional binder for such insurance dated
a date reasonably satisfactory to the Administrative Agent, or such other date
as agreed to by the Administrative Agent. Each such policy shall (i) be in an
amount reasonably satisfactory to the Administrative Agent; (ii) insure that the
Mortgage insured thereby creates a valid first Lien on the Material Real
Property encumbered thereby free and clear of all defects and encumbrances,
except those permitted by Section 8.03 and such as may be approved by the
Administrative Agent; (iii) name the Administrative Agent for the benefit of the
Lenders as the insured thereunder; (iv) be in the form of an ALTA Loan Policy;
(v) contain such endorsements and affirmative coverage as the Administrative
Agent may reasonably request; (vi) be issued by title companies reasonably
satisfactory to the Administrative Agent (including any such title companies
acting as reinsurers, at the option of the Administrative Agent) and (vii) be
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issued at ordinary rates (other than with respect to affirmative insurance). The
Administrative Agent shall have received evidence reasonably satisfactory to it
that all premiums in respect of each such policy, and all charges for mortgage
recording tax, if any, have been paid. The Administrative Agent shall have also
received a copy of all recorded documents referred to, or listed as exceptions
to title in, the title policy or policies referred to in this Section and a
copy, certified by such parties as the Administrative Agent may deem reasonably
appropriate, of all other documents affecting the property covered by each
Mortgage (including documents relating to insurance coverage with respect to
such property) as shall have been reasonably requested by the Administrative
Agent.
(d) At or prior to the time the Mortgages are delivered to the
Administrative Agent pursuant to Section 7.09(a), with respect to any of the
Material Real Properties which is located in an area identified by the Secretary
of Housing and Urban Development as having special flood hazards, the
Administrative Agent shall have received acknowledgment from the relevant Credit
Party as required pursuant to Section 208.8(e)(3) of Regulation H of the Board.
SECTION 7.10 After-Acquired Property and Fixtures. The Borrower
will, and will cause each of its Subsidiaries to:
(a) With respect to any assets (or any interest therein) acquired
after the Closing Date by any Credit Party that are intended to be subject to
the Lien created by any of the Security Documents but which are not so subject
(including, without limitation any assets described in paragraph (b)), promptly
(and in any event within 120 days after the acquisition thereof): (i) execute
and deliver to the Administrative Agent such amendments to the relevant Security
Documents or such other documents as the Administrative Agent shall deem
necessary or advisable to grant to the Administrative Agent, for the benefit of
the Lenders, a Lien on such assets (or such interest therein), (ii) take all
actions necessary or advisable to cause such Lien to be duly perfected in
accordance with all applicable Requirements of Law, including, without
limitation, the filing of financing statements and the recording of Mortgages in
such jurisdictions as may be requested by the Administrative Agent, (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described in clauses (i) and (ii) immediately
preceding, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent, and (iv) if requested by
the Administrative Agent, deliver to the Administrative Agent surveys, title
insurance and flood insurance as required by Sections 7.09(b), 7.09(c) or
7.09(d).
(b) With respect to any Person (other than an Excluded Subsidiary)
that, subsequent to the Closing Date, becomes a Domestic Subsidiary of a Credit
Party, promptly: (i) execute and deliver to the Administrative Agent, for the
benefit of the Lenders, such amendments to the Guarantee and Collateral
Agreement as the Administrative Agent shall deem necessary or advisable to grant
to the Administrative Agent, for the benefit of the Lenders, a Lien on the
Capital Stock of such Subsidiary which is, directly or indirectly, owned by the
Borrower, (ii) deliver to the Administrative Agent the certificates representing
such Capital Stock, together with undated stock powers executed and delivered in
blank by a duly authorized officer of the appropriate Credit Party, (iii) cause
such new
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Subsidiary (A) to become a party to the Guarantee and Collateral Agreement and
any other Security Documents, as the Administrative Agent determines in its
reasonable judgment, or to a new guarantee and security agreement, in each case
pursuant to an annex to the Guarantee and Collateral Agreement or otherwise
pursuant to documentation which is in form and substance satisfactory to the
Administrative Agent, and (B) to take all actions necessary or advisable to
cause the Lien created by the Guarantee and Collateral Agreement or such other
security agreement to be duly perfected in accordance with all applicable
Requirements of Law, including, without limitation, the filing of financing
statements in such jurisdictions as may be requested by the Administrative Agent
and (iv) if requested by the Administrative Agent, deliver to the Administrative
Agent legal opinions relating to the matters described in clauses (i), (ii) and
(iii) immediately preceding, which opinions shall be in form and substance, and
from counsel, reasonably satisfactory to the Administrative Agent.
(c) With respect to any Person that, subsequent to the Closing Date,
becomes a first tier Foreign Subsidiary of a Credit Party, promptly: (i) execute
and deliver to the Administrative Agent such amendments to the Guarantee and
Collateral Agreement, and the other Security Documents as the Administrative
Agent shall deem necessary or advisable to grant to the Administrative Agent,
for the benefit of the Lenders, a Lien on the Capital Stock of such Subsidiary
(provided that in no event shall more than 65% of the Capital Stock of any such
Subsidiary be required to be so pledged), (ii) deliver to the Administrative
Agent any certificates representing such Capital Stock, together with undated
stock powers executed and delivered in blank by a duly authorized officer of the
applicable Credit Party, and take or cause to be taken all such other actions
under the laws of the jurisdiction of organization of such Foreign Subsidiary as
may be necessary or advisable to perfect such Lien on such Capital Stock and
(iii) if requested by the Administrative Agent, deliver to the Administrative
Agent legal opinions relating to the matters described in clauses (i) and (ii)
immediately preceding, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.
SECTION 7.11 Foreign Subsidiaries. No later than 90 days following
the Closing Date, the Borrower will, and will cause each of its Subsidiaries to,
upon the request of the Administrative Agent, promptly perform or cause to be
performed any and all acts and obtain or execute or cause to be executed any and
all documents (including, without limitation, legal opinions from foreign
counsel within the relevant jurisdiction) which are necessary or advisable to
perfect the priority of the pledge in favor of the Administrative Agent of the
Capital Stock of any Foreign Subsidiary under the Guarantee and Collateral
Agreement.
SECTION 7.12 Further Assurances. The Borrower will, and will cause
each of its Subsidiaries to, upon the request of the Administrative Agent,
promptly perform or cause to be performed any and all acts and execute or cause
to be executed any and all documents (including, without limitation, financing
statements and continuation statements) for filing under the provisions of the
Uniform Commercial Code or any other Requirement of Law which are necessary or
advisable to maintain in favor of the Administrative Agent, for the benefit of
the Lenders, Liens on the Collateral that are duly perfected in accordance with
all applicable Requirements of Law.
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ARTICLE VIII.
Negative Covenants
Until the Commitments have expired or terminated and the principal
of and interest on each Loan and all fees payable hereunder have been paid in
full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Lenders that:
SECTION 8.01 Financial Condition Covenants. The Borrower will not,
(a) Maintenance of Leverage Ratio. Permit, as at the end of any
fiscal quarter of the Borrower ending during the periods set forth below, the
Leverage Ratio of the Borrower to be greater than the ratio set forth opposite
such period below:
Quarters ending Ratio
--------------- -----
9/30/99 through 12/31/99 5.75 to 1.0
3/31/00 through 9/30/00 5.50 to 1.0
12/31/00 through 9/30/01 5.00 to 1.0
12/31/01 through 9/30/02 4.50 to 1.0
12/31/02 through 9/30/03 4.00 to 1.0
12/31/03 through 9/30/04 3.50 to 1.0
12/31/04 and thereafter 3.00 to 1.0
(b) Maintenance of Interest Coverage Ratio. Permit, as at the end of
any fiscal quarter of the Borrower ending during the periods set forth below,
the Interest Coverage Ratio of the Borrower to be less than the ratio set forth
opposite such period below:
Quarters ending Ratio
--------------- -----
9/30/99 through 9/30/00 2.00 to 1.00
12/31/00 through 9/30/01 2.25 to 1.00
12/31/01 through 9/30/02 2.50 to 1.00
12/31/02 through 9/30/03 2.75 to 1.00
12/31/03 through 9/30/04 3.00 to 1.00
12/31/04 and thereafter 3.25 to 1.00
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(c) Maintenance of Adjusted EBITDA Coverage Ratio. Permit the ratio
of (i) Adjusted EBITDA to (ii) the sum of (a) Consolidated Interest Expense of
the Borrower, (b) Consolidated income tax expense of the Borrower, (c)
Consolidated Capital Expenditures and (d) dividends declared and payable in cash
on the Capital Stock of the Borrower or the Preferred Stock, in each case for
any period of four consecutive fiscal quarters ending during the periods set
forth below to be less than the ratio set forth opposite such period below:
Quarters ending Ratio
--------------- -----
12/31/99 through 9/30/00 1.10 to 1.00
12/31/00 through 9/30/01 1.15 to 1.00
12/31/01 through 9/30/03 1.20 to 1.00
12/31/03 and thereafter 1.25 to 1.00
The amounts for the periods ending December 31, 1999 and March 31, 2000 shall be
calculated on a pro forma basis as if the Transactions had occurred on January
1, 1999.
SECTION 8.02 Indebtedness. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness created hereunder and under the High Yield Offering
Documents;
(b) Indebtedness existing on the date hereof and set forth in
Schedule 8.02 and extensions, renewals and replacements of any such Indebtedness
that do not increase the outstanding principal amount thereof;
(c) Indebtedness of (i) any Credit Party to any other Credit Party
or (ii) any Foreign Subsidiary to any Credit Party in an aggregate amount at any
time outstanding not to exceed (a) the amount outstanding on the date hereof and
set forth in Schedule 8.02 plus (b) an additional aggregate principal amount of
Indebtedness for all Foreign Subsidiaries of $300,000,000; provided that such
Indebtedness is pari passu with all other unsecured debt for borrowed money and
that such Indebtedness is evidenced by a promissory note that is pledged under
the Guarantee and Collateral Agreement;
(d) Guarantee Obligations by any Credit Party of Indebtedness of any
other Credit Party otherwise permitted hereunder;
(e) Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition, construction or improvement of any fixed or capital
assets, including Capital Lease Obligations and any Indebtedness assumed in
connection with the acquisition of any such assets or secured by a Lien on any
such assets prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof;
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provided that (i) such Indebtedness is incurred prior to or within 150 days
after such acquisition or the completion of such construction or improvement and
(ii) the aggregate principal amount of Indebtedness permitted by this clause (e)
shall not exceed $25,000,000 at any time outstanding;
(f) Indebtedness of any Person that becomes a Subsidiary after the
date hereof; provided that (i) such Indebtedness exists at the time such Person
becomes a Subsidiary and is not created in contemplation of or in connection
with such Person becoming a Subsidiary and (ii) the aggregate principal amount
of Indebtedness permitted by this clause (f) shall not exceed $10,000,000 at any
time outstanding;
(g) to the extent that any Indebtedness may be incurred or arise
thereunder, Indebtedness of the Borrower or any Subsidiary under Permitted
Hedging Arrangements;
(h) Indebtedness of Foreign Subsidiaries in an aggregate amount at
any time outstanding not to exceed $125,000,000;
(i) Guarantee Obligations by the Borrower of Indebtedness of any
Foreign Subsidiary permitted by clause (h) above;
(j) (x) Permitted Vehicle Indebtedness provided that the aggregate
outstanding Permitted Vehicle Indebtedness held by Persons other than the
Borrower and its Subsidiaries as of the last day of any calendar month shall not
exceed the net book value of the Permitted Vehicle Collateral securing same on
such date and (y) Customer Lease Financing Loans;
(k) Guaranteed Obligations represented by guarantees issued to
airports and airport and other governmental authorities for the construction of
airport rental or related facilities to be used by the Borrower or any
Subsidiary in the ordinary course of business that do not exceed for the
Borrower and all Subsidiaries in the aggregate $50,000,000 at any time
outstanding;
(l) Indebtedness incurred by WEX Financial to fund WEX Financial's
credit card payables in the ordinary course of business, in an aggregate
principal amount not to exceed $100,000,000; provided that the total capital
ratio determined in accordance with regulations promulgated by the Board (the
"Total Capital Ratio") of WEX Financial on the date of any such incurrence shall
equal or exceed the Total Capital Ratio of WEX Financial on June 30, 1999
determined on the equivalent basis;
(m) other unsecured Indebtedness in an aggregate principal amount
not exceeding $5,000,000 at any time outstanding;
(n) Indebtedness of the Borrower or any Subsidiary assumed in
connection with a franchise acquisition permitted by Section 8.08(k), which
Indebtedness (i) finances the acquiree's fleet of vehicles and (ii) is not
greater than the net book value of such vehicles;
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79
(o) Indebtedness incurred in connection with the acquisition of
vehicles directly from a manufacturer pursuant to such manufacturer's repurchase
program, provided that (i) such Indebtedness is not greater than the net book
value of such vehicles and (ii) such vehicles could not be financed under the
Fleet Financing Program; and
(p) unsecured purchase money Indebtedness of the Borrower or any
Subsidiary incurred as part of the purchase of a franchisee provided that such
Indebtedness in the aggregate shall not exceed $5,000,000 at any time
outstanding.
SECTION 8.03 Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(a) Permitted Encumbrances;
(b) Liens created pursuant to the Security Documents or otherwise
securing Indebtedness created hereunder;
(c) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof, securing Indebtedness permitted pursuant
to Section 8.02(b) and set forth in Schedule 8.03; provided that (i) such Lien
shall not apply to any other property or asset of the Borrower or any Subsidiary
and (ii) such Lien shall secure only those obligations which it secures on the
date hereof and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof;
(d) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date hereof
prior to the time such Person becomes a Subsidiary; provided that (i) such Lien
is not created in contemplation of or in connection with such acquisition or
such Person becoming a Subsidiary, (ii) such Lien shall not apply to any other
property or assets of the Borrower or any Subsidiary and (iii) such Lien shall
secure Indebtedness permitted by Section 8.02(f) and extensions, renewals and
replacements thereof that are so permitted;
(e) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary; provided that (i) such security
interests secure Indebtedness permitted by Section 8.02(e), (ii) such security
interests and the Indebtedness secured thereby are incurred prior to or within
90 days after such acquisition or the completion of such construction or
improvement and (iii) such security interests shall not apply to any other
property or assets of the Borrower or any Subsidiary;
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(f) Liens securing Designated Financing Debt;
(g) Liens on vehicles owned by the Borrower or any Subsidiary
securing Indebtedness permitted by Section 8.02(n); and
(h) Liens on property of any Foreign Subsidiary securing
Indebtedness of such Foreign Subsidiary (i) permitted by Section 8.02(c) or (ii)
permitted by Section 8.02(h) (to the extent not guaranteed by a Credit Party) in
an aggregate amount at any time not to exceed $20,000,000.
SECTION 8.04 Limitation on Fundamental Changes. The Borrower will
not, and will not permit any Subsidiary to, enter into any merger, consolidation
or amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all of its property, business or
assets, except:
(a) any Credit Party may be merged or consolidated with or into the
Borrower (provided that the Borrower shall be the continuing or surviving
corporation) or with or into any one or more other Credit Parties (provided that
a Credit Party which is directly, or indirectly, Wholly-Owned shall be the
continuing or surviving entity);
(b) any Credit Party may sell, lease, transfer or otherwise dispose
of any or all of its assets (upon voluntary liquidation or otherwise) to the
Borrower or any other Credit Party; and
(c) as expressly permitted by Sections 8.05 and 8.08.
SECTION 8.05 Limitation on Sale of Assets. The Borrower will not,
and will not permit any Subsidiary to, convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests), whether now owned or hereafter
acquired, or, in the case of any Subsidiary, issue or sell any shares of such
Subsidiary's Capital Stock, to any Person other than the Borrower or another
Credit Party, except:
(a) the sale or other Disposition of obsolete, worn out or surplus
property, whether now owned or hereafter acquired, in the ordinary course of
business;
(b) the sale or other Disposition of any property in the ordinary
course of business;
(c) the sale or discount without recourse of accounts receivable or
notes receivable arising in the ordinary course of business, or the conversion
or exchange of accounts receivable into or for notes receivable, in connection
with the compromise or collection thereof;
(d) as permitted by Section 8.04(b); and
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81
(e) the sale or other disposition of Permitted Vehicle Collateral in
connection with Designated Financing Debt.
SECTION 8.06 Limitation on Restricted Payments. The Borrower will
not, and will not permit any Subsidiary to, declare or pay any dividend (other
than dividends payable solely in common stock of the Borrower or options,
warrants or other rights to purchase common stock of the Borrower) on, or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any shares of any class of Capital Stock of the Borrower or any warrants or
options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution (other than distributions payable
solely in common stock of the Borrower or options, warrants or other rights to
purchase common stock of the Borrower) in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of the Borrower,
except that (a) the Borrower may declare and pay cash dividends in respect of
its Capital Stock in respect of any fiscal year commencing with the fiscal year
ended December 31, 1998, if and to the extent that (i) the Leverage Ratio as of
the last day of such fiscal year was less than 3.50 to 1.00, (ii) the amount of
any such dividend does not exceed 50% of Excess Cash Flow for such fiscal year
and (iii) after giving effect thereto no Default has occurred and is continuing
and (b) the Borrower may repurchase its outstanding common stock up to an
aggregate amount that, when added to the aggregate amount of Subordinated Notes
repurchased or redeemed pursuant to clause (i) of Section 8.10, does not exceed
$50,000,000; provided that after giving effect to each such repurchase (i) no
Default has occurred and is continuing and (ii) not more than 25 percent of the
book value of the assets of the Borrower and its Subsidiaries on a consolidated
basis is represented by margin stock (as defined in Regulation U of the Board).
SECTION 8.07 Limitation on Capital Expenditures. The Borrower will
not, and will not permit any Subsidiary to, make or commit to make any Capital
Expenditures (excluding any expenses incurred in connection with the Fleet
Financing Program) in any fiscal year in an amount that exceeds $75,000,000.
SECTION 8.08 Limitation on Investments, Loans and Advances. The
Borrower will not, and will not permit any Subsidiary to, make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of, or any assets constituting a
business unit of, or make any other investment, in cash or by transfer of assets
or property, in (each an "Investment"), any Person, except:
(a) Permitted Investments;
(b) Investments existing on the Closing Date and described in
Schedule 8.08(b), setting forth the respective amounts of such Investments as of
a recent date;
(c) loans and advances to officers, directors or employees in the
ordinary course of business for travel and entertainment expenses;
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(d) Investments (i) by Credit Parties in other Credit Parties and
(ii) by Foreign Subsidiaries in other Foreign Subsidiaries;
(e) the intercompany Indebtedness permitted by Section 8.02(c);
(f) Investments in nominal amounts by Acquiror Sub in Specified
Financing Subsidiaries;
(g) Investments by the Borrower or any Subsidiary in a
Securitization Entity or any Investment by a Securitization Entity in any other
Person, in each case, in connection with a Qualified Securitization Transaction;
provided, however, that any Investment in any such Person is in the form of a
Purchase Money Note, or any equity interest or interests in Permitted Vehicle
Collateral generated by the Borrower or a Subsidiary and transferred to any
Person in connection with a Qualified Securitization Transaction;
(h) Investments of the Credit Parties under Permitted Hedging
Arrangements;
(i) Investments in the nature of pledges or deposits with respect to
leases or utilities provided to third parties in the ordinary course of
business;
(j) Investments representing evidences of Indebtedness, securities
or other property received from another Person in connection with any bankruptcy
proceeding or other reorganization of such other Person or as a result of
foreclosure, perfection or enforcement of any Lien or exchange for evidences of
Indebtedness, securities or other property of such other Person held by a Credit
Party;
(k) Investments by the Borrower for acquisitions in connection with
its Line of Business in an amount not to exceed (excluding the value of any
Capital Stock of the Borrower issued in connection with such Investment)
$100,000,000; provided that after giving effect to any such acquisition (i) no
Default would occur and be continuing, (ii) EBITDA for the twelve months
preceding the effective date of such acquisition (on a pro forma basis taking
into account the effects of the proposed acquisition) would be greater than
zero, (iii) the Borrower would be in pro forma compliance with the financial
covenants set forth in Section 8.01 for the four quarters preceding the
effective date of the acquisition and (iv) the amount of Indebtedness assumed in
such acquisition (other than Indebtedness that finances the acquiree's fleet of
vehicles) when added to the aggregate Indebtedness assumed for all such
acquisitions and any acquisitions permitted by clause (l) below would not exceed
$10,000,000;
(l) Investments by the Borrower not otherwise permitted by clause
(k) above, for the purpose of acquiring additional franchises, paid for solely
in common stock of the Borrower; provided, that after giving effect to any such
acquisition (i) no Default would occur and be continuing, (ii) EBITDA for the
twelve months preceding the effective date of such acquisition (on a pro forma
basis taking into
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account the effects of the proposed acquisition) would be greater than zero,
(iii) the Borrower would be in pro forma compliance with the financial covenants
set forth in Section 8.01 for the four quarters preceding the effective date of
the acquisition and (iv) the amount of Indebtedness assumed in such acquisition
(other than Indebtedness that finances the acquiree's fleet of vehicles) when
added to the aggregate Indebtedness assumed for all such acquisitions (including
any such acquisition permitted pursuant to Section 8.08(k)) would not exceed
$10,000,000; and
(m) Investments by the Borrower constituting repurchases of shares
of its common stock permitted by Section 8.06.
SECTION 8.09 Limitation on Sale and Leaseback Transactions. The
Borrower will not, and will not permit any Subsidiary to, enter into any
arrangement with any Person providing for the leasing by the Borrower or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Borrower or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of such Credit Party (any of
such arrangements, a "Sale and Leaseback Transaction") other than in connection
with the issuance of Permitted Vehicle Indebtedness.
SECTION 8.10 Limitation on Payments and Modifications of Debt
Instruments and Other Documents. The Borrower will not, and will not permit any
Subsidiary to, (i) make any optional payment or prepayment on or repurchase or
redemption of any part of the Subordinated Notes, or any interest therein, or
make any payment in respect of the Subordinated Notes not permitted to be made
by the subordination provisions thereof, including, without limitation, any
payments on account of, or for a sinking or other analogous fund for, the
repurchase, redemption, defeasance or other acquisition thereof; provided that,
so long as no Default has occurred and is continuing, the Borrower may
repurchase or redeem the Subordinated Notes up to an aggregate amount that, when
added to the aggregate amount of common stock of the Borrower repurchased
pursuant to clause (b) of Section 8.06, does not exceed $50,000,000 or (ii) make
any optional payment or prepayment on or optional repurchase or redemption of
any part thereof of any other Indebtedness (other than the Loans or Designated
Financing Debt) or any portion of the deferred royalty fee under the Master
License Agreement, or any interest thereon, including, without limitation, any
payments on account of, or for a sinking or other analogous fund for, the
repurchase, redemption, defeasance or other acquisition thereof or (iii) amend,
modify or change, or consent or agree to any amendment, modification or change
to any terms relating to (a) the Subordinated Notes or (b) the payment or
prepayment of any such other Indebtedness (other than Designated Financing Debt)
or deferred amounts or interest thereon (other than any such amendment,
modification or change that would extend the maturity or reduce the amount of
any such Indebtedness, deferred amounts or interest thereon) or (iv) designate
any Indebtedness (other than obligations of the Credit Parties pursuant to the
Credit Documents) as "Designated Senior Indebtedness" for the purposes of the
Subordinated Note Indenture.
SECTION 8.11 Limitation on Changes to Franchise Agreements or
Transaction Documents. The Borrower will not, and will not permit any Subsidiary
to, amend, supplement, waive
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or otherwise modify any of the provisions of the Franchise Agreements, the High
Yield Offering Documents or any instrument or agreement executed and delivered
in connection with the Acquisition and the Merger.
SECTION 8.12 Limitation on Changes in Fiscal Year. The Borrower will
not permit its fiscal year to end on a day other than December 31.
SECTION 8.13 Limitation on Lines of Business. The Borrower will not,
and will not permit any Subsidiary to, enter into any business, either directly
or through any Subsidiary or joint venture, except for those businesses of the
same general type as those in which the Borrower and its Subsidiaries, giving
effect to the Acquisition (including to the acquisition of WEX Financial as if
consummated), are engaged on the Closing Date or which are directly related
thereto (the "Line of Business").
SECTION 8.14 Limitations on Currency and Commodity Hedging
Transactions. The Borrower will not, and will not permit any Subsidiary to,
enter into, purchase or otherwise acquire agreements or arrangements relating to
currency, commodity or other hedging except, to the extent and only to the
extent that, such agreements or arrangements are entered into, purchased or
otherwise acquired in the ordinary course of business (including in connection
with the incurrence of Permitted Vehicle Indebtedness) with reputable financial
institutions and not for purposes of speculation (any such agreement or
arrangement permitted by this Section, a "Permitted Hedging Arrangement").
SECTION 8.15 Restrictive Agreements. The Borrower will not, and will
not permit any of its Domestic Subsidiaries (other than an Excluded Subsidiary)
to, directly or indirectly, enter into, incur or permit to exist any agreement
or other arrangement that prohibits, restricts or imposes any condition upon (a)
the ability of the Borrower or any such Subsidiary to create, incur or permit to
exist any Lien upon any of its property or assets, or (b) the ability of any
such Subsidiary to pay dividends or other distributions with respect to any
shares of its capital stock or to make or repay loans or advances to the
Borrower or any other Subsidiary or to guarantee Indebtedness of the Borrower or
any other Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date
hereof identified on Schedule 8.15 (but shall apply to any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (v) clause (a) of the foregoing shall not
apply to customary provisions in leases and other contracts restricting the
assignment thereof.
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85
SECTION 8.16 Limitation on Transactions with Affiliates. The
Borrower will not, and will not permit any Subsidiary to, enter into any
transaction (other than the Cendant Agreements), including, without limitation,
any purchase, sale, lease or exchange of property or the rendering of any
service, with any Affiliate (other than a Subsidiary) unless such transaction is
(a) otherwise permitted under this Agreement, and (b) upon terms no less
favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate.
SECTION 8.17 Limitation on Activities of Certain Subsidiaries. The
Borrower will not permit, and will cause each Subsidiary not to permit, each
direct or indirect Domestic Subsidiary which is not a Guarantor Subsidiary
(other than an Excluded Subsidiary) to acquire any additional assets or to
conduct any additional business, either directly or indirectly, unless prior to
owning such assets or conducting such business such Domestic Subsidiary executes
and delivers to the Administrative Agent those documents set forth in Section
7.10(b).
ARTICLE IX.
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of five
Business Days;
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any Subsidiary in or in connection with the Credit
Documents or any amendment or modification thereof, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with this Agreement or any amendment or modification hereof, shall
prove to have been incorrect in any material respect when made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 7.02, 7.03 (with respect to the
Borrower's existence) or 7.09 or in Article VIII;
(e) the Borrower or any other Credit Party, shall fail to observe or
perform any covenant, condition or agreement contained in this Agreement or the
Security Documents (other than
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those specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent (given at the request of any Lender) to the Borrower;
(f) the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness (including but not limited to Designated Financing Debt or
in connection with the Transactions), when and as the same shall become due and
payable;
(g) any event or condition occurs that results in any Material
Indebtedness (including but not limited to Designated Financing Debt or in
connection with the Transactions) becoming due prior to its scheduled maturity
or that enables or permits (with or without the giving of notice, the lapse of
time or both) the holder or holders of any Material Indebtedness or any trustee
or agent on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity; provided that this clause (g) shall not apply
to secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Significant Subsidiary or a group of
Subsidiaries that taken together (as of the latest audited consolidated
financial statements of the Borrower) would constitute a Significant Subsidiary
or its debts, or of a substantial part of its assets, under any Federal, state
or foreign bankruptcy, insolvency, receivership or similar law now or hereafter
in effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any such
Significant Subsidiary or group of Subsidiaries or for a substantial part of its
assets, and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;
(i) the Borrower or any Significant Subsidiary or a group of
Subsidiaries that taken together (as of the latest audited consolidated
financial statements of the Borrower) would constitute a Significant Subsidiary
shall (i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this
Article, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower or any
such Significant Subsidiary or group of Subsidiaries or for a substantial part
of its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
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(j) the Borrower or any Significant Subsidiary or group of
Subsidiaries that taken together (as of the latest audited consolidated
financial statements of the Borrower) would constitute a Significant Subsidiary
shall become unable, admit in writing or fail generally to pay its debts as they
become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000 shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain undischarged for
a period of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of the Borrower or any Subsidiary to enforce any such
judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Majority Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower
and its Subsidiaries in an aggregate amount exceeding (i) $2,000,000 in any year
or (ii) $5,000,000 for all periods;
(m) (i) any of the Security Documents shall cease for any reason to
be in full force and effect (other than pursuant to the terms hereof or
thereof), or any Credit Party which is a party to any of the Security Documents
shall so assert in writing, or (ii) the Lien created by any of the Security
Documents shall cease to be perfected and enforceable in accordance with its
terms or of the same effect as to perfection and priority purported to be
created thereby with respect to any significant portion of the Collateral (other
than in connection with any termination of such Lien in respect of any
Collateral as permitted hereby or by any Security Document), and such failure of
such Lien to be perfected and enforceable with such priority shall have
continued unremedied for a period of 20 days;
(n) any guarantee by a Guarantor under the Guarantee and Collateral
Agreement shall cease for any reason to be in full force and effect (other than
pursuant to the terms hereof or thereof) or any Guarantor shall so assert in
writing;
(o) any event or condition occurs that enables or permits any party
to any of the Franchise Agreements (other than the Borrower or any Subsidiary),
with or without the giving of notice, the lapse of time or both, to terminate
such Franchise Agreement;
(p) a Change in Control shall occur; or
(q) the Subordinated Notes or the guarantees thereof shall cease,
for any reason, to be validly subordinated to the Obligations or the obligations
of the Guarantor Subsidiaries under the Guarantee and Collateral Agreement, as
the case may be, as provided in the Subordinated Note Indenture, or any Credit
Party shall so assert;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative
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Agent may, and at the request of the Majority Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or different
times: (i) terminate the Commitments, and thereupon the Commitments shall
terminate immediately, and (ii) declare the Loans then outstanding to be due and
payable in whole (or in part, in which case any principal not so declared to be
due and payable may thereafter be declared to be due and payable), and thereupon
the principal of the Loans so declared to be due and payable, together with
accrued interest thereon and all fees and other obligations of the Borrower
accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; and in case of any event with respect to the
Borrower described in clause (h) or (i) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
With respect to any Letter of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by, and under the exclusive dominion and
control of, the Administrative Agent an amount equal to the aggregate then
undrawn and unexpired amount of such Letter of Credit. The Borrower hereby
grants to the Administrative Agent, for the benefit of the applicable Issuing
Bank and the applicable L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrower in respect of such Letter
of Credit under this Agreement and the other Credit Documents. The Borrower
shall execute and deliver to the Administrative Agent, for the account of the
Issuing Banks and the L/C Participants, such further documents and instruments
as the Administrative Agent may request to evidence the creation and perfection
of such security interest in such cash collateral account. Amounts held in such
cash collateral account shall be applied by the Administrative Agent to the
payment of drafts drawn under such Letter of Credit, and the unused portion
thereof after all such Letters of Credit shall have expired or been fully drawn
upon, if any, shall be applied to repay other obligations of the Borrower
hereunder and under any notes. When there is no CE LC Exposure and/or WC LC
Exposure remaining and all obligations of the Borrower hereunder and under any
notes shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrower.
ARTICLE X.
The Administrative Agent
Each of the Lenders and each Issuing Bank hereby irrevocably
appoints the Administrative Agent as its agent and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof, together with such
actions and powers as are reasonably incidental thereto.
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The bank serving as the Administrative Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Administrative Agent, and such
bank and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein, and any financial institution which
appears with the title "Managing Agent" shall, in its capacity as such, have no
duties or liabilities hereunder. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Majority Lenders, and (c) except as
expressly set forth herein, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrower or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates in
any capacity. The Administrative Agent shall not be liable for any action taken
or not taken by it with the consent or at the request of the Majority Lenders or
in the absence of its own gross negligence or wilful misconduct. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower, any other Credit Party or a Lender, and the Administrative Agent shall
not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article VI or elsewhere herein, other
than to confirm the receipt and satisfaction of those items expressly required
to be delivered to the Administrative Agent on terms satisfactory to it.
The Administrative Agent shall be entitled to rely upon, and shall
not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person. The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. The Administrative Agent may consult with legal
counsel (who may be counsel for the Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.
The Administrative Agent may perform any and all of its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights
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and powers through their respective Related Parties. The exculpatory provisions
of the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Banks and the Borrower.
Upon any such resignation, the Majority Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Majority Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
In connection with the sale or other disposition of all of the
Capital Stock of any Guarantor or the sale or other disposition of Collateral
(as defined in the Guarantee and Collateral Agreement) permitted under Section
8.05, the Administrative Agent shall, and is hereby authorized by the Lenders
to, promptly, upon the request of the Borrower and at the sole expense of the
Borrower, take all actions reasonably necessary to release such Guarantor from
its guarantee contained in the Guarantee and Collateral Agreement or to release
the Collateral subject to such sale or other disposition, as the case may be,
and shall take any other actions reasonably requested by the Borrower to effect
the transactions permitted under Section 8.05.
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ARTICLE XI.
Miscellaneous
SECTION 11.01 Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at Old Country Road, Garden City, New
York 11530, Attention of Treasurer, with a copy to the General Counsel,
(Telecopy No. 516-222- 3751);
(b) if to the Administrative Agent, to The Chase Manhattan Bank,
Agent Bank Services, 1 Chase Manhattan Plaza, 8th Floor, New York, New York
10081, Attention of Margaret Swales (Telecopy No. 212-552-5662), with a copy to
The Chase Manhattan Bank, 270 Park Avenue, New York 10017, Attention of Stewart
Wallace (Telecopy No. 212-270-0002);
(c) if to the WC Issuing Bank, to it at PNC Bank, National
Association, 345 Park Avenue, New York, New York 10017, Attention of Donald
Davis (Telecopy No. 212-409-3737);
(d) if to the CE Issuing Bank, to it at Bayerische Hypo- und
Vereinsbank AG, 150 E. 42nd Street, 31st Floor, New York, New York 10017,
Attention of Marianne Weinzinger (Telecopy No. 212-672-5530); and
(e) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 11.02 Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Issuing Bank and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by any Credit Party therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality
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of the foregoing, the making of a Loan or issuance of a Letter of Credit shall
not be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or an Issuing Bank may have had notice or
knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Majority Lenders (or in the case of the
Revolving Credit Provisions, the Majority Revolving Credit Lenders) or by the
Borrower and the Administrative Agent with the consent of the Majority Lenders
(or in the case of the Revolving Credit Provisions, the Majority Revolving
Credit Lenders); provided that no such agreement shall (i) increase the
Commitment of any Lender without the written consent of such Lender, (ii) reduce
the principal amount of any Loan or LC Disbursement or reduce the rate of
interest thereon, or reduce any fees payable hereunder, without the written
consent of each Lender affected thereby, (iii) postpone the scheduled date of
payment of the principal amount of any Loan or LC Disbursement, or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby, (iv)
change Section 4.07(b) or (c) in a manner that would alter the pro rata sharing
of payments required thereby, without the written consent of each Lender, (v)
release, or subordinate the interest of the Administrative Agent in, all or
substantially all of the collateral for the obligations hereunder or release all
or substantially all of the Guarantors from their guarantees hereof without the
written consent of each Lender, or (vi) change any of the provisions of this
Section or the definition of "Majority Lenders" or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent or an Issuing Bank hereunder without the prior written
consent of the Administrative Agent or such Issuing Bank, as the case may be.
SECTION 11.03 Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation
and administration of this Agreement or any amendments, modifications or waivers
of the provisions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all out-of-pocket expenses incurred by an
Issuing Bank in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Administrative Agent, an Issuing Bank or
any Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agent, an Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement,
including its rights under this Section, or in connection with the Loans made or
Letters of Credit issued hereunder, including in connection with any workout,
restructuring or negotiations in respect thereof.
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(b) The Borrower shall indemnify the Administrative Agent, each
Issuing Bank and each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any Loan
or Letter of Credit or the use of the proceeds therefrom (including any refusal
by the Issuing Bank to honor a demand for payment under a Letter of Credit if
the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), (iii) any actual or alleged presence
or release of Hazardous Materials on or from any property owned or operated by
the Borrower or any of its Subsidiaries, or any Environmental Liability related
in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are deter mined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent or to an Issuing Bank under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent, or such Issuing Bank, as the case may be, such Lender's
Voting Percentage (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent or the Issuing Bank in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall
not assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement or any agreement or instrument contemplated hereby,
the Transactions, any Loan or Letter of Credit or the use of the proceeds
thereof.
(e) All amounts due under this Section shall be payable not later
than 10 Business Days after written demand therefor.
SECTION 11.04 Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this
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Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the Issuing Bank and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.
(b) Any Lender may assign to one or more assignees all or a portion
of any of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided that
(i) except in the case of an assignment to a Lender or an Affiliate or Approved
Fund of a Lender, each of the Borrower and the Administrative Agent (and, in the
case of an assignment of all or a portion of a Commitment or any Lender's
obligations in respect of its CE LC Exposure and/or WC LC Exposure, the relevant
Issuing Bank) must give their prior written consent to such assignment (which
consent shall not be unreasonably withheld or delayed), (ii) except in the case
of an assignment to a Lender or an Affiliate or Approved Fund of a Lender or an
assignment of the entire remaining amount of a particular Commitment of an
assigning Lender, the amount of a particular Commitment of an assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 unless each of the Borrower and the
Administrative Agent otherwise consent, (iii) the parties to each assignment
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of $3,500, and (iv)
the assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire; provided further that any consent of the
Borrower otherwise required under this paragraph shall not be required if an
Event of Default under clause (a), (b), (h) or (i) of Article IX has occurred
and is continuing. Upon acceptance and recording pursuant to paragraph (d) of
this Section, from and after the effective date specified in each Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 4.04,
4.05, 4.06 and 11.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (e) of
this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent,
each Issuing Bank and the Lenders may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary.
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(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, or any Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitments and the Loans owing to it); provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent, each Issuing
Bank and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the first proviso to
Section 11.02(b) that affects such Participant. Subject to paragraph (f) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 4.04, 4.05 and 4.06 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section.
(f) A Participant shall not be entitled to receive any greater
payment under Section 4.04 or 4.06 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 4.06 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
4.06(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any such pledge or assignment to a Federal Reserve
Bank, and this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such assignee for such Lender as a party hereto.
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SECTION 11.05 Survival. All covenants, agreements, representations
and warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 4.04, 4.05, 4.06 and 11.03 and Article
X shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
SECTION 11.06 Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 6.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 11.07 Severability. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 11.08 Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be
<PAGE>
97
unmatured. The rights of each Lender under this Section are in addition to other
rights and remedies (including other rights of setoff) which such Lender may
have.
SECTION 11.09 Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Administrative Agent, the Issuing Banks or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
against the Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred to
in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 11.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 11.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN
<PAGE>
98
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
SECTION 11.11 Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 11.12 Confidentiality. Each of the Administrative Agent, the
Issuing Banks and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority or rating
agency, (c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) to any other party to this Agreement, (e)
in connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, the Issuing
Bank or any Lender on a nonconfidential basis from a source other than the
Borrower. For the purposes of this Section, "Information" means all information
received from the Borrower relating to the Borrower or its business, other than
any such information that is available to the Administrative Agent, the Issuing
Bank or any Lender on a nonconfidential basis prior to disclosure by the
Borrower; provided that, in the case of information received from the Borrower
after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
<PAGE>
99
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
AVIS RENT A CAR, INC.
By: _____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent,
By: _____________________________________
Name:
Title:
<PAGE>
COMMERCIAL LOAN FUNDING
TRUST I
By: Lehman Commercial Paper Inc.,
not in its individual capacity, but
solely as Administrative Agent
By: _____________________________________
Name:
Title:
<PAGE>
SYNDICATED LOAN FUNDING TRUST
By: Lehman Commercial Paper Inc.,
not in its individual capacity, but
solely as Asset Manager
By: _____________________________________
Name:
Title:
<PAGE>
TYLER TRADING, INC.
By: _____________________________________
Name:
Title:
<PAGE>
INDUSTRIAL BANK OF JAPAN,
LIMITED
By: _____________________________________
Name:
Title:
<PAGE>
BAYERISCHE HYPO- UND
VEREINSBANK AG, NEW YORK
BRANCH
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title:
<PAGE>
THE FIRST NATIONAL BANK OF
CHICAGO
By: _____________________________________
Name:
Title:
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By: _____________________________________
Name:
Title:
<PAGE>
FIRST UNION NATIONAL BANK
By: _____________________________________
Name:
Title:
<PAGE>
THE SUMITOMO BANK, LIMITED
By: _____________________________________
Name:
Title:
<PAGE>
CIBC INC.
By: CIBC World Markets Corp., as Agent
By: _____________________________________
Name:
Title:
<PAGE>
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By: _____________________________________
Name:
Title:
<PAGE>
DAI ICHI KANGYO BANK LTD.
By: _____________________________________
Name:
Title:
<PAGE>
CREDIT LYONNAIS NEW YORK
BRANCH
By: _____________________________________
Name:
Title:
<PAGE>
DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title:
<PAGE>
FLEET BANK, N.A.
By: _____________________________________
Name:
Title:
<PAGE>
PARIBAS
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title:
<PAGE>
THE BANK OF NEW YORK
By: _____________________________________
Name:
Title:
<PAGE>
THE FUJI BANK, LIMITED
NEW YORK BRANCH
By: _____________________________________
Name:
Title:
<PAGE>
BHF (USA) CAPITAL CORPORATION
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title:
<PAGE>
BANQUE NATIONALE DE PARIS
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title:
<PAGE>
THE MITSUBISHI TRUST & BANKING
CORPORATION
By: _____________________________________
Name:
Title:
<PAGE>
BANK OF HAWAII
By: _____________________________________
Name:
Title:
<PAGE>
THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By: _____________________________________
Name:
Title:
<PAGE>
THE PROVIDENT BANK OF
MARYLAND
By: _____________________________________
Name:
Title:
<PAGE>
NATIONAL CITY BANK
By: _____________________________________
Name:
Title:
<PAGE>
WESTPAC BANKING CORPORATION
By: _____________________________________
Name:
Title:
<PAGE>
VAN KAMPEN AMERICA CAPITAL
PRIME RATE INCOME TRUST
By: _____________________________________
Name:
Title:
<PAGE>
SENIOR FLOATING RATE FUND
By: _____________________________________
Name:
Title:
<PAGE>
DEBT STRATEGIES FUND III, INC.
By: _____________________________________
Name:
Title:
<PAGE>
DEBT STATEGIES FUND II, INC.
By: _____________________________________
Name:
Title:
<PAGE>
MERRILL LYNCH SENIOR FLOATING
RATE FUND II, INC.
By: _____________________________________
Name:
Title:
<PAGE>
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By: _____________________________________
Name:
Title:
<PAGE>
EATON VANCE SENIOR INCOME
TRUST
By: EATON VANCE MANAGEMENT
AS INVESTMENT ADVISOR
By: _____________________________________
Name:
Title:
<PAGE>
SENIOR DEBT PORTFOLIO
By: Boston Management and Research
as Investment Advisor
By: _____________________________________
Name:
Title:
<PAGE>
MORGAN STANLEY SENIOR FUNDING
By: _____________________________________
Name:
Title:
<PAGE>
OSPREY INVESTMENTS PORTFOLIO
By: Citibank, N.A., as Manager
By: _____________________________________
Name:
Title:
<PAGE>
PILGRIM PRIME RATE TRUST
By: Pilgrim Investments, Inc.
as its investment manager
By: _____________________________________
Name:
Title:
<PAGE>
METROPOLITAN LIFE INSURANCE
COMPANY
By: _____________________________________
Name:
Title:
<PAGE>
FLOATING RATE PORTFOLIO
By: INVESCO Senior Secured Management,
Inc. as attorney in fact
By: _____________________________________
Name:
Title:
<PAGE>
BAIN CAPITAL INC.
By: _____________________________________
Name:
Title:
<PAGE>
STANFIELD CAPITAL
By: _____________________________________
Name:
Title:
<PAGE>
ING HIGH INCOME PRINCIPAL
PRESERVATION FUND HOLDINGS,
LDC
By: ING Capital Advisors LLC,
as Investor
By: _____________________________________
Name:
Title:
<PAGE>
ARCHIMEDES FUNDING II, LTD.
By: ING Capital Advisors LLC,
as Collateral Manager
By: _____________________________________
Name:
Title:
<PAGE>
KZH ING-2 LLC
By: _____________________________________
Name:
Title:
<PAGE>
HIGHLAND CAPITAL MANAGEMENT
By: _____________________________________
Name:
Title:
<PAGE>
KZH WATERSIDE LLC
By: _____________________________________
Name:
Title:
<PAGE>
KZH SOLEIL-2 LLC
By: _____________________________________
Name:
Title:
<PAGE>
KZH CYPRESSTREE-1 LLC
By: _____________________________________
Name:
Title:
<PAGE>
KZH RIVERSIDE LLC
By: _____________________________________
Name:
Title:
<PAGE>
OLYMPIC FUNDING TRUST
By: _____________________________________
Name:
Title:
<PAGE>
KEMPER FLOATING RATE FUND
By: _____________________________________
Name:
Title:
<PAGE>
STEIN ROE FLOATING RATE LIMITED
LIABILITY COMPANY
By: _____________________________________
Name:
Title:
<PAGE>
STEIN ROE & FARNHAM
INCORPORATED, as agent for Keyport
Life Insurance Company
By: _____________________________________
Name:
Title:
<PAGE>
ALLIANCE CAPITAL MANAGEMENT
By: _____________________________________
Name:
Title:
<PAGE>
FRANKLIN ADVISORS INC.
FLOATING RATE MANAGEMENT
By: _____________________________________
Name:
Title:
<PAGE>
BALANCED HIGH YIELD FUND 1 LTD.
By: BHF (USA) CAPITAL
CORPORATION,
acting as Attorney-in-Fact
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title:
<PAGE>
BALANCED HIGH YIELD FUND 2
By: BHF (USA) CAPITAL
CORPORATION,
acting as Attorney-in-Fact
By: _____________________________________
Name:
Title:
<PAGE>
TORONTO DOMINION (NEW YORK, INC.)
By: _____________________________________
Name:
Title:
<PAGE>
FRANKLIN FLOATING RATE TRUST
By: _____________________________________
Name:
Title:
<PAGE>
BANKBOSTON, N.A. as Trust
Administrator for LONGLANE MASTER
TRUST IV
By: _____________________________________
Name:
Title:
<PAGE>
THE PROVIDENT BANK
By: _____________________________________
Name:
Title:
<PAGE>
GALAXY CLO 1999-1
By: SAI INVESTMENT ADVISER, INC.
its Collateral Manager
By: _____________________________________
Name:
Title:
<PAGE>
Exhibit 4.33
EXECUTION COPY
================================================================================
GUARANTEE AND COLLATERAL AGREEMENT
made by
AVIS RENT A CAR, INC.
and certain of its Subsidiaries
in favor of
THE CHASE MANHATTAN BANK,
as Administrative Agent
Dated as of June 30, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1 DEFINED TERMS
......................................................................1
1.1 Definitions.......................................................1
1.2 Other Definitional Provisions.....................................5
SECTION 2. GUARANTEE........................................................6
2.1 Guarantee.........................................................6
2.2 Right of Contribution.............................................6
2.3 No Subrogation....................................................7
2.4 Amendments, etc. with respect to the Borrower Obligations.........7
2.5 Guarantee Absolute and Unconditional..............................8
2.6 Reinstatement.....................................................8
2.7 Payments..........................................................9
SECTION 3. GRANT OF SECURITY INTEREST.......................................9
SECTION 4. REPRESENTATIONS AND WARRANTIES..................................10
4.1 Title; No Other Liens............................................10
4.2 Perfected First Priority Liens...................................10
4.3 Chief Executive Office...........................................10
4.4 Farm Products....................................................10
4.5 Investment Property..............................................10
4.6 Receivables......................................................11
4.7 Contracts........................................................11
4.8 Intellectual Property............................................12
SECTION 5. COVENANTS.......................................................12
5.1 Delivery of Instruments and Certificated Securities..............12
5.2 Payment of Obligations...........................................12
5.3 Maintenance of Perfected Security Interest; Further
Documentation..................................................13
5.4 Changes in Locations, Name, etc..................................13
5.5 Notices..........................................................14
5.6 Investment Property..............................................14
5.7 Receivables......................................................15
5.8 Contracts........................................................15
5.9 Intellectual Property............................................15
SECTION 6. REMEDIAL PROVISIONS.............................................17
i
<PAGE>
Page
----
6.1 Certain Matters Relating to Receivables..........................17
6.2 Communications with Obligors; Grantors Remain Liable.............18
6.3 Pledged Stock....................................................18
6.4 Proceeds to be Turned Over To Administrative Agent...............19
6.5 Application of Proceeds..........................................19
6.6 Code and Other Remedies..........................................20
6.7 Registration Rights..............................................21
6.8 Waiver; Deficiency...............................................22
SECTION 7. THE ADMINISTRATIVE AGENT........................................22
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc......22
7.2 Duty of Administrative Agent.....................................23
7.3 Execution of Financing Statements................................24
7.4 Authority of Administrative Agent................................24
SECTION 8. MISCELLANEOUS...................................................24
8.1 Amendments in Writing............................................24
8.2 Notices..........................................................25
8.3 No Waiver by Course of Conduct; Cumulative Remedies..............25
8.4 Enforcement Expenses; Indemnification............................25
8.5 Successors and Assigns...........................................25
8.6 Set-Off..........................................................26
8.7 Counterparts.....................................................26
8.8 Severability.....................................................26
8.9 Section Headings.................................................26
8.10 Integration.....................................................26
8.11 GOVERNING LAW...................................................26
8.12 Submission To Jurisdiction; Waivers.............................27
8.13 Acknowledgements................................................27
8.14 Additional Grantors.............................................27
8.15 Releases........................................................28
8.16 WAIVER OF JURY TRIAL............................................28
SCHEDULES
Schedule 1 Notice Addresses of Guarantors
Schedule 2 Description of Investment Property
Schedule 3 Filings Required to Perfect Security Interests
Schedule 4 Jurisdiction of Organization and Chief Executive Office
Schedule 5 Intellectual Property
ii
<PAGE>
Page
----
Schedule 6 Contracts
iii
<PAGE>
GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of June 30, 1999, made
by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "Grantors"), in favor of THE CHASE
MANHATTAN BANK, as Administrative Agent (in such capacity, the "Administrative
Agent") for the banks and other financial institutions (the "Lenders") from time
to time parties to the Credit Agreement, dated as of June 30, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Avis Rent A Car, Inc. (the "Borrower"), the Lenders and the Administrative
Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the terms and
subject to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of
companies that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrower to make valuable transfers
to one or more of the other Grantors in connection with the operation of their
respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrower under the
Credit Agreement that the Grantors shall have executed and delivered this
Agreement to the Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
SECTION 1 DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms are used herein as defined in the
New York UCC: Accounts, Certificated Security, Chattel Paper, Documents, Farm
Products and Instruments.
<PAGE>
2
(b) The following terms shall have the following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.
"Borrower Obligations": the collective reference to the unpaid
principal of and interest on the Loans and LC Disbursements and all other
obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of the Loans and LC Disbursements and
interest accruing at the then applicable rate provided in the Credit
Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) to the
Administrative Agent or any Lender (or, in the case of any Lender Hedge
Agreement, any Affiliate of any Lender), whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the Credit
Agreement, this Agreement, the other Credit Documents, any Letter of
Credit, any Lender Hedge Agreement or any other document made, delivered
or given in connection with any of the foregoing, in each case whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Administrative Agent or to
the Lenders that are required to be paid by the Borrower pursuant to the
terms of any of the foregoing agreements).
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.
"Contracts": the contracts and agreements listed in Schedule 6, as
the same may be amended, supplemented or otherwise modified from time to
time, including, without limitation, (i) all rights of any Grantor to
receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of any Grantor to damages arising thereunder
and (iii) all rights of any Grantor to perform and to exercise all
remedies thereunder.
"Copyrights": (i) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished
(including, without limitation, those listed in Schedule 5), all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings
and applications in the United States Copyright Office, and (ii) the right
to obtain all renewals thereof.
<PAGE>
3
"Copyright Licenses": any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in
Schedule 5), granting any right under any Copyright, including, without
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"Deposit Account": as defined in the Uniform Commercial Code of any
applicable jurisdiction and, in any event, including, without limitation,
any demand, time, savings, passbook or like account maintained with a
depositary institution.
"Foreign Subsidiary": any Subsidiary organized under the laws of any
jurisdiction outside the United States of America.
"Foreign Subsidiary Voting Stock": the voting Capital Stock of any
Foreign Subsidiary.
"General Intangibles": all "general intangibles" as such term is
defined in Section 9-106 of the New York UCC and, in any event, including,
without limitation, with respect to any Grantor, all contracts,
agreements, instruments and indentures in any form, and portions thereof,
to which such Grantor is a party or under which such Grantor has any
right, title or interest or to which such Grantor or any property of such
Grantor is subject, as the same may from time to time be amended,
supplemented or otherwise modified, including, without limitation, (i) all
rights of such Grantor to receive moneys due and to become due to it
thereunder or in connection therewith, (ii) all rights of such Grantor to
damages arising thereunder and (iii) all rights of such Grantor to perform
and to exercise all remedies thereunder, in each case to the extent the
grant by such Grantor of a security interest pursuant to this Agreement in
its right, title and interest in such contract, agreement, instrument or
indenture is not prohibited by such contract, agreement, instrument or
indenture without the consent of any other party thereto, would not give
any other party to such contract, agreement, instrument or indenture the
right to terminate its obligations thereunder, or is permitted with
consent if all necessary consents to such grant of a security interest
have been obtained from the other parties thereto (it being understood
that the foregoing shall not be deemed to obligate such Grantor to obtain
such consents); provided, that the foregoing limitation shall not affect,
limit, restrict or impair the grant by such Grantor of a security interest
pursuant to this Agreement in any Receivable or any money or other amounts
due or to become due under any such contract, agreement, instrument or
indenture.
"Guarantor Obligations": with respect to any Guarantor, all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement (including, without limitation, Section 2)
or any other Credit Document to which such Guarantor is a party or any
Lender Hedge Agreement to which such Guarantor is a party or which is
guaranteed by such Guarantor, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses
or otherwise (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent or to the Lenders that are required to
<PAGE>
4
be paid by such Guarantor pursuant to the terms of this Agreement or any
other Credit Document).
"Guarantors": the collective reference to each Grantor other than
the Borrower.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks and the Trademark Licenses,
and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and
damages therefrom.
"Intercompany Note": any promissory note evidencing loans made by
any Grantor to the Borrower or any of its Subsidiaries.
"Investment Property": the collective reference to (i) all
"investment property" as such term is defined in Section 9-115 of the New
York UCC (other than any Foreign Subsidiary Voting Stock excluded from the
definition of "Pledged Stock") and (ii) whether or not constituting
"investment property" as so defined, all Pledged Notes and all Pledged
Stock.
"Issuers": the collective reference to each issuer of any Investment
Property.
"Lender Hedge Agreements": any interest derivative, interest rate
protection agreement, foreign currency exchange agreement, commodity price
protection agreement or other interest or currency exchange rate or
commodity price hedging arrangement entered into by any Grantor with any
Lender (or any Affiliate of any Lender) or entered into by any Subsidiary
of any Grantor with any Lender (or any Affiliate of any Lender) and
guaranteed by a Grantor.
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"Patents": (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including, without
limitation, any of the foregoing referred to in Schedule 5, (ii) all
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing referred to in
Schedule 5, and (iii) all rights to obtain any reissues or extensions of
the foregoing.
<PAGE>
5
"Patent License": all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or
sell any invention covered in whole or in part by a Patent, including,
without limitation, any of the foregoing referred to in Schedule 5.
"Pledged Notes": all promissory notes listed on Schedule 2, all
Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor (other than promissory
notes issued in connection with extensions of trade credit by any Grantor
in the ordinary course of business).
"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
together with any other shares, stock certificates, options or rights of
any nature whatsoever in respect of the Capital Stock of any Person that
may be issued or granted to, or held by, any Grantor while this Agreement
is in effect; provided that in no event shall more than 65% of the total
outstanding Foreign Subsidiary Voting Stock of any Foreign Subsidiary be
required to be pledged hereunder.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the New York UCC and, in any event, shall include, without
limitation, all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and all
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications
in connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including, without
limitation, any of the foregoing referred to in Schedule 5 , and (ii) the
right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred to
in Schedule 5.
1.2 Other Definitional Provisions. (a) The words "hereof," "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a
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6
whole and not to any particular provision of this Agreement, and Section and
Schedule references are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Lenders and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Credit Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Credit Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws relating to
the insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the Administrative Agent or any Lender
hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the
Administrative Agent or any Lender from the Borrower, any of the Guarantors, any
other guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment
received
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7
or collected from such Guarantor in respect of the Borrower Obligations), remain
liable for the Borrower Obligations up to the maximum liability of such
Guarantor hereunder until the Borrower Obligations are paid in full, no Letter
of Credit shall be outstanding and the Commitments are terminated.
2.2 Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 2.3. The provisions of
this Section 2.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Administrative Agent and the Lenders, and each Guarantor
shall remain liable to the Administrative Agent and the Lenders for the full
amount guaranteed by such Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrower or any other Guarantor or any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender for
the payment of the Borrower Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Administrative Agent and the Lenders by the Borrower on
account of the Borrower Obligations are paid in full, no Letter of Credit shall
be outstanding and the Commitments are terminated. If any amount shall be paid
to any Guarantor on account of such subrogation rights at any time when all of
the Borrower Obligations shall not have been paid in full, such amount shall be
held by such Guarantor in trust for the Administrative Agent and the Lenders,
segregated from other funds of such Guarantor, and shall, forthwith upon receipt
by such Guarantor, be turned over to the Administrative Agent in the exact form
received by such Guarantor (duly indorsed by such Guarantor to the
Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender and any of the Borrower Obligations
continued, and the Borrower Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and the
Credit Agreement and the other Credit Documents and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Majority
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8
Lenders or all Lenders, as the case may be) may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by the Administrative Agent or any Lender for the payment of the Borrower
Obligations may be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Borrower Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by the Administrative
Agent or any Lender upon the guarantee contained in this Section 2 or acceptance
of the guarantee contained in this Section 2; the Borrower Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 2; and all dealings between the Borrower and
any of the Guarantors, on the one hand, and the Administrative Agent and the
Lenders, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon the guarantee contained in this Section 2.
Each Guarantor waives diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon the Borrower or any of the Guarantors
with respect to the Borrower Obligations. Each Guarantor understands and agrees
that the guarantee contained in this Section 2 shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity or enforceability of the Credit Agreement or any other Credit
Document, any of the Borrower Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Administrative Agent or any Lender, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the
Borrower or any other Person against the Administrative Agent or any Lender, or
(c) any other circumstance whatsoever (with or without notice to or knowledge of
the Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower for the Borrower
Obligations, or of such Guarantor under the guarantee contained in this Section
2, in bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, the
Administrative Agent or any Lender may, but shall be under no obligation to,
make a similar demand on or otherwise pursue such rights and remedies as it may
have against the Borrower, any other Guarantor or any other Person or against
any collateral security or guarantee for the Borrower Obligations or any right
of offset with respect thereto, and any failure by the Administrative Agent or
any Lender to make any such demand, to pursue such other rights or remedies or
to collect any payments from the Borrower, any other Guarantor or any other
Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Borrower, any other
Guarantor or any other Person or any such collateral security, guarantee or
right of offset, shall not relieve any Guarantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Administrative Agent or
any Lender against any Guarantor. For the purposes hereof "demand" shall include
the commencement and continuance of any legal proceedings.
<PAGE>
9
2.6 Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the office of the Administrative Agent located at 270
Park Avenue, New York, New York 10017.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Administrative
Agent, and hereby grants to the Administrative Agent, for the ratable benefit of
the Lenders, a security interest in, all of the following property now owned or
at any time hereafter acquired by such Grantor or in which such Grantor now has
or at any time in the future may acquire any right, title or interest other than
any Permitted Vehicle Collateral (collectively, the "Collateral"), as collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of such Grantor's
Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Deposit Accounts;
(e) all Documents;
(f) all General Intangibles;
(g) all Instruments;
(h) all Intellectual Property;
(i) all Investment Property;
(j) all books and records pertaining to the Collateral; and
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10
(k) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing;
provided that no security interest shall be granted in any Permitted Vehicle
Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective extensions
of credit to the Borrower thereunder, each Grantor hereby represents and
warrants to the Administrative Agent and each Lender that:
4.1 Title; No Other Liens. Except for the security interest granted
to the Administrative Agent for the ratable benefit of the Lenders pursuant to
this Agreement and the other Liens permitted to exist on the Collateral by the
Credit Agreement, such Grantor owns each item of the Collateral free and clear
of any and all Liens or claims of others. No financing statement or other public
notice with respect to all or any part of the Collateral is on file or of record
in any public office, except such as have been filed in favor of the
Administrative Agent, for the ratable benefit of the Lenders, pursuant to this
Agreement or as are permitted by the Credit Agreement.
4.2 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon completion of the filings specified on
Schedule 3 (which have been delivered to the Administrative Agent in completed
and duly executed form) will constitute valid perfected security interests in
all of the Collateral in favor of the Administrative Agent, for the ratable
benefit of the Lenders, as collateral security for such Grantor's Obligations,
enforceable in accordance with the terms hereof against all creditors of such
Grantor and any Persons purporting to purchase any Collateral from such Grantor,
except in each case as enforceability may be affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing, and (b) are prior to all other
Liens on the Collateral in existence on the date hereof except for unrecorded
Liens permitted by the Credit Agreement which have priority over the Liens on
the Collateral by operation of law.
4.3 Chief Executive Office. On the date hereof, such Grantor's
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on Schedule 4.
4.4 Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
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11
4.5 Investment Property. (a) The shares of Pledged Stock pledged by
such Grantor hereunder constitute all the issued and outstanding shares of all
classes of the Capital Stock of each Issuer owned by such Grantor or, in the
case of Foreign Subsidiary Voting Stock, if less, 65% of the outstanding Foreign
Subsidiary Voting Stock of each relevant Issuer.
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Investment Property pledged by it hereunder, free
of any and all Liens or options in favor of, or claims of, any other Person,
except the security interest created by this Agreement and Liens described in
clause (a) of the definition of "Permitted Encumbrances" in the Credit
Agreement.
4.6 Receivables. (a) No amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument (other than an
Instrument that constitutes Chattel Paper) which has not been delivered to the
Administrative Agent.
(b) The amounts represented by such Grantor to the Lenders from time
to time as owing to such Grantor in respect of the Receivables will at such
times be accurate.
4.7 Contracts. (a) No consent of any party (other than such Grantor)
to any Contract is required, or purports to be required, in connection with the
execution, delivery and performance of this Agreement.
(b) Each Contract is in full force and effect and constitutes a
valid and legally enforceable obligation of the parties thereto, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(c) No consent or authorization of, filing with or other act by or
in respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Contracts by any party thereto other than those which have been duly obtained,
made or performed, are in full force and effect and do not subject the scope of
any such Contract to any material adverse limitation, either specific or general
in nature.
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12
(d) Neither such Grantor nor (to the best of such Grantor's
knowledge) any of the other parties to the Contracts is in default in the
performance or observance of any of the terms thereof in any manner that, in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(e) The right, title and interest of such Grantor in, to and under
the Contracts are not subject to any defenses, offsets, counterclaims or claims
that, in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(f) Such Grantor has delivered to the Administrative Agent a
complete and correct copy of each Contract, including all amendments,
supplements and other modifications thereto.
(g) No amount payable to such Grantor under or in connection with
any Contract is evidenced by any Instrument (other than an Instrument that
constitutes Chattel Paper) which has not been delivered to the Administrative
Agent.
4.8 Intellectual Property. (a) Schedule 5 lists all Intellectual
Property owned by such Grantor in its own name on the date hereof.
(b) On the date hereof, to the best of each Grantor's knowledge, all
material Intellectual Property is valid, subsisting, unexpired and enforceable,
has not been abandoned and does not infringe the intellectual property rights of
any other Person.
(c) Except as set forth in Schedule 5, on the date hereof, none of
the Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
such Grantor's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.
(e) No action or proceeding is pending, or, to the knowledge of such
Grantor, threatened, on the date hereof (i) seeking to limit, cancel or question
the validity of any Intellectual Property or such Grantor's ownership interest
therein, or (ii) which, if adversely determined, would have a material adverse
effect on the value of any Intellectual Property.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Administrative Agent and
the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have terminated:
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13
5.1 Delivery of Instruments and Certificated Securities. If any
amount payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument (other than an Instrument that constitutes
Chattel Paper) or Certificated Security, such Instrument or Certificated
Security shall be immediately delivered to the Administrative Agent, duly
indorsed in a manner satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Agreement.
5.2 Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor and
such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.
5.3 Maintenance of Perfected Security Interest; Further
Documentation. (a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described in Section 4.2 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing any Collateral of such Grantor acquired after the date hereof and
such other reports in connection therewith as the Administrative Agent may
reasonably request, all in reasonable detail.
(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (i) filing any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby and
(ii) in the case of Investment Property, Deposit Accounts and any other relevant
Collateral, taking any actions necessary to enable the Administrative Agent to
obtain "control" (within the meaning of the applicable Uniform Commercial Code)
with respect thereto.
5.4 Changes in Locations, Name, etc. Such Grantor will not, except
upon 15 days' prior written notice to the Administrative Agent:
(i) change its jurisdiction of organization or the location of its
chief executive office or sole place of business from that referred to in
Section 4.3; or
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14
(ii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Administrative Agent in
connection with this Agreement would become seriously misleading;
so long as within 30 days of the taking of any such actions, such Grantor has
delivered to the Administrative Agent all additional executed financing
statements and other documents reasonably requested by the Administrative Agent
to maintain the validity, perfection and priority of the security interests
provided for herein.
5.5 Notices. Such Grantor will advise the Administrative Agent and
the Lenders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Administrative Agent to exercise any of its
remedies hereunder; and
(b) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.6 Investment Property. (a) If such Grantor shall become entitled
to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Capital Stock of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Administrative Agent and the Lenders, hold the same in
trust for the Administrative Agent and the Lenders and deliver the same
forthwith to the Administrative Agent in the exact form received, duly indorsed
by such Grantor to the Administrative Agent, if required, together with an
undated stock power covering such certificate duly executed in blank by such
Grantor and with, if the Administrative Agent so requests, signature guaranteed,
to be held by the Administrative Agent, subject to the terms hereof, as
additional collateral security for the Obligations. Any sums paid upon or in
respect of the Investment Property upon the liquidation or dissolution of any
Issuer shall be paid over to the Administrative Agent to be held by it hereunder
as additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the Investment
Property or any property shall be distributed upon or with respect to the
Investment Property pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property so
distributed shall, unless otherwise subject to a perfected security interest in
favor of the Administrative Agent, be delivered to the Administrative Agent to
be held by it hereunder as additional collateral security for the Obligations.
If any sums of money or property so paid or distributed in respect of the
Investment Property shall be received by such Grantor, such Grantor shall, until
such money or property is paid or delivered to the Administrative Agent, hold
such money or property in
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15
trust for the Lenders, segregated from other funds of such Grantor, as
additional collateral security for the Obligations.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock or other equity securities of any nature or to
issue any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any Issuer,
except to the extent any such issuance is permitted by the Credit Agreement,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Investment Property or Proceeds thereof (except
pursuant to a transaction expressly permitted by the Credit Agreement), (iii)
create, incur or permit to exist any Lien or option in favor of, or any claim of
any Person with respect to, any of the Investment Property or Proceeds thereof,
or any interest therein, except for the security interests created by this
Agreement and Liens described in clause (a) of the definition of "Permitted
Encumbrances" in the Credit Agreement or (iv) enter into any agreement or
undertaking restricting the right or ability of such Grantor or the
Administrative Agent to sell, assign or transfer any of the Investment Property
or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Investment Property issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5.6(a) with respect to the Investment Property issued by it and (iii) the terms
of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to
all actions that may be required of it pursuant to Section 6.3(c) or 6.7 with
respect to the Investment Property issued by it.
5.7 Receivables. (a) Other than in the ordinary course of business
consistent with its past practice, such Grantor will not (i) grant any extension
of the time of payment of any Receivable, (ii) compromise or settle any
Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could adversely affect the value
thereof.
(b) At any time after the occurrence and during the continuance of
an Event of Default, such Grantor will deliver to the Administrative Agent a
copy of each material demand, notice or document received by it that questions
or calls into doubt the validity or enforceability of more than 5% of the
aggregate amount of the then outstanding Receivables.
5.8 Contracts. (a) Such Grantor will perform and comply in all
material respects with all its obligations under the Contracts.
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16
(b) Such Grantor will not amend, modify, terminate or waive any
provision of any Contract in any manner which could reasonably be expected to
materially adversely affect the value of such Contract as Collateral.
(c) Such Grantor will exercise promptly and diligently each and
every material right which it may have under each Contract (other than any right
of termination).
(d) Such Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it relating in any way to
any Contract that questions the validity or enforceability of such Contract.
5.9 Intellectual Property. (a) Such Grantor (either itself or
through licensees) will (i) continue to use each material Trademark on each and
every trademark class of goods applicable to its current line as reflected in
its current catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-use, (ii)
maintain as in the past the quality of products and services offered under such
Trademark, (iii) use such Trademark with the appropriate notice of registration
and all other notices and legends required by applicable Requirements of Law,
(iv) not adopt or use any mark which is confusingly similar or a colorable
imitation of such Trademark unless the Administrative Agent, for the ratable
benefit of the Lenders, shall obtain a perfected security interest in such mark
pursuant to this Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated.
(b) Such Grantor (either itself or through licensees) will not do
any act, or omit to do any act, whereby any material Patent may become
forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will
employ each material Copyright and (ii) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any material portion of the Copyrights may become invalidated or
otherwise impaired. Such Grantor will not (either itself or through licensees)
do any act whereby any material portion of the Copyrights may fall into the
public domain.
(d) Such Grantor (either itself or through licensees) will not do
any act that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
(e) Such Grantor will notify the Administrative Agent and the
Lenders immediately if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal in
any country) regarding such Grantor's ownership of any
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17
material Intellectual Property or such Grantor's right to register the same or
to own and maintain the same.
(f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Administrative Agent within five Business Days after the last day
of the fiscal quarter in which such filing occurs. Upon request of the
Administrative Agent, such Grantor shall execute and deliver, and have recorded,
any and all agreements, instruments, documents, and papers as the Administrative
Agent may request to evidence the Administrative Agent's and the Lenders'
security interest in any Copyright, Patent or Trademark and the goodwill and
general intangibles of such Grantor relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall (i)
take such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns thereof and sue for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) If an Event of
Default shall have occurred and be continuing, the Administrative Agent shall
have the right to make test verifications of the Receivables in any manner and
through any medium that it reasonably considers advisable, and each Grantor
shall furnish all such assistance and information as the Administrative Agent
may require in connection with such test verifications. At any time and from
time to time, upon the Administrative Agent's request and at the expense of the
relevant Grantor, such Grantor shall cause independent public accountants or
others satisfactory to the Administrative Agent to furnish to the Administrative
Agent reports showing reconciliations, aging and test verifications of, and
trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Receivables, subject to the Administrative Agent's
direction and control, and the Administrative Agent
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18
may curtail or terminate said authority at any time after the occurrence and
during the continuance of an Event of Default. If required by the Administrative
Agent at any time after the occurrence and during the continuance of an Event of
Default, any payments of Receivables, when collected by any Grantor, (i) shall
be forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the
Administrative Agent if required, in a Collateral Account maintained under the
sole dominion and control of the Administrative Agent, subject to withdrawal by
the Administrative Agent for the account of the Lenders only as provided in
Section 6.5, and (ii) until so turned over, shall be held by such Grantor in
trust for the Administrative Agent and the Lenders, segregated from other funds
of such Grantor. Each such deposit of Proceeds of Receivables shall be
accompanied by a report identifying in reasonable detail the nature and source
of the payments included in the deposit.
(c) At the Administrative Agent's request, each Grantor shall
deliver to the Administrative Agent all original and other documents evidencing,
and relating to, the agreements and transactions which gave rise to the
Receivables, including, without limitation, all original orders, invoices and
shipping receipts.
6.2 Communications with Obligors; Grantors Remain Liable. (a) The
Administrative Agent in its own name or in the name of others may at any time
after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables and parties to the Contracts to
verify with them to the Administrative Agent's satisfaction the existence,
amount and terms of any Receivables or Contracts.
(b) Upon the request of the Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, each Grantor
shall notify obligors on the Receivables and parties to the Contracts that the
Receivables and the Contracts have been assigned to the Administrative Agent for
the ratable benefit of the Lenders and that payments in respect thereof shall be
made directly to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables and Contracts to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. Neither the Administrative Agent nor any Lender shall have any
obligation or liability under any Receivable (or any agreement giving rise
thereto) or Contract by reason of or arising out of this Agreement or the
receipt by the Administrative Agent or any Lender of any payment relating
thereto, nor shall the Administrative Agent or any Lender be obligated in any
manner to perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto) or Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
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19
6.3 Pledged Stock. (a) Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given notice
to the relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes, in each case paid in the normal
course of business of the relevant Issuer and consistent with past practice, to
the extent permitted in the Credit Agreement, and to exercise all voting and
corporate rights with respect to the Investment Property; provided, however,
that no vote shall be cast or corporate right exercised or other action taken
which, in the Administrative Agent's reasonable judgment, would impair the
Collateral or which would be inconsistent with or result in any violation of any
provision of the Credit Agreement, this Agreement or any other Credit Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Investment Property and make application thereof to the
Obligations in such order as the Administrative Agent may determine, and (ii)
any or all of the Investment Property shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its nominee
may thereafter exercise (x) all voting, corporate and other rights pertaining to
such Investment Property at any meeting of shareholders of the relevant Issuer
or Issuers or otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
Issuer, or upon the exercise by any Grantor or the Administrative Agent of any
right, privilege or option pertaining to such Investment Property, and in
connection therewith, the right to deposit and deliver any and all of the
Investment Property with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Administrative
Agent may determine), all without liability except to account for property
actually received by it, but the Administrative Agent shall have no duty to any
Grantor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) unless otherwise expressly
permitted to be paid to the relevant Grantor hereunder, pay any dividends or
other payments with respect to the Investment Property directly to the
Administrative Agent.
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20
6.4 Proceeds to be Turned Over To Administrative Agent. In addition
to the rights of the Administrative Agent and the Lenders specified in Section
6.1 with respect to payments of Receivables, if an Event of Default shall occur
and be continuing, all Proceeds received by any Grantor consisting of cash,
checks and other near-cash items shall be held by such Grantor in trust for the
Administrative Agent and the Lenders, segregated from other funds of such
Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to
the Administrative Agent in the exact form received by such Grantor (duly
indorsed by such Grantor to the Administrative Agent, if required). All Proceeds
received by the Administrative Agent hereunder shall be held by the
Administrative Agent in a Collateral Account maintained under its sole dominion
and control. All Proceeds while held by the Administrative Agent in a Collateral
Account (or by such Grantor in trust for the Administrative Agent and the
Lenders) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in Section 6.5.
6.5 Application of Proceeds. At such intervals as may be agreed upon
by the Borrower and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may apply all or any part of Proceeds held in
any Collateral Account in payment of the Obligations in such order as the
Administrative Agent may elect, and any part of such funds which the
Administrative Agent elects not so to apply and deems not required as collateral
security for the Obligations shall be paid over from time to time by the
Administrative Agent to the Borrower or to whomsoever may be lawfully entitled
to receive the same. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the Commitments shall have terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall occur and
be continuing, the Administrative Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Administrative Agent or any Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Administrative Agent or any Lender shall have
the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released. Each Grantor
further agrees, at the
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21
Administrative Agent's request, to assemble the Collateral and make it available
to the Administrative Agent at places which the Administrative Agent shall
reasonably select, whether at such Grantor's premises or elsewhere. The
Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 6.6, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Administrative Agent and the Lenders hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Obligations, in such order as the Administrative
Agent may elect, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the New York UCC, need the
Administrative Agent account for the surplus, if any, to any Grantor. To the
extent permitted by applicable law, each Grantor waives all claims, damages and
demands it may acquire against the Administrative Agent or any Lender arising
out of the exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such sale
or other disposition.
6.7 Registration Rights. (a) If the Administrative Agent shall
determine to exercise its right to sell any or all of the Pledged Stock pursuant
to Section 6.6, and if in the opinion of the Administrative Agent it is
necessary or advisable to have the Pledged Stock, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may
be, in the opinion of the Administrative Agent, necessary or advisable to
register the Pledged Stock, or that portion thereof to be sold, under the
provisions of the Securities Act, (ii) use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering of
the Pledged Stock, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause such Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Administrative Agent shall designate
and to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the provisions
of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a
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22
commercially reasonable manner. The Administrative Agent shall be under no
obligation to delay a sale of any of the Pledged Stock for the period of time
necessary to permit the Issuer thereof to register such securities for public
sale under the Securities Act, or under applicable state securities laws, even
if such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Administrative Agent and
the Lenders, that the Administrative Agent and the Lenders have no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 6.7 shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred under the Credit Agreement.
6.8 Waiver; Deficiency. Each Grantor waives and agrees not to assert
any rights or privileges which it may acquire under Section 9-112 of the New
York UCC. Each Grantor shall remain liable for any deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. (a)
Each Grantor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Administrative Agent the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any or all of
the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or Contract or with respect to any other Collateral and file
any claim or take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Administrative Agent for the
purpose of collecting any and all such moneys due under any Receivable or
Contract or with respect to any other Collateral whenever payable;
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23
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may request to evidence the
Administrative Agent's and the Lenders' security interest in such
Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section
6.6 or 6.7, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (3)
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (5) defend any suit, action or proceeding
brought against such Grantor with respect to any Collateral; (6) settle,
compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as the
Administrative Agent may deem appropriate; (7) assign any Copyright,
Patent or Trademark (along with the goodwill of the business to which any
such Copyright, Patent or Trademark pertains), throughout the world for
such term or terms, on such conditions, and in such manner, as the
Administrative Agent shall in its sole discretion determine; and (8)
generally, sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as
though the Administrative Agent were the absolute owner thereof for all
purposes, and do, at the Administrative Agent's option and such Grantor's
expense, at any time, or from time to time, all acts and things which the
Administrative Agent deems necessary to protect, preserve or realize upon
the Collateral and the Administrative Agent's and the Lenders' security
interests therein and to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
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24
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the highest rate per annum at which
interest would then be payable on any category of past due ABR Loans under the
Credit Agreement, from the date of payment by the Administrative Agent to the
date reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of Administrative Agent. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent's and the Lenders' interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7.3 Execution of Financing Statements. Pursuant to Section 9-402 of
the New York UCC and any other applicable law to the extent permitted by such
applicable law, each Grantor authorizes the Administrative Agent, upon giving
written notice to such Grantor, to file or record financing statements and other
filing or recording documents or instruments with respect to the Collateral
without the signature of such Grantor in such form and in such offices as the
Administrative Agent reasonably determines appropriate to perfect the security
interests of the Administrative Agent under this Agreement. A photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement or other filing or recording document or instrument for filing or
recording in any jurisdiction.
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25
7.4 Authority of Administrative Agent. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Grantors, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Lenders with full
and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by each affected Grantor and the Administrative
Agent, provided that any provision of this Agreement imposing obligations on any
Grantor may be waived by the Administrative Agent in a written instrument
executed by the Administrative Agent.
8.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 11.01 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor agrees
to pay or reimburse each Lender and the Administrative Agent for all its costs
and expenses incurred in collecting against such Guarantor under the guarantee
contained in Section 2 or otherwise enforcing or preserving any rights under
this Agreement and the other Credit Documents to which such Guarantor is a
party,
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26
including, without limitation, the reasonable fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement to the
extent the Borrower would be required to do so pursuant to Section 11.03 of the
Credit Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of
the Obligations and all other amounts payable under the Credit Agreement and the
other Credit Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns; provided
that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes the
Administrative Agent and each Lender at any time and from time to time without
notice to such Grantor or any other Grantor, any such notice being expressly
waived by each Grantor, upon any amount remaining unpaid after it becomes due
and payable by such Grantor hereunder to set-off and appropriate and apply
against any such payment any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent or such Lender to or for the credit or the
account of such Grantor, or any part thereof in such amounts as the
Administrative Agent or such Lender may elect. The Administrative Agent and each
Lender shall notify such Grantor promptly of any such set-off and the
application made by the Administrative Agent or such Lender of the proceeds
thereof, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Administrative Agent
and each Lender under this Section 8.6 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the
Administrative Agent or such Lender may have.
8.7 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
<PAGE>
27
8.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Credit Documents
represent the agreement of the Grantors, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof and thereof not expressly
set forth or referred to herein or in the other Credit Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Credit Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts
of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to in Section 8.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
<PAGE>
28
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential
damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Credit Documents to which it is a
party;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to any Grantor arising out of or in
connection with this Agreement or any of the other Credit Documents, and
the relationship between the Grantors, on the one hand, and the
Administrative Agent and Lenders, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Grantors and the Lenders.
8.14 Additional Grantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 7.10 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.
8.15 Releases. (a) At such time as the Loans, the LC Disbursements
and the other Obligations shall (other than indemnities for which no request has
been made) have been paid in full, the Commitments have been terminated and no
Letters of Credit shall be outstanding, the Collateral shall be released from
the Liens created hereby, and this Agreement and all obligations (other than
those expressly stated to survive such termination) of the Administrative Agent
and each Grantor hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party, and all rights to the
Collateral shall revert to the Grantors. At the request and sole expense of any
Grantor following any such termination, the Administrative Agent shall deliver
to such Grantor any Collateral held by the Administrative Agent hereunder, and
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral. At the request and sole expense of the Borrower, a Guarantor
Subsidiary shall be released from its obligations hereunder in the event that
all the Capital Stock of such Guarantor Subsidiary shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Credit Agreement;
<PAGE>
29
provided that the Borrower shall have delivered to the Administrative Agent, at
least five Business Days prior to the date of the proposed release, a written
request for release identifying the relevant Guarantor Subsidiary and the terms
of the sale or other disposition in reasonable detail, including the price
thereof and any expenses in connection therewith, together with a certification
by the Borrower stating that such transaction is in compliance with the Credit
Agreement and the other Credit Documents.
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
<PAGE>
30
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.
AVIS RENT A CAR, INC.
By:________________________________
Title:
AVIS FLEET LEASING AND MANAGEMENT
CORPORATION
By:________________________________
Title:
AVIS RENT A CAR SYSTEM, INC.
By:________________________________
Title:
AVIS INTERNATIONAL, LTD.
By:________________________________
Title:
<PAGE>
31
AVIS ASIA AND PACIFIC, LIMITED
By:________________________________
Title:
AVIS CARIBBEAN, LIMITED
By:________________________________
Title:
AVIS ENTERPRISES, INC.
By:________________________________
Title:
AVIS SERVICE, INC.
By:________________________________
Title:
AVIS LUBE, INC.
By:________________________________
Title:
<PAGE>
32
AVIS MANAGEMENT SERVICES, LTD.
By:________________________________
Title:
PHH VEHICLE MANAGEMENT SERVICES
LLC
By:________________________________
Title:
WRIGHT EXPRESS LLC
By:________________________________
Title:
AVIS LEASING CORPORATION
By:________________________________
Title:
RESERVE CLAIMS MANAGEMENT CO.
By:________________________________
Title:
<PAGE>
33
PHH CANADIAN HOLDINGS, INC.
By:________________________________
Title:
RENT-A-CAR COMPANY, INCORPORATED
By:________________________________
Title:
DEALERS HOLDINGS, INC.
By:________________________________
Title:
WILLIAMSBURG MOTORS, INC.
By:________________________________
Title:
EDENTON MOTORS, INC.
By:________________________________
Title:
<PAGE>
34
PHH DEUTSCHLAND, INC.
By:________________________________
Title:
<PAGE>
EXHIBIT 4.40
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AMENDED AND RESTATED
ORIGINATION TRUST AGREEMENT
BY AND AMONG
RAVEN FUNDING LLC,
AS SUCCESSOR SETTLOR
AND INITIAL BENEFICIARY,
PHH VEHICLE MANAGEMENT SERVICES LLC,
AS EXISTING SETTLOR AND INITIAL
BENEFICIARY AND SUCCESSOR UTI TRUSTEE,
AND
WILMINGTON TRUST COMPANY, AS DELAWARE TRUSTEE
CREATING A DELAWARE BUSINESS TRUST TO BE KNOWN
AS THE "D.L. PETERSON TRUST"
DATED AS OF JUNE 30, 1999
- --------------------------------------------------------------------------------
<PAGE>
AMENDED AND RESTATED ORIGINATION TRUST AGREEMENT
AMENDED AND RESTATED ORIGINATION TRUST AGREEMENT, dated as of JUNE
30, 1999 (as it may be modified, supplemented or amended from time to time in
accordance with its term, this "Agreement"), among Raven Funding LLC, a Delaware
limited liability company ("SPV"), as successor settlor and initial beneficiary
(the "Settlor" and the "Initial Beneficiary"), PHH VEHICLE MANAGEMENT SERVICES
LLC, a Delaware limited liability company ("VMS"), as the existing settlor and
initial beneficiary and the successor UTI Trustee, and WILMINGTON TRUST COMPANY,
a Delaware banking association (the "Delaware Trustee"). Certain capitalized
terms used herein are defined in Exhibit A.
R E C I T A L S
WHEREAS, VMS and Allfirst Bank (formerly The First National Bank of
Maryland ("Allfirst")) entered into an Amended and Restated Trust Agreement (the
"Original Trust Agreement") dated as of December 17, 1998 pursuant to which a
Maryland common law trust known as the "D.L. Peterson Trust" (the "Original
Trust") was governed and continued;
WHEREAS, the Original Trust previously issued a Series 1998-A
Special Beneficial Certificate, a Series 1998-B Special Beneficial Certificate
and a Series 1998-C Special Beneficial Certificate, each certificate
representing an exclusive undivided interest in specific assets of the Original
Trust (the "Existing Special Beneficial Certificates"), and a certificate
representing the assets of the Original Trust not allocated to the Existing
Special Beneficial Certificates (the "Exchangeable Beneficial Certificate",
together with the Existing Special Beneficial Certificate, the "Existing
Interests");
WHEREAS, pursuant to an Asset Sale Agreement, dated as of the date
hereof, between VMS and SPV, SPV purchased the Existing Interests from VMS;
WHEREAS, pursuant to the Agreement, dated as of the date hereof,
among VMS, SPV, Allfirst and Wilmington Trust Company, Wilmington Trust Company
succeeded Allfirst as trustee of the Original Trust; and
WHEREAS, each party hereto wishes to amend and restate the terms of
the Original Trust and extinguish the Existing Interests and provide for the
Original Trust to become a business trust pursuant to the Business Trust Statute
(as defined below) by its execution and delivery of this Agreement and to make
certain other modifications to the Original Trust;
NOW, THEREFORE, IN CONSIDERATION of the mutual agreements herein
contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
<PAGE>
PART I
CREATION OF TRUST
Section 1.1. Creation of Trust. It is the intention of the parties
to amend and restate the terms of the Original Trust under Delaware law and form
a business trust pursuant to Chapter 38 of Title 12 of the Delaware Code, 12
Del. C. ss.3801 et seq. (the "Business Trust Statute"), and that this Agreement
constitutes the governing instrument of such business trust to be known as "D.L.
PETERSON TRUST" (the "Trust"). The Original Trust was formed pursuant to the
Original Trust Agreement. Beneficial interests in all of the assets (the
"Existing Trust Assets") of the Original Trust are represented by the Existing
Interests. The Settlor hereby delivers to the UTI Trustee the Existing Interests
in exchange for the UTI Certificate and directs that the Existing Trust Assets
allocated to such Existing Interests be reallocated to the UTI. The Existing
Interests are hereby extinguished. The UTI Trustee shall continue to hold the
Existing Trust Assets with such other Trust Assets as the Trust may from time to
time acquire, for the benefit of the holders of the Certificates under the terms
provided herein. The Delaware Trustee is hereby authorized to file a certificate
of trust under the Business Trust Statute. The purpose of the Trust is to act as
the agent and nominee of the Certificateholders.
PART II
TRUST ASSETS
Section 2.1. Trust Assets. Pursuant to this Agreement and the
Servicing Agreement, the Trust shall hold and acquire from the Initial
Beneficiary from time to time the following assets as contemplated by this
Agreement and the Servicing Agreement: (a) cash; (b) lease contracts (such lease
contracts, the "Leases") of Vehicles, and all security therefore; (c) Vehicles
that are or were subject to a Lease (the "Leased Vehicles") and all proceeds
thereof, including the residual values of the Leased Vehicles to be realized
through the exercise by lessees of purchase options under the Leases, the
proceeds of sale of the Leased Vehicles to third parties and payments received
from any other Person, either directly or through a Servicer, with respect to
the Leased Vehicles; (d) Vehicles acquired at the request of lessees under
Leases ("Paid-In-Advance Vehicles" and, together with the Leased Vehicles,
"Trust Vehicles"), and all proceeds thereof, including the proceeds of sale of
the Paid-In-Advance Vehicles and payments received from the related lessees or
any other Persons, either directly or through the Servicer, with respect to such
Paid-In-Advance Vehicles; (e) each certificate of title or other evidence of
ownership of a Trust Vehicle issued by the Registrar of Titles (as defined
below) in the respective jurisdiction in which such Trust Vehicle is registered
(each a "Certificate of Title"), which Certificate of Title shall reflect as the
owner of such Trust Vehicle "D.L. Peterson Trust", the name of any Trustee or
such other similar designation as may be acceptable to any applicable
department, agency or official in each state responsible for accepting
applications for, and maintaining records regarding, Certificates of Title and
liens thereon (each a "Registrar of Titles"); (f) all of the lessor's rights
(but not its obligations) and all of the Trust's rights, in each case with
respect to any Lease or Trust Vehicle; (g) any insurance policy and rights
thereunder or proceeds therefrom, including, without limitation, any policy of
comprehensive, collision, public liability, physical damage or personal
liability insurance, maintained by the Initial Beneficiary or
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<PAGE>
any Affiliate of the Initial Beneficiary, the Servicer under the Servicing
Agreement, any Obligor under any Lease or any Affiliate of any such Obligor to
the extent that any such policy covers or applies to any Lease or Trust Vehicle
(collectively, "Insurance Policies"); (h) receivables (the "Fleet Receivables")
generated by VMS from Obligors under fleet maintenance contracts, fleet
management contracts, fuel card contracts and any other service contracts the
fees for which are or would be billed together with a Lease if the Obligor is a
party to a Lease (collectively, "Fleet Service Contracts") and all proceeds
thereof, which Fleet Receivables are acquired by the Initial Beneficiary from
time to time pursuant to the terms of the Receivables Purchase Agreement dated
as of June 30, 1999 between VMS and the Initial Beneficiary (as amended,
modified or supplemented from time to time, the "Receivables Purchase
Agreement"); (i) all of the Initial Beneficiary's rights (but not its
obligations) under the Receivables Purchase Agreement, the Contribution
Agreement and the Asset Sale Agreement; and (j) all proceeds of any of the
foregoing. The foregoing assets, together with the Trust's rights under the
Receivables Purchase Agreement and the Contribution Agreement, and all proceeds
of the same, are collectively referred to herein as the "Trust Assets".
PART III
ACCEPTANCE BY TRUSTEES
Section 3.1. Acceptance by Trustees. (a) The UTI Trustee shall have
the rights, powers and duties with respect to the UTI set forth herein. The UTI
Trustee does hereby accept such appointment and agrees to act as a trustee of
the Trust for the benefit of the Initial Beneficiary and such other Persons as
may become holders of all or a part of the UTI, subject to the terms and
conditions of this Agreement.
(b) The Delaware Trustee shall have only such rights, powers and
duties as are specifically and expressly required by the Business Trust Statute
and this Agreement. The Delaware Trustee hereby accepts such appointment.
(c) Any SUBI Trustee shall have the rights, powers and duties set
forth herein with respect to the applicable SUBI. Any SUBI Trustee shall accept
such appointment and agree to act as a trustee of the Trust for the benefit of
the holders of all or part of the applicable SUBI, subject to the terms and
conditions of this Agreement, by execution of a counterpart to this Agreement or
other agreement acceptable to the UTI Trustee.
PART IV
BENEFICIAL INTERESTS IN TRUST
Section 4.1. Undivided Trust Interest. (a) The Initial Beneficiary
shall hold an exclusive, undivided beneficial interest (the "Undivided Trust
Interest" or the "UTI") in all assets of the Trust (the "UTI Assets"), other
than those identified Trust Assets that are from time to time allocated by the
Trust, upon the written direction of the Initial Beneficiary and otherwise in
accordance with Section 4.2 hereof, into one or more separate portfolios of
Trust Assets (together with any other Trust Asset allocated to or earned by any
such portfolio(s), and any proceeds
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<PAGE>
thereof, collectively, "SUBI Assets"). Except as otherwise provided for herein,
all collections and amounts received with respect to the Undivided Trust
Interest shall be distributed or retained by the UTI Trustee, as directed in
writing from time to time by the Initial Beneficiary. Any assignee or pledgee of
an Undivided Trust Interest or Undivided Trust Interest Certificate must, prior
to or contemporaneously with the grant of any such assignment, pledge or
security interest (i) give to the Trust a non-petition covenant substantially
similar to that set forth in Section 6.9, (ii) execute an agreement between or
among itself and each assignee or pledgee from time to time of any SUBI or SUBI
Certificate, to release all claims to the Trust Assets allocated to any SUBI
Portfolio and, in the event that such release is not given effect, to fully
subordinate all claims it may be deemed to have against all Trust Assets
allocated to any SUBI Portfolio, and (iii) provide to each Trustee an Opinion of
Counsel to the effect that, in the event of a bankruptcy or insolvency of such
assignee or pledgee, the Trust will not be substantively consolidated with such
assignee or pledgee. Nothing contained herein shall be deemed to limit the
rights of the holder of the UTI to enter into participation agreements pursuant
to which the holder grants one or more participation interests in the UTI.
(b) The Undivided Trust Interest initially shall be represented by a
single trust certificate (together with any replacements thereof, the "Undivided
Trust Interest Certificate" or the "UTI Certificate"); provided, however, that
at the request of any holder thereof the Undivided Trust Interest may be
represented by two (2) or more such certificates that, in the aggregate,
represent the entire Undivided Trust Interest, such divided certificates to be
issued pursuant to a supplement to this Agreement (each, a "UTI Supplement")
which shall specify any terms or conditions relevant to the issuance thereof, as
shall be prescribed and established by such holder and by the pledgee of any UTI
Pledge. Except as set forth in any applicable UTI Supplement, any Undivided
Trust Interest Certificate shall be in substantially the form of Exhibit B
hereto, with such appropriate insertions, omissions, substitutions and other
variations as are required by this Agreement and may have such letters, numbers
or other marks of identification and such legends and endorsements placed
thereon as may, consistently herewith, be directed in writing by the Initial
Beneficiary. Any portion of any Undivided Trust Interest Certificate may be set
forth on the reverse or subsequent pages thereof. Each Undivided Trust Interest
Certificate shall be printed, lithographed, typewritten, mimeographed,
photocopied or otherwise produced or may be produced in any other manner as may,
consistently herewith, be determined by the Initial Beneficiary.
(c) The UTI shall be a separate series of the Trust as provided in
Section 3806(b)(2) of the Business Trust Statute. Separate and distinct records
shall be maintained for the UTI Portfolio and the UTI Assets associated with
such UTI Portfolio shall be held and accounted for separately from the other
assets of the Trust, including any SUBI Assets. The debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to the UTl or the related UTI Assets shall be enforceable against such
UTI Assets only, and not against the assets of the Trust generally or against
any SUBI Assets. Except to the extent required by law or specified in this
Agreement, the UTI shall not be subject to claims, debts, liabilities, expenses
or obligations arising from or with respect to any SUBI or any Trustee. No
creditor or holder of a claim relating to assets allocated to the UTI shall be
entitled to maintain any action against or recover any assets allocated to any
SUBI in respect of such claim (whether
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<PAGE>
such assets were UTI Assets at any time since such claim arose). The holder of
the UTI may, in its sole discretion, appoint for the UTI a separate trustee,
(the "UTI Trustee") which shall perform such duties, have such responsibilities
and adhere to such standards of care as are specified in Part V of this
Agreement, but only with respect to the UTI. The Initial Beneficiary hereby
appoints VMS as the UTI Trustee.
Section 4.2. Special Units of Beneficial Interest. (a) The UTI
Trustee shall, from time to time, as directed in writing by the Initial
Beneficiary, identify and allocate or cause to be identified and allocated on
the books and records of the Trust one or more separate portfolios of SUBI
Assets to be accounted for independently within the Trust (each such portfolio,
a "SUBI Portfolio"). Upon their allocation as SUBI Assets, such Trust Assets
shall no longer be UTI Assets (unless and until specifically reallocated to the
UTI Assets from that SUBI Portfolio pursuant to the terms hereof). Separate and
distinct records shall be maintained for each SUBI Portfolio and the SUBI Assets
associated with each SUBI Portfolio shall be held and accounted for separately
from the other assets of the Trust, including the UTI Assets, or any other SUBI
Assets. The beneficial interest in each such SUBI Portfolio shall constitute a
separate "special unit of beneficial interest" ("SUBI") in the Trust. The SUBI
Trustee shall execute and deliver, on behalf of the Trust, to or upon the
written order of the Initial Beneficiary one or more SUBI Certificates
evidencing SUBIs, each SUBI representing a specific divided interest in (but
only in) such identified SUBI Portfolio and the SUBI Assets allocated thereto,
including with respect to each Trust Vehicle included in any such SUBI Portfolio
the actual net proceeds received with respect to the disposition of such Trust
Vehicle.
(b) Each SUBI shall be represented by one or more certificates (each
a "SUBI Certificate") to be issued by the Trust and shall be created by the
execution of a supplement to this Agreement (each a "SUBI Supplement"), which
SUBI Supplement shall specify the terms and provisions pursuant to which SUBI
Certificates shall be issued with respect to such SUBI; the form of any SUBI
Certificate(s) to be issued in connection therewith; the initial SUBI Assets to
be included in such SUBI Portfolio; the arrangements, if any, whereby additional
SUBI Assets may be added subsequently to the SUBI Portfolio; the provisions
under which the proceeds of the related SUBI Assets shall be collected, invested
and distributed; and other relevant terms and provisions specific to such SUBI,
all as shall be prescribed and established by the Initial Beneficiary. Each SUBI
Supplement shall provide for the application of all net proceeds received with
respect to the SUBI Assets, including any mandatory distributions to holders of
SUBI Certificates, but shall require an express written waiver of any claim by
any holder of any SUBI Certificate (which waiver may be set forth in such SUBI
Certificate) to any proceeds or assets of the Trustees and to all of the assets
of the Trust other than the SUBI Assets included from time to time within the
SUBI Portfolio allocated to that SUBI and those proceeds or assets derived from
or earned by such SUBI Assets.
(c) Each SUBI shall be a separate series of the Trust as provided in
Section 3806(b)(2) of the Business Trust Statute. The debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to each SUBI or the related SUBI Assets shall be enforceable against
such SUBI Assets only, and not against any other SUBI Assets or the UTI Assets.
Except to the extent required by law or specified in this Agreement or
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<PAGE>
in the related SUBI Supplement, SUBI Assets with respect to a particular SUBI
shall not be subject to claims, debts, liabilities, expenses or obligations
arising from or with respect to the Trust, any Trustee, the UTI or any other
SUBI in respect of such claim. No creditor or holder of a claim relating to
assets allocated to any SUBI shall be entitled to maintain any action against or
recover any assets allocated to the UTI or any other SUBI. Notice of this
limitation on interseries liabilities shall be set forth in the certificate of
trust of the Trust (whether originally or by amendment) as filed or to be filed
in the office of the Secretary of State of the State of Delaware pursuant to the
Business Trust Statute, and upon the giving of such notice in the certificate of
trust, the statutory provisions of Section 3804 of the Business Trust Statute
relating to limitations on interseries liabilities (and the statutory effect
under Section 3804 of setting forth such notice in the certificate of trust)
shall become applicable to the Trust and each SUBI and UTI. Any purchaser,
assignee or pledgee of an interest in a SUBI or SUBI Certificate must, prior to
or contemporaneously with the grant of any such assignment, pledge or security
interest, (i) give to the Trust a non-petition covenant substantially similar to
that set forth in Section 6.9, and (ii) execute an agreement for the benefit of
each holder, assignee or pledgee from time to time of the UTI or UTI Certificate
and any other SUBI or SUBI Certificate, to release all claims to the assets of
the Trust allocated to the UTI and each other SUBI Portfolio and in the event
that such release is not given effect, to fully subordinate all claims it may be
deemed to have against the assets of the Trust allocated to the UTI Portfolio
and each other SUBI Portfolio. In the event of a sale or assignment of a SUBI,
such purchaser or assignee shall be a beneficiary of the Trust in the manner and
to the extent set forth in the SUBI Certificate so acquired and in the
applicable SUBI Supplement.
(d) Each holder of a SUBI shall appoint for such SUBI a trustee (a
"SUBI Trustee") which shall perform such duties, have such responsibilities and
adhere to such standards of care as are specified in Part V of this Agreement,
but only with respect to the SUBI or SUBIs for which it was appointed. The same
Person may be appointed as SUBI Trustee for all or any SUBIs; provided, however,
that neither the Initial Beneficiary nor any Affiliate of the Initial
Beneficiary shall be a SUBI Trustee.
(e) No interest in any SUBI, SUBI Certificate or SUBI Portfolio
shall be transferred, assigned, sold or conveyed if, as the result of such
transfer, assignment, sale or conveyance, the Trust would become a publicly
traded partnership.
Section 4.3. [Intentionally Left Blank.]
Section 4.4. Form of Certificate: Registration of Certificates. (a)
The Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Delaware Trustee. Certificates bearing
a manual or facsimile signatures of individuals who were, at the time when such
a signature shall have been affixed, authorized to sign on behalf of the
Delaware Trustee shall, when duly authenticated pursuant hereto, be validly
issued and entitled to the benefits of this Agreement, notwithstanding that such
individuals or any of them shall cease to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of authentication and delivery of such Certificates. No Certificate
shall entitle its holder to any benefit under this Agreement, or shall
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<PAGE>
be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication, executed by the Delaware Trustee or an agent
thereof, by annual signature; such authentication shall constitute conclusive
evidence that such Certificate shall have been duly authenticated and delivered
hereunder.
(b) The Delaware Trustee shall keep or cause to be kept at its
offices at 1100 North Market Street, Wilmington, Delaware 19890-0001 or such
other office as it shall designate, by written notice to the Initial
Beneficiary, a certificate register (the "Certificate Register"), in which,
subject to such reasonable regulations as it may prescribe, the Delaware Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
transfer of any Certificate, the Delaware Trustee shall execute, authenticate
and deliver in the name of the designated transferee or transferees one or more
new Certificates of the same type and proportionate beneficial interest dated
the date of authentication by the Delaware Trustee. Each Certificate presented
or rendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in form reasonably satisfactory to the Delaware
Trustee, duly executed by the holder of such Certificate or its attorney duly
authorized in writing. Each Certificate surrendered for registration of transfer
and exchange shall be canceled and subsequently disposed of by the Delaware
Trustee in accordance with its customary practice. No service charge shall be
made for any registration of transfer or exchange of any Certificate, but the
Delaware Trustee my require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates. Prior to the due presentation of a Certificate for
registration of transfer, the Delaware Trustee and each agent of the Delaware
Trustee may treat the Person in whose name any Certificate shall be registered
in the Certificate Register as the owner of such Certificate for all purposes,
and neither the Delaware Trustee nor any such agent shall be bound by any notice
to the contrary. The Delaware Trustee shall furnish or cause to be furnished to
each Servicer and the Initial Beneficiary, within (3) three Business Days after
receipt by the Delaware Trustee of request therefor, a list of the names and
addresses of the holders of the Certificates.
Section 4.5. Mutilated, Destroyed, Lost or Stolen Certificates. If
any mutilated Certificate is surrendered to the Delaware Trustee, or the
Delaware Trustee receives evidence to its satisfaction of the mutilation,
destruction, loss or theft of any Certificate, and there is delivered to the
Delaware Trustee such security or indemnity as may be reasonably required by it
to save it harmless, then the Delaware Trustee shall execute and authenticate,
in lieu of such mutilated, destroyed, lost or stolen Certificate, a Certificate
of the same type and proportionate beneficial interest bearing an identification
number not contemporaneously outstanding, which shall constitute for all
purposes a substitute for the original Certificate, which original Certificate
shall be deemed canceled and shall be so marked on the books and records of the
Delaware Trustee.
Section 4.6. Retitling of Trust Vehicles. Except as otherwise
provided in the related Supplement, each holder of a UTI Certificate or a SUBI
Certificate may at any time, at its option, to be exercised by written notice
delivered to the applicable UTI or SUBI Trustee and the Servicer, request that
the Trust Vehicles allocated to such UTI Certificate or SUBI Certificate, as
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the case may be, be retitled in the name of such holder (or a Person designated
by such holder), that a lien may be noted on the Certificate of Title therefor
in the name of such holder (or a Person designated by such holder), or that
possession of such Certificate of Title and/or the other Trust Assets allocated
to such UTI Certificate or SUBI Certificate, as the case may be, be transferred
to such holder (or a Person designated by such holder). Except as otherwise
provided in the related Supplement, such holder shall indemnify the Trust, the
Trustees and the Servicer for, and hold the Trust, the Trustees and the Servicer
harmless against, any and all expenses, costs, liabilities, losses and claims
incurred by any of them as a result of or relating to such retitling or
transfer, or any action or inaction such holder shall take as the registered
owner of such Trust Vehicles or the owner of such Trust Assets, including,
without limitation, sales and transfer taxes and registration fees.
PART V
DUTIES AND POWERS OF TRUST AND TRUSTEES; TRUSTEE LIABILITY
Section 5.1. Duties and Powers of Trustees; Limitations on Trust
Activity. (a) Each Trustee undertakes to perform such duties, and only such
duties, as are specified in this Agreement, any supplement entered into pursuant
to this Agreement by such Trustee, or, except with respect to the duties of any
Trustee to the extent such duties relate to any SUBI Portfolio and the assets
thereof, as may be directed by the Initial Beneficiary in a manner not contrary
to the terms of this Agreement, from time to time, including (without
limitation) in connection with (i) financing transactions of any sort undertaken
by the Initial Beneficiary or a Special Purpose Entity secured, directly or
indirectly, by Trust Assets, by the Undivided Trust Interest or by any SUBI or
any interest therein (including without limitation any financing undertaken in
connection with the issuance and assignment of a SUBI and related SUBI
Certificates), (ii) any sale by the Initial Beneficiary or a Special Purpose
Entity of any interest in one or more SUBIs, (iii) any other asset
securitization, secured loan or similar transaction involving Trust Assets or
any beneficial interest therein or in the Trust (collectively, the transactions
in clauses (i), (ii) and (iii) are referred to herein as "Securitizations"),
(iv) sales by the Trust of Trust Assets to the extent permitted by the terms of
any existing Securitizations (so long as the Certificate of Title of any Unit so
sold is amended to reflect the transfer of ownership thereof from the Trust,
unless applicable law permits the transfer of ownership of a motor vehicle
without an amendment to the vehicle's certificate of title) or (v) activities
ancillary thereto.
(b) Except as provided in or otherwise expressly contemplated by
this Agreement or any Servicing Agreement, the Trust shall not (i) issue
beneficial interests in the Trust Assets or securities of the Trust other than
the UTI and UTI Certificates and one or more SUBIs and SUBI Certificates; (ii)
borrow money on behalf of the Trust; (iii) make loans or extend credit on behalf
of the Trust; (iv) invest in or underwrite securities; (v) offer or issue
securities in exchange for Trust Assets (other than UTI Certificates and SUBI
Certificates); (vi) repurchase or otherwise reacquire any UTI Certificate or,
except as permitted by or in connection with any Securitization relating
thereto, any SUBI Certificate; (vii) acquire any assets, other than Trust Assets
as contemplated in Section 2.1; (viii) engage in any trade or business; or (ix)
except for the acquisition of Trust Assets and agreements relating to any
Securitization and activities ancillary thereto, enter into any agreements or
contracts.
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(c) The Trustees shall establish accounts and receive, maintain,
invest and disburse funds in accordance with Part VII hereof and any Servicing
Agreement or Supplement hereto or thereto.
(d) On the date hereof, the Trust is entering into a Servicing
Agreement with VMS and the Initial Beneficiary, and the Trust shall enter from
time to time into one or more other servicing agreements (each a "Servicing
Agreement") with VMS or with such other or additional Persons as the holder of
the UTI Certificate or any SUBI Certificate shall designate in writing with
respect to the applicable Portfolio represented by such Certificate (each, in
such capacity, a "Servicer"). VMS is hereby designated as the initial Servicer.
Each Servicing Agreement shall specify various duties, powers, liabilities,
obligations and compensation of the Servicer with respect to the administration
and servicing of those Trust Assets as to which such Servicing Agreement
applies, including (without limitation) Trust Vehicles, Leases and Fleet
Receivables. The Trust may enter from time to time into one or more agreements
(each, a "Nominee Agreement") with any Person (other than the Initial
Beneficiary or any Affiliate of the Initial Beneficiary) that the Initial
Beneficiary shall designate, such Person to serve as a nominee for the Trust in
those jurisdictions where the Trust cannot be named as owner of Trust Vehicles
on Certificates of Title. The Trustees, and each of them, on behalf of the
Trust, shall execute and deliver such documents, certificates, applications,
powers of attorney and registrations as shall be requested and prepared by a
Servicer pursuant to a Servicing Agreement or by the Initial Beneficiary in
connection with the administration of the Trust or the servicing of the Trust
Assets, including, without limitation, a power of attorney to the Servicer and,
to the extent deemed appropriate by the Servicer, the lessees or a dealer;
provided, however, that no Trustee shall be obligated to enter into any such
documents, certificates, applications, powers of attorney or registrations that
adversely affect such Trustee's own rights, duties or immunities under this
Agreement or otherwise.
(e) The Trustees and the Trust shall have such powers as are
necessary and appropriate to the conduct of their duties as set forth in this
Agreement, the Servicing Agreements and the SUBI Supplements. In furtherance of
the foregoing, the Delaware Trustee is hereby authorized to execute and deliver
any documents, certificates or agreements to which the Trust is a party pursuant
to this Agreement or any SUBI Supplement hereto.
Section 5.2. Duty of Care. (a) No provision of this Agreement shall
be construed to relieve any Trustee from liability for its own grossly negligent
action (or, with respect to any handling or disbursement of funds, its own
negligent action), its own grossly negligent failure to act (or, with respect to
any handling or disbursement of funds, its own negligent failure to act), its
own bad faith, its own breach of its representations, warranties or covenants
given in its individual capacity or its own willful misfeasance or similar acts
or omissions of any Trust Agent; provided, however, that:
(i) a Trustee shall not be personally liable for any action taken,
suffered or omitted by it or any error of judgment, in each case made in
good faith by any officer of, or any other employee of the corporate trust
office of, such Trustee or any Trust Agent, including any vice-president,
trust officer or any other officer of such Trustee or such
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Trust Agent customarily performing functions similar to those performed by
such officers or to whom any corporate trust matter is referred because of
such Person's knowledge of or familiarity with the particular subject,
unless it shall be proved that such Trustee or Trust Agent was grossly
negligent (or, with respect to any handling or disbursement of funds,
negligent) or acted with willful misfeasance in performing its duties in
accordance with the terms of this Agreement; and
(ii) a Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken in good faith in accordance
with the express direction of the Initial Beneficiary (to the extent
relating to the Undivided Trust Interest) or the holder or pledgee of a
SUBI Certificate in connection with a Securitization (to the extent
relating to a SUBI) relating to the exercise of any trust power conferred
upon such Trustee under this Agreement.
(b) Notwithstanding subsection (a) above, a Trustee shall not be
required to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties under this Agreement, or in the exercise
of any of its rights or powers, if there shall be reasonable grounds for
believing that the repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it, and none of the provisions
contained in this Agreement shall in any event require a Trustee to perform, or
be responsible for the manner or omission of performance of, any of the duties
or obligations of a Servicer under any Servicing Agreement.
(c) Except for actions expressly authorized by this Agreement, a
Trustee shall take no action as to which such Trustee has been notified in
writing by the holder, assignee or pledgee of a related SUBI Certificate or UTI
Certificate, or has actual knowledge, that such action would impair the
beneficial interests in the Trust, would impair the value of any Trust Asset or
would adversely affect the credit rating of any Securitization.
(d) All information obtained by a Trustee regarding the
administration of the Trust, whether upon the exercise of its rights under this
Agreement or otherwise, shall be maintained by such Trustee in confidence and
shall not be disclosed to any other Person other than to any Trust Agent, the
Initial Beneficiary, any Special Purpose Entity (if applicable), any Servicer,
any assignee of an interest in a UTI or UTI Certificate or any pledgee of a UTI
Pledge (or any beneficiary of such pledge) and any assignee or pledgee of a SUBI
Certificate, unless such disclosure is permitted by this Agreement or any other
agreement contemplated hereby, is reasonably necessary or incidental to the
Trustee's discharge of its duties or exercise of its rights hereunder, is
required by any applicable law or regulation or pursuant to subpoena (and such
Trustee has provided notice thereof to the Initial Beneficiary), or such
information is already otherwise publicly available.
Section 5.3. Certain Matters Affecting the Trustees. Except as
otherwise provided in this Agreement:
(a) a Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, officer's certificate,
certificate of auditors or any other
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certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by the
proper party or parties. in particular, but without limitation, whenever
in this Agreement it is provided that a Trustee shall receive or may rely
on the instructions or direction, of the Initial Beneficiary, a Special
Purpose Entity, or the holder or pledgee of a UTI Certificate or a SUBI
Certificate in connection with a Securitization, any written instruction
or direction purporting to bear the signature of any officer of the
Initial Beneficiary, a Special Purpose Entity, or the holder or pledgee of
a UTI Certificate or a SUBI Certificate in connection with a
Securitization reasonably believed by it to be genuine may be deemed by
such Trustee to have been signed or presented by the proper party;
(b) a Trustee may consult with counsel, and any written opinion of
counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it under this Agreement in
good faith and in accordance with such written opinion of counsel;
(c) a Trustee shall be under no obligation to exercise any of the
discretionary rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or in
relation to this Agreement, at the request, order or direction of the
Initial Beneficiary, a Special Purpose Entity, the assignee or pledgee of
a UTI Certificate or a SUBI Certificate in connection with a
Securitization or any other beneficiary of the Trust pursuant to the
provisions of this Agreement, unless such requesting Person(s) shall have
offered to such Trustee reasonable security or indemnity against the
costs, expenses and liabilities that may be incurred therein or thereby;
(d) a Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by
the Initial Beneficiary, a Special Purpose Entity or by the assignee or
pledgee of a UTI Certificate or a SUBI Certificate in connection with a
Securitization; provided, however, that if the payment within a reasonable
time to such Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of
such Trustee, not reasonably assured to such Trustee by the security
afforded to it by the terms of this Agreement, such Trustee may require
reasonable indemnity against such cost, expense or liability as a
condition to so proceeding; the reasonable expense of every such
examination shall be paid by the Person(s) requesting such examination or,
if paid by such Trustee, shall be reimbursed as a Trust expense upon
demand; and
(e) a Trustee may execute any of the trusts or powers under this
Agreement or perform any duties under this Agreement either directly or by
or through agents or attorneys or one or more custodians and the Trustee
shall not be liable for the acts or omissions of any agent or attorney
selected by the Trustee in good faith with reasonable care. A Trustee may
delegate its duties and responsibilities hereunder to a sub-trustee and
may
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enter from time to time into one or more agency agreements (each a "Trust
Agency Agreement") with such Person or Persons selected by the Trustee
including without limitation any Affiliate of such Trustee (each a "Trust
Agent"), as are by experience and expertise qualified to act in a trustee
capacity and otherwise acceptable to the Initial Beneficiary and any
assignee or pledgee of a SUBI Certificate in connection with a
Securitization. A Trustee shall provide seven days' prior written notice
to the Initial Beneficiary of any such Trust Agency Agreement.
Notwithstanding the foregoing, a Trustee shall replace any Trust Agent if
(i) in the good faith judgment of the Initial Beneficiary, the
compensation or level of service of such Trust Agent shall no longer be
reasonably competitive with those of any alternative agent reasonably
proposed by the Initial Beneficiary, or (ii) if the Trust Agent has
materially breached its obligations under the Trust Agency Agreement, the
Initial Beneficiary or any assignee or pledgee of a UTI Certificate or a
SUBI Certificate in connection with a Securitization has given written
notice to such Trustee and the Trust Agent of such breach, and the Trust
Agent has not cured such breach in all material respects within 15
Business Days thereafter (for purposes of this Agreement, "Business Day"
meaning any day that is not a Saturday, Sunday or other day on which
commercial banking institutions in Maryland, Delaware or any other State
in which the corporate trust office of any Trustee is located are
authorized or obligated by law or executive order to be closed). Such
Trust Agency Agreement shall specify the duties, powers, liabilities,
obligations and compensation of such Trust Agent(s) to carry out on behalf
of such Trustee any or all of its obligations as Trustee of the Trust
arising under this Agreement or otherwise and shall contain a non-petition
covenant substantially identical to that set forth in Section 6.9;
provided, however, that nothing contained in any Trust Agency Agreement
shall excuse, limit or otherwise affect any power, duty, obligation,
liability or compensation otherwise applicable to such Trustee hereunder.
The Trust shall pay such amount to the Trust Agent as reasonable
compensation for its services and shall provide such reimbursement of
expenses as are separately agreed by such Trustee, the Initial Beneficiary
and the Trust Agent. Notwithstanding anything to the contrary herein, in
no event shall any Nominee Agreement be deemed to be a Trust Agency
Agreement, or any Servicer or any Affiliate thereof or any Person referred
to in the penultimate sentence of Section 5.1(d) be deemed to be a Trust
Agent.
Section 5.4. Trustees Not Liable for Certificates, Leases or Fleet
Receivables. A Trustee shall have no obligation to perform any of the duties of
the Initial Beneficiary or any Servicer unless explicitly set forth in this
Agreement or any Servicing Agreement. A Trustee shall at no time have any
responsibility or liability for or with respect to (a) the validity or
sufficiency of this Agreement (except as set forth in Section 6.7) or the due
execution hereof by the Initial Beneficiary or the legality, validity and
enforceability of any security interest in any Trust Asset; (b) the perfection
or priority of such a security interest or the maintenance of any such
perfection and priority; (c) the efficacy of the Trust or its ability to
generate the payments to be distributed to the Initial Beneficiary or its
permitted assignee(s) under this Agreement, including, without limitation, the
existence, condition, location and ownership of any Trust Asset; (d) the
existence and enforceability of any Insurance Policy; (e) the existence and
contents of any Lease, Trust Vehicle or Fleet Receivable or any computer or
other record of any thereof;
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(f) the validity of the assignment of any Trust Asset to the Trust or of any
intervening assignment; (g) the completeness of any Lease; (h) the performance
or enforcement of any Lease or Fleet Receivable; (i) the compliance by the
Initial Beneficiary or any Servicer with any covenant or the breach by the
Initial Beneficiary or any Servicer of any warranty or representation in any
document and the accuracy of any such warranty or representation prior to such
Trustee's receipt of notice or other discovery of any noncompliance therewith or
any breach thereof; (j) any investment of monies by any Servicer or any loss
resulting therefrom (it being understood that such Trustee shall remain
responsible for any Trust Assets that it may hold); (k) the acts or omissions of
the Initial Beneficiary, any Servicer, any other Person or any obligor under, or
in connection with the origination of, any Lease; (l) any action of any Servicer
taken in the name of such Trustee or the acts or omissions of any Servicer under
any Servicing Agreement or any other agreement contemplated hereby or thereby;
(m) any action by such Trustee taken at the instruction of the Initial
Beneficiary, the holder or any pledgee of any Certificate or any Servicer; or
(n) the preparation, execution or filing of any document or report with the
Securities and Exchange Commission or any state securities commission or agency;
provided, however, that the foregoing shall not relieve any Trustee of its
obligation to perform its duties under this Agreement. Except with respect to a
claim based on the failure of a Trustee to perform its duties (i) under this
Agreement to authenticate and deliver Certificates at the request of the Initial
Beneficiary, or (ii) as set forth in Sections 5.1(d) and 6.9, or based on a
Trustee's or any Trust Agent's willful misconduct, bad faith or gross negligence
(or, with respect to the handling or disbursement of funds, negligence), no
recourse shall be had against the Person or institution serving as a Trustee in
its individual capacity for any claim based on any provision of this Agreement
or any Servicing Agreement, or any Trust Asset or assignment thereof. A Trustee
shall not have any personal obligation, liability or duty whatsoever to the
Initial Beneficiary or any permitted assignee(s) thereof or any other Person
with respect to any such claim, and any such claim shall be asserted solely
against the Trust Assets or any indemnitor who shall furnish indemnity as
provided in this Agreement. A Trustee shall not be accountable for the use or
application by the Initial Beneficiary or a Special Purpose Entity of any of the
SUBI Certificates or of the proceeds of such Certificates, or for the use or
application of any funds properly paid to any Servicer pursuant to any Servicing
Agreement.
Section 5.5. Indemnity of Trustees and Trust Agents. Each Trustee
and any Trust Agent shall be indemnified and held harmless (but only, to the
extent, if any, provided in the applicable SUBI Supplement, out of and to the
extent of the Trust Assets allocated to the Portfolio for which such Trustee
acts as trustee) with respect to any loss, liability or expense, including
reasonable attorneys, and other professionals' fees and expenses (collectively
"Claims"), arising out of or incurred in connection with (a) any of the Trust
Assets (including, without limitation, any Claims relating to Leases, Trust
Vehicles, Fleet Receivables, misrepresentation, deceptive and unfair trade
practices, consumer fraud, consumer leasing act violations, and any other claims
arising in connection with any Lease, personal injury or property damage claims
arising with respect to any Unit or any claim with respect to any tax arising
with respect to any Trust Asset) or (b) such Trustee's or Trust Agent's
acceptance or performance of the trusts and duties contained in this Agreement
or any Trust Agency Agreement, with any allocation of such indemnification among
the Trust Assets to be made as provided for in Section 7.1(b) hereof; provided,
however, that neither a Trustee nor any Trust Agent shall be indemnified
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or held harmless out of the Trust Assets as to any Claim (i) for which the
Initial Beneficiary, a Servicer or any of their respective Affiliates shall be
liable pursuant to this Agreement or a Servicing Agreement, (ii) incurred by
reason of such Trustee's or such Trust Agent's willful misfeasance, bad faith or
gross negligence (or, with respect to the handling or disbursement of funds,
negligence), or (iii) incurred by reason of such Trustee Bank's breach of its
respective representations and warranties pursuant to any Servicing Agreement or
of Section 6.2 of this Agreement. The UTI Trustee shall in no event have any
recourse to any SUBI Assets, including such SUBI Assets which were UTI Assets at
the time a Claim against the UTI Trustee arose, and no SUBI Trustee shall have
any recourse to any UTI Assets, including such UTI Assets which were SUBI Assets
at the time a Claim against such SUBI Trustee arose.
Section 5.6. Trustee's Right Not to Act. Notwithstanding anything to
the contrary contained herein, a Trustee shall have the right to decline to act
in any particular manner otherwise provided for herein if such Trustee, being
advised in writing by counsel, determines that such action may not lawfully be
taken, or if such Trustee in good faith shall determine that such action would
be illegal or subject such Trustee Bank to personal liability or be unduly
prejudicial to the rights of other beneficiaries of the Trust.
Section 5.7. Doing Business in Other Jurisdictions. Notwithstanding
anything contained herein to the contrary, neither a Trustee Bank nor the
related Trustee shall be required to take any action in any jurisdiction other
than in the State of its incorporation or any State in which it is qualified to
do business (each, a "State of Qualification") if the taking of such action may
(i) require the consent, approval, authorization or order of or the giving of
notice to, or the registration with or the taking of any other action in respect
of, any state or other governmental authority or agency of any jurisdiction
other than a State of Qualification; (ii) result in any fee, tax or other
governmental charge under the laws of any jurisdiction or any political
subdivisions thereof in existence on the date hereof other than a State of
Qualification becoming payable by the Trust Bank; or (iii) subject the Trustee
Bank to personal jurisdiction in any jurisdiction other than a State of
Qualification for causes of action arising from acts unrelated to the
consummation of the transactions by such Trustee Bank or the related Trustee, as
the case may be, contemplated hereby. In the event that a Trustee does not take
any action because such action may result in the consequences described in the
preceding sentence, such Trustee will appoint, at the expense of the Trust, a
separate trustee or co-trustee pursuant to Section 6.6 to proceed with such
action.
Section 5.8. No Election to be a Corporation. Neither the Trust nor
any Trustee shall make or authorize any Person to make an election to have the
Trust classified or taxed as a corporation for federal income tax purposes or
any applicable state or local income or franchise tax purposes.
PART VI
APPOINTMENT, COMPENSATION AND REMOVAL OF TRUSTEES
Section 6.1. Appointment of Trustees. VMS is hereby designated as
UTI Trustee. Wilmington Trust Company is hereby designated as Delaware Trustee.
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Section 6.2. Qualification of Trustee. Except as otherwise provided
in this Agreement, each Trustee under this Agreement (with the exception of VMS
as the initial UTI Trustee) shall at all times be (a) a bank or trust company
organized under the laws of the United States or one of the fifty states of the
United States or the District of Columbia, with capital and surplus of at least
$100,000,000, and (b) in the case of the Delaware Trustee only, have a principal
place of business, or shall have appointed an agent with a principal place of
business, in the State of Delaware. Any Trustee need not meet the qualifications
set forth in clause (a) above if such Trustee has appointed a Trust Agent that
meets such qualifications.
Section 6.3. Resignation or Removal of Trustee. (a) A Trustee may at
any time resign by giving thirty days' prior written notice to the Initial
Beneficiary and each Certificateholder. Upon receiving the notice of resignation
the holder of the UTI (in the case of the UTI Trustee or the Delaware Trustee)
or the holder of the applicable SUBI (in the case of a SUBI Trustee) shall
promptly appoint a successor Trustee who meets the eligibility requirements set
forth in Section 6.2 by written instrument.
(b) If at any time a Trustee shall cease to be qualified in
accordance with Section 6.2, or if any representation or warranty made by a
Trustee Bank pursuant to Section 6.7 shall prove to have been untrue in any
material respect when made, but such Trustee shall fail to resign after written
request therefor by the holder of the applicable UTI Certificate or SUBI
Certificate or the assignee or pledgee of such UTI Certificate or SUBI
Certificate in connection with a Securitization, or if at any time a Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of a Trustee or of its property shall be appointed, or any public
officer shall take charge or control of a Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation, then such
Trustee may be removed upon written notice by the holder of the applicable UTI
Certificate or SUBI Certificate or the assignee or pledgee of such UTI
Certificate or SUBI Certificate in connection with a Securitization. If a
Trustee resigns or is removed under the authority of the immediately preceding
sentence, the holder of the applicable UTI Certificate or SUBI Certificate shall
promptly appoint a successor Trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor Trustee, together with payment of all amounts owed to the
outgoing Trustee.
(c) Any resignation or removal of a Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this part shall not
become effective until acceptance of appointment by the successor Trustee.
Section 6.4. Successor Trustee. Any successor Trustee appointed as
provided in Section 6.3 shall execute, acknowledge and deliver to the Servicer,
the Initial Beneficiary, the holder and each assignee or pledgee of the
applicable UTI Certificate or SUBI Certificate and to its predecessor Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor under this Agreement, with like effect as if originally named as the
applicable Trustee. The predecessor Trustee shall deliver to
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the successor Trustee all documents and statements held by it under this
Agreement, and the Initial Beneficiary, the holder of the applicable UTI
Certificate or SUBI Certificate and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Trustee all such
rights, powers, duties and obligations. No successor Trustee shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor Trustee shall be eligible under the provisions of Section 6.2.
Section 6.5. Merger or Consolidation of Trustees. (a) Any entity (i)
into which a Trustee may be merged or consolidated, (ii) which may result from
any merger, conversion, or consolidation to which a Trustee shall be a party, or
(iii) which may succeed to all or substantially all of the corporate trust
business of a Trustee, which entity, if requested by the Initial Beneficiary or
the holder, assignee or pledgee of the applicable SUBI, executes an agreement of
assumption to perform every obligation of such Trustee under this Agreement,
shall be the successor of such Trustee hereunder, provided such entity shall be
eligible pursuant to Section 6.2, without the execution or filing of any
instrument or any further act on the part of any of the parties hereto (other
than the written consent of the Initial Beneficiary or the holder, assignee or
pledgee of the applicable SUBI Certificate).
(b) Upon the happening of any of the events described in Section
6.3, Section 6.4 or paragraph (a) of this Section 6.5, the successor trustee
shall, to the extent required by Delaware law, cause an amendment to the
certificate of trust to be filed with the Secretary of State, in accordance with
the provisions of Section 3810 of the Business Trust Statute, indicating the
change with respect to such Trustee's identity.
Section 6.6. Appointment of Co-Trustee, Separate Trustee, or
Nominee. (a) Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any Trust Asset may at the time be located, the Initial Beneficiary or the
holder of or the Servicer with respect to the applicable SUBI and a Trustee,
acting jointly, shall have the power to execute and deliver all instruments to
appoint one or more Persons approved by such Persons to act as co-trustee,
jointly with such Trustee, or as a separate trustee or nominee, of all or any
part of the Trust, and to vest in such Person, in such capacity and for the
benefit of the Initial Beneficiary and its permitted assignee(s) , such title to
the Trust Assets, or any part thereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as such
Persons may consider necessary or desirable. No co-trustee, separate trustee, or
nominee under this Agreement shall be required to meet the terms of eligibility
as a successor trustee pursuant to Section 6.2, except that no co-trustee,
separate trustee or nominee with respect to any SUBI or any SUBI Assets under
this Agreement may be the Initial Beneficiary or any Affiliate thereof.
(b) Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the applicable Trustee shall be conferred upon and exercised or
performed by such Trustee
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and such separate trustee and co-trustee jointly (it being understood that
such separate trustee or co-trustee is not authorized to act separately
without such Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to be
performed (whether as a Trustee under this Agreement or as successor to
any Servicer under this Agreement or any Servicing Agreement), such
Trustee shall be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties and obligations (including the
holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of such Trustee;
(ii) no Trustee under this Agreement shall be personally liable by
reason of any act or omission of any other Trustee under this Agreement;
and
(iii) the Initial Beneficiary (or the holder of a SUBI Certificate
for a separate trustee or co-trustee acting with respect to the related
SUBI Portfolio) and a Trustee acting jointly may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to a Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Section. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with a Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, such Trustee. Each
such instrument shall be filed with such Trustee and a copy thereof given to the
Servicer.
Any separate trustee or co-trustee may at any time appoint the
applicable Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts relating to this Agreement
and the Trust Assets shall vest in and be exercised by the applicable Trustee,
to the extent permitted by law, without the appointment of a new or successor
trustee. Notwithstanding anything to the contrary in this Agreement, the
appointment of any separate trustee or co-trustee shall not relieve the
applicable Trustee of its obligations and duties under this Agreement.
Section 6.7. Representations and Warranties of Trustees. (a) Each
Trustee Bank hereby makes the following representations and warranties as of the
date hereof, and the Trustee Banks shall be deemed to remake the following
representations and warranties upon each transfer by the Initial Beneficiary of
a SUBI in connection with a Securitization, on which the Initial Beneficiary,
each of its permitted assignees and pledgees, and each pledgee or holder of a
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Certificate (and beneficial owner of any portion thereof in connection with a
Securitization) may rely:
(i) Organization and Good Standing. The Trustee Bank is a banking
corporation duly organized, validly existing and in good standing under
the law of its jurisdiction of organization;
(ii) Power and Authority. The Trustee Bank has full power, authority
and right to execute, deliver and perform its obligations under this
Agreement, and has taken all necessary action to authorize the execution,
delivery and performance by it of this Agreement;
(iii) Due Execution. This Agreement has been duly executed and
delivered by the Trustee Bank, and is a legal, valid and binding
instrument enforceable against the Trustee Bank in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law;
(iv) No Conflict. Neither the execution and delivery of this
Agreement nor the consummation of the transactions herein contemplated,
nor compliance with the provisions hereof, will conflict with or result in
a breach of, or constitute a default (with notice or passage of time or
both) under any provision of any federal or Delaware state law,
governmental rule or regulation, or any judgment, decree or order binding
on the Trustee Bank or the articles of association or bylaws of the
Trustee Bank or any provision of any mortgage, indenture, contract,
agreement or other instrument to which the Trustee Bank is a party or by
which it is bound; and
(v) Location of Records. The office where the Trustee keeps its
records concerning the transactions contemplated hereby is located at: (i)
in the case of the SUBI Trustee, 1100 North Market Street, Wilmington,
Delaware 19890-0001, and (ii) in the case of the Delaware Trustee, 1100
North Market Street, Wilmington, Delaware 19890-0001.
(b) VMS, as the initial UTI Trustee, hereby makes the following
representations and warranties as of the date hereof, and VMS, so long as VMS is
the UTI Trustee, shall be deemed to remake the following representations and
warranties upon each transfer by the Initial Beneficiary of a SUBI in connection
with a Securitization, on which the Initial Beneficiary, each of its permitted
assignees and pledgees, and each pledgee or holder of a Certificate (and
beneficial owner of any portion thereof in connection with a Securitization) may
rely:
(a) Organization and Good Standing. VMS is a Delaware limited
liability company duly organized, validly existing and in good standing
under the law of its jurisdiction of organization;
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(b) Power and Authority. VMS has full power, authority and right to
execute, deliver and perform its obligations under this Agreement, and has
taken all necessary action to authorize the execution, delivery and
performance by it of this Agreement;
(c) Due Execution. This Agreement has been duly executed and
delivered by VMS, and is a legal, valid and binding instrument enforceable
against VMS in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law;
(d) No Conflict. Neither the execution and delivery of this
Agreement nor the consummation of the transactions herein contemplated,
nor compliance with the provisions hereof, will conflict with or result in
a breach of, or constitute a default (with notice or passage of time or
both) under any provision of any federal or Delaware state law,
governmental rule or regulation, or any judgment, decree or order binding
on VMS or the limited liability company agreement of VMS or any provision
of any mortgage, indenture, contract, agreement or other instrument to
which VMS is a party or by which it is bound; and
(e) Location of Records. The office where VMS, as the UTI Trustee,
keeps its records concerning the transactions contemplated hereby is
located at 900 Old Country Road, Garden City, New York 11530.
Section 6.8. Trustee's Fees and Expenses. Each Trustee shall be paid
out of Trust Assets allocated to the Portfolio for which such Trustee acts as
trustee, to the extent, if any, provided in the applicable SUBI Supplement or by
the Servicer, to the extent provided in the Servicing Agreement and any
supplement thereto, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
and reimbursement of all reasonable expenses (including without limitation
reasonable attorneys' fees), as may be agreed upon in writing between the
Initial Beneficiary and such Trustee, for all services rendered by it in the
execution of the Trust and in the exercise and performance of any of the powers
and duties under this Agreement.
Section 6.9. No Petition. (a) Each of the Trustee Banks, each
Trustee and the Initial Beneficiary covenants and agrees that prior to the date
which is one year and one day after the date upon which all obligations under
each Securitization have been paid in full, it will not institute against, or
join any other Person in instituting against, the Trust, the Initial
Beneficiary, any other Special Purpose Entity, or any general partner of any
Special Purpose Entity that is a partnership, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other proceedings under any
federal or state bankruptcy or similar law. This Section shall survive the
termination of this Agreement or the resignation or removal of such Trustee
under this Agreement.
(b) No bankruptcy, reorganization arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy, insolvency or similar law
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shall be instituted by the Trust without the unanimous consent of all Trustees
and Certificateholders hereunder. A SUBI Trustee shall not so consent unless
directed to do so by the holder of the applicable SUBI and each assignee or
pledgee of such SUBI Certificate, and the Delaware Trustee shall not so consent
unless directed to do so by all of the Certificateholders.
Section 6.10. Place of Business. At all times, either the Delaware
Trustee or a co-trustee hereunder shall be a resident of, or have a principal
place of business in, the State of Delaware.
PART VII
ACCOUNTS
Section 7.1. Accounts; Expenses. (a) The UTI Trustee will establish
and maintain with respect to the Undivided Trust Interest such bank accounts as
may be directed in writing by the Initial Beneficiary and each SUBI Trustee will
establish and maintain with respect to each SUBI such bank accounts as may be
set forth in the applicable SUBI Supplement (collectively, the "Trustee
Accounts," and each such Trustee Account with respect to any particular SUBI, a
"SUBI Account"). A Trustee may authorize any Servicer to make deposits into and
to make disbursements from its Trustee Accounts in accordance with the terms and
provisions of this Agreement and any Servicing Agreement.
(b) All Trust expenses shall be paid by the Servicer in accordance
with Section 2.5 of the Servicing Agreement (other than losses with respect to
the Trust Assets). In the event of any failure of the Servicer to pay any
expense of the Trust in accordance with Section 2.5 of the Servicing Agreement,
Trust expenses relating to any particular UTI Portfolio or SUBI Portfolio or any
UTI Trustee or SUBI Trustee shall be paid from the assets of that UTI Portfolio
or SUBI Portfolio to the extent, if any, provided in the applicable Supplement.
To the extent any such expense or liability shall be incurred or suffered with
respect to the Trust Assets generally, all beneficiaries of the Trust shall bear
the burden of such Trust expense or liability ratably in accordance with their
respective share of such expense or liability borne or allocable to their
respective UTI Portfolio or SUBI Portfolio, or, if such allocation is not
practicable, on a pro rata basis in the ratio of the aggregate value of Trust
Assets held in each respective SUBI Portfolio and the UTI Portfolio, as each is
recorded on the books of the Trust, to the total value of all Trust Assets, or
on such other equitable basis as shall be appropriate under the circumstances.
Any pro rata allocation of an expense or liability among one or more of the SUBI
Portfolios or the UTI Portfolio shall be made in good faith and so as not to
disproportionately affect any SUBI Portfolio or the UTI Portfolio.
(c) All or a portion of the funds deposited into each Trustee
Account shall be separately invested by the applicable Trustee from time to time
at the written direction of the Initial Beneficiary or a Special Purpose Entity
(as appropriate) or the applicable Servicer, as its designee, all as specified
in the applicable Servicing Agreement.
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PART VIII
TERMINATION
Section 8.1. Termination of the Trust. (a) The Trust shall dissolve
upon the unanimous written agreement of all of the holders of Certificates. Upon
the dissolution of the Trust, its affairs shall be wound up and its property
liquidated. Thereafter, after paying its liabilities in accordance with Section
3808 of the Business Trust Statute, the Delaware Trustee shall cause the Trust's
certificate of trust to be canceled by filing a certificate of cancellation with
the Secretary of State in accordance with the provisions of Section 3810 of the
Business Trust Statute and the Trust shall terminate.
(b) Any SUBI shall be dissolved and its affairs shall be wound up at
the time or upon the happening of events specified in the applicable SUBI
Supplement. Any SUBI established in accordance with this Agreement may be
dissolved and its affairs wound up without causing the dissolution of the Trust
or any other SUBI thereof. The dissolution, winding up, liquidation or
termination of the Trust or any SUBI thereof shall not affect any limitation of
liability with respect to a SUBI established in accordance with this Agreement,
the Certificate of Trust or Section 3804(a) of the Business Trust Statute. The
death, incapacity, dissolution, termination or bankruptcy of a beneficial owner
of any SUBI shall not result in the termination or dissolution of such SUBI and
such SUBI may not be terminated or revoked by a beneficial owner of such SUBI or
other person except in accordance with the terms of this Agreement or, in the
case of any SUBI, the applicable SUBI Supplement.
(c) The Servicer and any other persons under this Agreement or a
SUBI Supplement which are responsible for winding up the affairs of any SUBI may
in the name of the Trust and for and on behalf of the Trust and such SUBI, take
all actions with respect to the SUBI as are permitted under Section 3808 of the
Business Trust Statute and shall provide for the claims and obligations of the
SUBI and distribute the assets of the SUBI as provided under Section 3808 of the
Business Trust Statute. Any Person, including any Trustee, who under this
Agreement or any SUBI Supplement is responsible for winding up such SUBI'
affairs who has complied with Section 3808(e) of the Business Trust Statute
shall not be personally liable to the claimants of the dissolved SUBI by reason
of such Person's actions in winding up the SUBI.
PART IX
MISCELLANEOUS PROVISIONS
Section 9.1. Amendment. This Agreement may be amended by written
agreement between the Initial Beneficiary and the UTI Trustee (entered into by
the UTI Trustee at the written direction of the Initial Beneficiary); provided,
however, that any such amendment shall also require the approvals of the
Certificateholders and any pledgee or assignee of a SUBI Certificate to the
extent required pursuant to the terms of the related SUBI Supplement; provided
further, however, that amendments shall not require any approval of
Certificateholders, or pledgees or assignees of any SUBI Certificate, if such
Certificateholders, pledgees or assignees would not be adversely affected by
such amendment. Prior to the execution of any amendment to this Agreement, any
Servicing Agreement or any other agreement contemplated hereby or
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thereby, each Trustee and each Certificateholder shall receive and shall be
entitled to rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and that all conditions
precedent, if any, to such execution and delivery have been satisfied. A Trustee
may, but shall not be obligated to, enter into any such amendment which
adversely affects such Trustee's own rights, duties or immunities under this
Agreement or otherwise.
Section 9.2. GOVERNING LAW. THIS AGREEMENT SHALL BE CREATED UNDER
AND GOVERNED BY AND CONSTRUED UNDER THE INTERNAL LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.
Section 9.3. Notices. All demands, notices and communications under
this Agreement shall be in writing and shall be delivered or mailed by
registered or certified first class United States mail, postage prepaid, return
receipt requested; hand delivery; prepaid courier service; or telecopier, and
addressed in each case as follows: (a) if to the Initial Beneficiary, c/o Global
Securitization Services, LLC, 25 West 43rd Street, New York, New York 10036,
Attention: Vice President (at Telecopier No. (212) 302-5151); (b) if to the UTI
Trustee, 900 Old Country Road, Garden City, New York 11530, Attention: General
Counsel (at Telecopier No. 516-222-3751) and (c) if to the Delaware Trustee Bank
or the Delaware Trustee, 1100 North Market Street, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration (at Telecopier No.
302-651-8882) or at such other address as shall be designated by VMS, the
Initial Beneficiary, the UTI Trustee, the Delaware Trustee Bank or the Delaware
Trustee in a written notice to the other parties hereto.
Section 9.4. Severability of Provisions. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of any Certificates
or the rights of the holders thereof.
Section 9.5. Construction. For all purposes of this Agreement,
unless the context otherwise requires or as otherwise expressly provided, (a)
all defined terms shall include both the singular and the plural form thereof;
(b) reference to any gender shall include all other genders; (c) all references
to words such as "herein", "hereof" and the like shall refer to this Agreement
as a whole and not to any particular Part or Section within this Agreement; (d)
the term "include" means "include without limitation"; and (e) the term "or" is
intended to include the term "and/or".
Section 9.6. Separate Entity. The Trustees and the Initial
Beneficiary shall in all transactions with third parties hold the Trust out as a
separate entity from the Initial Beneficiary and any Affiliate of the Initial
Beneficiary (the "Initial Beneficiary Group") and the Initial Beneficiary Group
shall do all things necessary to make the Trust continue to be readily
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distinguishable from the Initial Beneficiary and other members of the Initial
Beneficiary Group. In furtherance and not in limitation of the foregoing, the
Trust shall:
(i) practice and adhere to organizational formalities, such as
maintaining appropriate books and records;
(ii) observe all organizational formalities in connection with all
dealings with the Initial Beneficiary Group ;
(iii) observe all procedures required by this Agreement and the laws
of the State of Delaware;
(iv) act solely in its name;
(v) ensure the receipt of proper authorization, when necessary, from
the holders of the Certificates for its actions;
(vi) not (i) have or incur any indebtedness to the Initial
Beneficiary Group; (ii) guarantee or otherwise become liable for any
obligations of the Initial Beneficiary Group; (iii) have obligations
guaranteed by the Initial Beneficiary Group; (iv) hold itself out as
responsible for debts of the Initial Beneficiary Group or for decisions or
actions with respect to the affairs of the Initial Beneficiary Group; (v)
operate or purport to operate as an integrated, single economic unit with
respect to the Initial Beneficiary Group or any other unaffiliated entity;
(vi) seek to obtain credit or incur any obligation to any third party
based upon the assets of the Initial Beneficiary Group or any other
unaffiliated entity; (vii) induce any such third party to reasonably rely
on the creditworthiness of the Initial Beneficiary Group or any other
unaffiliated entity; and (viii) be directly or indirectly named as a
direct or contingent beneficiary or loss payee on any insurance policy of
the Initial Beneficiary Group other than as required by the Transaction
Documents;
(vii) other than as provided in the Transaction Documents, maintain
its deposit and other bank accounts and all of its assets separate from
those of any other Person;
(viii) maintain its financial records separate and apart from those
of any other Person;
(ix) compensate all its agents for services provided to it by such
Persons out of its own funds or reimbursing any of its Affiliates in
respect of amounts paid by such Affiliates for such services;
(x) account for and manage all of its liabilities separately from
those of the Initial Beneficiary Group;
(xi) refrain from filing or otherwise initiating or supporting the
filing of a motion in any bankruptcy or other insolvency proceeding
involving the Initial
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Beneficiary Group to substantively consolidate the Trust or any Affiliate
of the Trust with the Initial Beneficiary; and
(xii) remain solvent.
Section 9.7. No Market in Beneficial Interests. Each of the Initial
Beneficiary and each Trustee covenants and agrees that it will not transfer,
assign, participate, pledge or otherwise dispose of its interest in the Trust,
or cause its interest to be marketed, on or through an established securities
market. No transfer of a beneficial interest in the Trust may be made unless the
transferee makes representations substantially similar to those set forth in
Exhibit D hereto.
[SIGNATURES ON NEXT PAGE]
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<PAGE>
IN WITNESS WHEREOF, each of the undersigned have caused this Amended
and Restated Origination Trust Agreement to be duly executed by their respective
officers as of the day and year first above written.
RAVEN FUNDING LLC,
as Settlor and Initial Beneficiary
By:_______________________________________
Name:
Title:
PHH VEHICLE MANAGEMENT SERVICES LLC,
as existing settlor and UTI Trustee
By:_______________________________________
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Delaware Trustee
By:_______________________________________
Name:
Title:
<PAGE>
TABLE OF CONTENTS
Page
----
PART I
CREATION OF TRUST................................................2
Section 1.1. Creation of Trust........................................2
PART II
TRUST ASSETS.....................................................2
Section 2.1. Trust Assets.............................................2
PART III
ACCEPTANCE BY TRUSTEES...........................................3
Section 3.1. Acceptance by Trustees...................................3
PART IV
BENEFICIAL INTERESTS IN TRUST....................................3
Section 4.1. Undivided Trust Interest.................................3
Section 4.2. Special Units of Beneficial Interest.....................5
Section 4.3. [Intentionally Left Blank.]..............................6
Section 4.4. Form of Certificate: Registration of Certificates........6
Section 4.5. Mutilated, Destroyed, Lost or Stolen Certificates........7
Section 4.6. Retitling of Trust Vehicles..............................7
PART V
DUTIES AND POWERS OF TRUST AND TRUSTEES; TRUSTEE LIABILITY.......8
Section 5.1. Duties and Powers of Trustees; Limitations on
Trust Activity...........................................8
Section 5.2. Duty of Care.............................................9
Section 5.3. Certain Matters Affecting the Trustees..................10
Section 5.4. Trustees Not Liable for Certificates, Leases or
Fleet Receivables.......................................12
Section 5.5. Indemnity of Trustees and Trust Agents..................13
Section 5.6. Trustees Right Not to Act...............................14
Section 5.7. Doing Business in Other Jurisdictions...................14
PART VI
APPOINTMENT, COMPENSATION AND REMOVAL OF TRUSTEES...............14
(i)
<PAGE>
Page
----
EXHIBITS:
EXHIBIT A Definitions
EXHIBIT B Form of Undivided Trust Interest Certificate
EXHIBIT C Form of Certificate of Trust
(ii)
<PAGE>
TABLE OF CONTENTS
Page
----
PART I CREATION OF TRUST....................................................2
Section 1.1. Creation of Trust........................................2
PART II TRUST ASSETS........................................................2
Section 2.1. Trust Assets.............................................2
PART III ACCEPTANCE BY TRUSTEES.............................................3
Section 3.1. Acceptance by Trustees...................................3
PART IV BENEFICIAL INTERESTS IN TRUST.......................................3
Section 4.1. Undivided Trust Interest.................................3
Section 4.2. Special Units of Beneficial Interest.....................5
Section 4.3. [Intentionally Left Blank.]..............................6
Section 4.4. Form of Certificate: Registration of Certificates........6
Section 4.5. Mutilated, Destroyed, Lost or Stolen Certificates........7
Section 4.6. Retitling of Trust Vehicles..............................7
PART V DUTIES AND POWERS OF TRUST AND TRUSTEES; TRUSTEE LIABILITY...........8
Section 5.1. Duties and Powers of Trustees; Limitations on
Trust Activity...........................................8
Section 5.2. Duty of Care.............................................9
Section 5.3. Certain Matters Affecting the Trustees..................10
Section 5.4. Trustees Not Liable for Certificates, Leases or
Fleet Receivables.......................................12
Section 5.5. Indemnity of Trustees and Trust Agents..................13
Section 5.6. Trustees Right Not to Act...............................14
Section 5.7. Doing Business in Other Jurisdictions...................14
PART VI APPOINTMENT, COMPENSATION AND REMOVAL OF TRUSTEES..................14
Section 6.1. Appointment of Trustees.................................14
Section 6.2. Qualification of Trustee................................14
Section 6.3. Resignation or Removal of Trustee.......................14
Section 6.4. Successor Trustee.......................................15
Section 6.5. Merger or Consolidation of Trustees.....................15
Section 6.6. Appointment of Co-Trustee, Separate Trustee, or
Nominee.................................................16
Section 6.7. Representations and Warranties of Trustees..............17
Section 6.8. Trustees Fees and Expenses..............................19
Section 6.9. No Petition.............................................19
(i)
<PAGE>
Page
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Section 6.10. Place of Business......................................19
PART VII ACCOUNTS..........................................................19
Section 7.1. Accounts; Expenses......................................19
PART VIII TERMINATION......................................................20
Section 8.1. Termination of the Trust................................20
PART IX MISCELLANEOUS PROVISIONS...........................................21
Section 9.1. Amendment...............................................21
Section 9.2. GOVERNING LAW...........................................21
Section 9.3. Notices.................................................21
Section 9.4. Severability of Provisions..............................22
Section 9.5. Construction............................................22
Section 9.6. Separate Entity.........................................22
Section 9.7. No Market in Beneficial Interests.......................23
(ii)
<PAGE>
EXHIBIT 4.41
================================================================================
D.L. PETERSON TRUST
SOLD SUBI SUPPLEMENT 1999-1A
TO ORIGINATION TRUST AGREEMENT
among
RAVEN FUNDING LLC,
as Settlor and Initial Beneficiary
PHH VEHICLE MANAGEMENT SERVICES LLC,
as UTI Trustee and Servicer
and
WILMINGTON TRUST COMPANY,
as Delaware Trustee and SUBI Trustee
Dated as of June 30, 1999
================================================================================
<PAGE>
SOLD SUBI SUPPLEMENT 1999-1A
TO ORIGINATION TRUST AGREEMENT
THIS SOLD SUBI SUPPLEMENT 1999-1A TO ORIGINATION TRUST AGREEMENT
(the "1999-1A Sold SUBI Supplement") is dated and effective as of June 30, 1999,
among RAVEN FUNDING LLC ("SPV" or, in its capacity as settlor, the "Settlor", or
in its capacity as initial beneficiary, the "Initial Beneficiary"), PHH VEHICLE
MANAGEMENT SERVICES LLC, a Delaware limited liability company ("VMS"), as UTI
Trustee (in such capacity, together with any successor or permitted assign, the
"UTI Trustee") and as Servicer (in such capacity, together with any successor or
permitted assign, the "Servicer") and WILMINGTON TRUST COMPANY, as Delaware
Trustee (in such capacity, together with any successor or permitted assign, the
"Delaware Trustee"), and as trustee with respect to the 1999-1A Sold SUBI (in
such capacity, together with any successor or permitted assign, the "SUBI
Trustee"; together with the UTI Trustee and the Delaware Trustee, the
"Origination Trustees").
RECITALS
A. The Settlor, the UTI Trustee and the Delaware Trustee have
entered into that certain Amended and Restated Origination Trust Agreement dated
as of June 30, 1999 (as modified, supplemented or amended from time to time, the
"Origination Trust Agreement") pursuant to which the Settlor continued the D.L.
Peterson Trust, formerly a Maryland common law trust, as a Delaware business
trust (the "Origination Trust"), for the purpose of acting as agent and nominee
owner of various Trust Assets in accordance with the Origination Trust
Agreement.
B. The Origination Trust, the Settlor and VMS, as Servicer, also
have entered into that certain Servicing Agreement dated as of June 30, 1999 (as
modified, supplemented or amended from time to time, the "Servicing Agreement"),
which provides, among other things, for the servicing of the Trust Assets by the
Servicer.
C. The Origination Trust Agreement contemplates that, from time to
time, the UTI Trustee, on behalf of the Origination Trust and at the direction
of the Initial Beneficiary, will identify and allocate on the Origination
Trust's books and records certain Trust Assets from the Undivided Trust Interest
to separate SUBI Portfolios (as defined in the Origination Trust Agreement) and
create and issue Certificates to the Initial Beneficiary representing separate
special units of beneficial interest in the Origination Trust or "SUBIs" (as
defined in the Origination Trust Agreement), the beneficiary or beneficiaries of
which generally will hold undivided beneficial interests in the related SUBI
Portfolios (as defined in the Origination Trust Agreement), all as set forth in
the Origination Trust Agreement.
<PAGE>
D. The parties hereto desire to supplement the terms of the
Origination Trust Agreement (i) to cause the UTI Trustee to identify and
allocate Trust Assets to a SUBI Portfolio (the "1999-1A Sold SUBI Portfolio"),
and (ii) to create and issue to the Initial Beneficiary a SUBI Certificate (as
defined in the Origination Trust Agreement) (such SUBI Certificate, together
with any replacements thereof, the "1999-1A Sold SUBI Certificate"), that will
evidence the entire and exclusive beneficial interest in the related SUBI (the
"1999-1A Sold SUBI"), and (iii) to set forth the terms and conditions thereof.
E. Concurrently herewith, the Initial Beneficiary, the UTI Trustee,
the Servicer, the Delaware Trustee and the SUBI Trustee are entering into a
separate SUBI supplement (the "1999-1B SUBI Supplement" to create and issue to
SPV two separate 1999-1B SUBI Certificates (the "1999-1B SUBI Certificates"),
which collectively evidence the entire and exclusive beneficial interest in the
1999-1B SUBI consisting of the Fleet Receivables and the Trust Assets associated
therewith (the "1999-1B SUBI").
F. Concurrently herewith, SPV is transferring all of its right,
title and interest in and to the 1999-1A Sold SUBI, the 1999-1A Sold SUBI
Certificate, the portion of the 1999-1B SUBI represented by the Class X 1999-1B
Sold SUBI Certificate (as defined in the 1999-1B Sold SUBI Supplement), and the
Class X 1999-1B Sold SUBI Certificate to Issuer pursuant to the Transfer
Agreement.
G. Issuer will issue (i) debt securities pursuant to an Indenture
dated as of June 30, 1999 (the "Indenture") between the Issuer and The Chase
Manhattan Bank, as indenture trustee (the "Indenture Trustee"), and (ii)
preferred membership interests in the Issuer pursuant to the LLC Agreement and
will use the proceeds thereof on the date hereof to satisfy certain claims on
the Trust Assets allocated to the 1999-1A Sold SUBI and to make a distribution
to the Initial Beneficiary and thereafter will use the proceeds thereof to fund
the acquisition of subsequent additions to the 1999-1A Sold SUBI Portfolio.
H. Also concurrently herewith, the Origination Trust, the Settlor
and the Servicer are entering into that certain 1999-1 Sold SUBI Supplement to
Servicing Agreement (the "1999-1 Sold SUBI Servicing Supplement") pursuant to
which, among other things, the terms of the Servicing Agreement will be
supplemented insofar as they apply to the 1999-1A Sold SUBI Portfolio and the
Trust Assets allocated to the 1999-1B SUBI, providing for specific servicing
obligations that will benefit the Issuer, as the holder of the 1999-1A Sold SUBI
Certificate and the Class X 1999-1B Sold SUBI Certificate and SPV, as the holder
of the Class Y 1999-1B Sold SUBI Certificate and related matters.
PART X
DEFINITIONS; THIRD-PARTY BENEFICIARIES
Section 10.1. Definitions. For all purposes of this 1999-1A Sold
SUBI Supplement, except as otherwise provided or unless the context otherwise
requires, (a) all capitalized terms used herein which are not defined herein and
which are defined in the
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Origination Trust Agreement shall have the meanings attributed to them by the
Origination Trust Agreement, (b) all capitalized terms used herein which are not
defined herein or in the Origination Trust Agreement and which are defined in
the Indenture shall have the meanings attributed to them by the Indenture, (c)
all references to words such as "herein," "hereof" and the like shall refer to
this 1999-1A Sold SUBI Supplement as a whole and not to any particular article
or section within this 1999-1A Sold SUBI Supplement, (d) the term "include" and
all variations thereon shall mean "include without limitation", and (e) the term
"or" shall include "and/or".
Section 10.2. Rights in Respect of 1999-1A Sold SUBI. The holder and
pledgees of the 1999-1A Sold SUBI Certificate (including the SPV, the Issuer and
the Indenture Trustee, on behalf of the Investor Noteholders) and their
respective successors and permitted assigns are third-party beneficiaries of the
Origination Trust Agreement and this 1999-1A Sold SUBI Supplement, insofar as
they apply to the 1999-1A Sold SUBI and said holders or pledgees. Therefore, to
that extent, references in the OriginationTrust Agreement and herein to the
ability of any "holder of a SUBI Certificate", "pledgee or assignee of a SUBI
Certificate" or the like to take any action shall be deemed to refer to the
Issuer acting with the consent or upon the instruction of the Indenture Trustee
during such time as any Investor Note shall remain outstanding and, if no
Investor Notes remain outstanding, shall be deemed to refer to the Issuer acting
in accordance with the LLC Agreement.
PART XI
CREATION OF THE 1999-1A SOLD SUBI
Section 11.1. Initial Creation of 1999-1A Sold SUBI Portfolio and
1999-1A Sold SUBI. (a) Pursuant to Section 4.2(a) of the Origination Trust
Agreement, the Initial Beneficiary hereby directs the UTI Trustee to identify
and allocate or cause to be identified and allocated on the books and records of
the Origination Trust an initial separate portfolio of SUBI Assets (as defined
in the Origination Trust Agreement) consisting of those Master Lease Agreements
listed on Schedule I, all Leases entered into under those Master Lease
Agreements as of the Initial Cut-off Date, all Leased Vehicles subject to those
Leases and all Paid-In Advance Vehicles relating to those Master Lease
Agreements and those Consumer Leases listed on Schedule I and all Leased
Vehicles subject to these Consumer Leases (each, a "1999-1A Sold SUBI Asset"),
and all Trust Assets to the extent related thereto, including, without
limitation, the Initial Beneficiary's rights under the Contribution Agreement
and the Asset Sale Agreement related thereto (other than Trust Assets described
in clause (h) of the definition thereof). Based upon their identification and
allocation by the Initial Beneficiary pursuant to such Schedule I, the UTI
Trustee hereby identifies and allocates as 1999-1A Sold SUBI Assets such
portfolio of SUBI Assets, each such SUBI Asset to be identified on the books and
accounts of the Origination Trust as belonging exclusively to the 1999-1A Sold
SUBI Portfolio; provided that any Collections received prior to the Initial
Cut-off Date in respect of any such 1999-1A Sold SUBI Asset identified on
Schedule I shall not be allocated as a 1999-1A Sold SUBI Asset and shall not
belong to the 1999-1A Sold SUBI Portfolio.
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(b) Also pursuant to Section 4.2(a) of the Origination Trust
Agreement, the UTI Trustee hereby creates a SUBI which shall be known as the
"1999-1A Sold SUBI" and which shall represent an exclusive and specific
beneficial interest solely in the 1999-1A Sold SUBI Portfolio.
(c) As required by Section 4.2(d) of the Origination Trust
Agreement, SPV has appointed Wilmington Trust Company as the SUBI Trustee for
the 1999-1A Sold SUBI and the 1999-1A Sold SUBI Portfolio.
Section 11.2. Subsequent Additions to the 1999-1A Sold SUBI
Portfolio. (a) Subject to the satisfaction of the conditions therefor set forth
in Section 11.2(d), the Initial Beneficiary, from time to time on any date on
which it acquires a Paid-In Advance Vehicle that is, or is to become, subject to
a Master Lease Agreement identified on Schedule I hereto (as such Schedule I may
be amended from time to time as provided in Section 11.2(b) below), shall assign
such Paid-In Advance Vehicle to the Origination Trust pursuant to an Assignment
Agreement in the form of Exhibit B hereto (the "Assignment Agreement") and
direct the UTI Trustee to identify on the books of the Origination Trust, and
allocate exclusively to the 1999-1A Sold SUBI Portfolio as additional 1999-1A
Sold SUBI Assets, such Paid-In-Advance Vehicle, any Lease subsequently entered
into by the Origination Trust with respect to such Paid-In Advance Vehicle and
all other unallocated Trust Assets to the extent related thereto (other than
Trust Assets described in clause (h) of the definition thereof).
(b) Subject to the satisfaction of the conditions therefor set forth
in Section 11.2(d), the Initial Beneficiary may from time to time, on or after
any date on which the Origination Trust enters into a Master Lease Agreement
direct the UTI Trustee to identify on the books and records of the Origination
Trust, and allocate exclusively to the 1999-1A Sold SUBI Portfolio as additional
1999-1A Sold SUBI Assets, such Master Lease Agreement and all other unallocated
Trust Assets to the extent related thereto (other than Trust Assets described in
clause (h) of the definition thereof). In connection with any allocation of a
Master Lease Agreement and the related Trust Assets to the 1999-1A Sold SUBI
Portfolio, the UTI Trustee shall amend Schedule I hereto to add such Master
Lease Agreement and the related Trust Assets.
(c) Subject to the satisfaction of the conditions therefor set forth
in Section 11.2(d), the Initial Beneficiary may from time to time, on or after
any date on which the Origination Trust enters into a Consumer Lease, assign all
of its right, title and interest in and to such Consumer Lease and the Leased
Vehicle then subject thereto to the Origination Trust pursuant to an Assignment
Agreement and direct the UTI Trustee to identify on the books and records of the
Origination Trust, and allocate exclusively to the 1999-1A Sold SUBI Portfolio
as additional 1999- 1A Sold SUBI Assets, such Consumer Lease and such Leased
Vehicle, and all other unallocated Trust Assets to the extent related thereto
(other than Trust Assets described in clause (h) of the definition thereof). In
connection with any allocation of a Consumer Lease and the related Trust Assets
to the 1999-1A Sold SUBI Portfolio, the UTI Trustee shall amend Schedule I
hereto to add such Consumer Lease and the related Trust Assets.
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(d) Each identification and allocation to the 1999-1A Sold SUBI
Portfolio of a Paid-In Advance Vehicle pursuant to Section 11.2(a), a Master
Lease Agreement and the related Trust Assets pursuant to Section 11.2(b) or a
Consumer Lease and the related Trust Assets pursuant to Section 11.2(c) shall be
subject to the prior satisfaction of the following conditions:
(i) In the case of an identification and allocation of a Paid-In
Advance Vehicle pursuant to Section 11.2(a), the Master Lease Agreement
under which such Paid-In-Advance is being acquired shall not be an
Ineligible Delinquent Lease and the Initial Beneficiary shall have
delivered to the UTI Trustee and the SUBI Trustee, with a copy to the
Indenture Trustee, the Assignment Agreement with respect to such Paid-In
Advance Vehicle;
(ii) In the case of an identification and allocation of a Master
Lease Agreement and the related Trust Assets pursuant to Section 11.2(b),
the Servicer shall have delivered to SPV, the Issuer and the Indenture
Trustee a certification as of the date of such allocation of an Authorized
Officer with respect to such Master Lease Agreement substantially to the
effect set forth in Exhibit C;
(iii) In the case of an identification and allocation of a Consumer
Lease and the related Trust Assets pursuant to Section 11.2(c), (A) the
Initial Beneficiary shall have delivered to the UTI Trustee and the SUBI
Trustee, with a copy to the Indenture Trustee, the Assignment Agreement
with respect to the Leased Vehicle relating to such Consumer Lease and (B)
the Servicer shall have delivered to the SPV, the Issuer and the Indenture
Trustee a certification as of the date of such allocation of an Authorized
Officer with respect to such Consumer Lease substantially to the effect
set forth in Exhibit C; and
(iv) No Transfer Termination Event shall have occurred and be
continuing.
Section 11.3. Issuance and Form of the 1999-1A Sold SUBI
Certificate. (a) The 1999-1A Sold SUBI shall be represented by the 1999-1A Sold
SUBI Certificate which shall represent an exclusive 100% beneficial interest in
the 1999-1A Sold SUBI and the 1999-1A Sold SUBI Portfolio, as further set forth
herein. The 1999-1A Sold SUBI Certificate shall be substantially in the form of
Exhibit A attached hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required by this 1999-1A Sold SUBI
Supplement and may have such letters, numbers or other marks of identification
and such legends and endorsements placed thereon as may, consistently herewith
and with the Origination Trust Agreement, be directed by the Initial
Beneficiary. Any portion of the 1999-1A Sold SUBI Certificate may be set forth
on the reverse thereof. The 1999-1A Sold SUBI Certificate shall be printed,
lithographed, typewritten, photocopied or otherwise produced or may be produced
in any other manner as may, consistently herewith and with the Origination Trust
Agreement, be determined by the Initial Beneficiary. The 1999-1A Sold SUBI
Certificate shall be initially registered in the name of the Issuer.
(b) As required by Section 4.2(b) of the Origination Trust
Agreement, the 1999-1A Sold SUBI Certificate shall contain an express written
release and subordination of any
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claim by any holder thereof to any proceeds or assets of the Origination Trust
other than those from time to time included within the 1999-1A Sold SUBI
Portfolio.
Section 11.4. Filings; Termination of 1999-1A Sold SUBI; Related
Matters. (a) The Settlor, the UTI Trustee and the SUBI Trustee will undertake
all other and future actions and activities as may be required by the Servicer
to perfect (or evidence) and confirm the foregoing allocations of SUBI Assets to
the 1999-1A Sold SUBI Portfolio, including filing or causing to be filed UCC
financing statements and executing and delivering all related filings, documents
or writings as may be deemed reasonably necessary by the Servicer hereunder or
under any of the Transaction Documents and as are presented to them in final
execution form; provided, however, that in no event will the Settlor, the
Servicer or any Origination Trustee be required to take any action to change the
Person listed as owner or lienholder on the Certificate of Title for any Leased
Vehicle allocated to the 1999-1A Sold SUBI Portfolio. The Settlor hereby
irrevocably makes and appoints each of the SUBI Trustee and the Servicer, and
any of their respective officers, employees or agents, as the true and lawful
attorney-in-fact of the Settlor (which appointment is coupled with an interest
and is irrevocable) with power to sign on behalf of the Settlor any financing
statements, continuation statements, security agreements, mortgages,
assignments, affidavits, letters of authority, notices or similar documents
necessary or appropriate to be executed or filed pursuant to this Section.
(b) If all of the Sold Units have been liquidated into cash and all
of such cash shall have been distributed in accordance with the 1999-1A Sold
SUBI Servicing Supplement, then at the direction of the Initial Beneficiary the
1999-1A Sold SUBI shall be terminated and the 1999-1A Sold SUBI Certificate
shall be returned to the SUBI Trustee and canceled thereby and all 1999-1A Sold
SUBI Assets shall be allocated to the UTI.
Section 11.5. Acceptance by SUBI Trustee. The SUBI Trustee shall
have the rights, powers and duties set forth herein and in the Origination Trust
Agreement with respect to the 1999-1A Sold SUBI. Pursuant to Section 3.1(c) of
the Origination Trust Agreement, the SUBI Trustee hereby accepts its appointment
as SUBI Trustee with respect to the 1999-1A Sold SUBI hereunder and agrees to
act as a trustee of the Origination Trust for the benefit of the holder or
holders of each 1999-1A Sold SUBI Certificate in accordance with the terms of
this 1999-1A Sold SUBI Supplement and the Origination Trust Agreement
Section 11.6. Representations and Warranties of the SUBI Trustee.
The SUBI Trustee hereby makes the following representations and warranties on
which the Settlor and Initial Beneficiary, each of their permitted assignees and
pledgees, and each pledgee or holder of the 1999-1A Sold SUBI Certificate may
rely:
(a) Organization and Good Standing. The SUBI Trustee is a banking
corporation, duly organized, validly existing and in good standing under
the laws of the State of Delaware.
(b) Power and Authority. The SUBI Trustee has full power, authority
and right to execute, deliver and perform this 1999-1A Sold SUBI
Supplement and has taken
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all necessary action to authorize the execution, delivery and performance
by it of this 1999-1A Sold SUBI Supplement.
(c) Due Execution. This 1999-1A Sold SUBI Supplement has been duly
executed and delivered by the SUBI Trustee, and this 1999-1A Sold SUBI
Supplement and the Origination Trust Agreement are legal, valid and
binding instruments enforceable against the SUBI Trustee in accordance
with their respective terms, except as such enforceability may be limited
by bankruptcy, insolvency and other similar laws relating to the
enforcement of creditors' rights generally and to general principles of
equity.
(d) No Conflict. Neither the execution and delivery of this 1999-1A
Sold SUBI Supplement nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict
with or result in a breach of, or constitute a default (with notice or
passage of time or both) under any provision of any law, governmental
rule, regulation, judgment, decree or order of any Governmental Authority
in the State of Delaware binding on the SUBI Trustee or the charter or
bylaws of the SUBI Trustee or any provision of any mortgage, indenture,
contract, agreement or other instrument to which the SUBI Trustee is a
party or by which it is bound. No consent, approval or authorization of,
or filing, registration or qualification with, or the giving of notice or
the taking of any other action with respect to, any Governmental Authority
of the State of Delaware is required on the part of the SUBI Trustee in
connection with the execution, delivery and performance by the SUBI
Trustee of the Origination Trust Agreement, the Servicing Agreement, the
1999-1A Sold SUBI Servicing Supplement and this 1999-1A Sold SUBI
Supplement.
(e) Location of Records. The office where the SUBI Trustee keeps its
records concerning the transactions contemplated hereby is located at 1100
North Market Street, Wilmington, Delaware 19890-0001.
Section 11.7. Merger and Consolidation of Origination Trustees. Each
Origination Trustee shall give notice to the Initial Beneficiary, the Servicer,
SPV, the Issuer, and the Indenture Trustee within 30 days after effecting any
merger, consolidation, or other transaction set forth in Section 6.5 of the
Origination Trust Agreement.
PART XII
ORIGINATION TRUST FEES AND EXPENSES
Section 12.1. Origination Trust Fees and Expenses. Notwithstanding
Sections 5.5, 6.8 or 7.1 or any other provision of the Origination Trust
Agreement, the rights of the Origination Trustees to receive fees or be
indemnified or reimbursed for expenses incurred in connection with or allocated
to the 1999-1A Sold SUBI out of the 1999-1A Sold SUBI Assets shall be paid by
the Servicer pursuant to Section 7.5 of the 1999-1 Sold SUBI Servicing
Supplement.
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PART XIII
ASSIGNMENT OF THE 1999-1A SOLD SUBI
Section 13.1. Assignment. The parties to this 1999-1A Sold SUBI
Supplement hereby acknowledge and consent to (i) the transfer, pledge,
assignment by SPV to the Issuer pursuant to the Transfer Agreement of all of the
SPV's right, title and interest in and to the 1999-1A Sold SUBI and the 1999-1A
Sold SUBI Certificate and (ii) the pledge, assignment and grant of a security
interest by the Issuer to the Indenture Trustee for the benefit of the Investor
Noteholders pursuant to the Indenture of all of the Issuer's right, title and
interest in the 1999-1A Sold SUBI and the 1999-1A Sold SUBI Certificate.
PART XIV
MISCELLANEOUS PROVISIONS
Section 14.1. Amendment, Etc. (a) Notwithstanding Section 9.1 of the
Origination Trust Agreement, the Origination Trust Agreement, as supplemented by
this 1999-1A Sold SUBI Supplement, to the extent that it deals solely with the
1999-1A Sold SUBI and the 1999-1A Sold SUBI Portfolio, may be amended only in
accordance with this Section 14.1.
(b) The Origination Trust Agreement or this 1999-1A Sold SUBI
Supplement may be amended by SPV with the consent of the Origination Trustees,
but without the consent of any other Person, to correct any inconsistency or
cure any ambiguity or errors in the Origination Trust Agreement or this 1999-1A
Sold SUBI Supplement only in a manner which would have no adverse effect on any
holder of the 1999-1A Sold SUBI Certificate or any pledgee or assignee thereof.
(c) The Origination Trust Agreement or this 1999-1A Sold SUBI
Supplement may be amended in any respect from time to time by SPV, with the
consent of the Origination Trustees (to the extent adversely affected thereby)
and the holder of the 1999-1A Sold SUBI Certificate and each pledgee or assignee
thereof.
(d) Prior to the execution of any such amendment or consent, the
Servicer shall furnish at least five (5) Business Days prior written
notification of the substance of such amendment or consent (together with a copy
of the related Opinion of Counsel) to each Rating Agency with respect to each
Series of Investor Notes and each series of Preferred Membership Interests;
provided that the Servicer shall have no obligation to furnish any such Rating
Agency with prior written notice of the substance of any amendment or consent to
the Origination Trust Agreement. No later than ten (10) Business Days after the
execution of any such amendment or consent, the Servicer shall furnish a copy of
such amendment or consent to each Rating Agency with respect to each Series of
Investor Notes and each series of Preferred Membership Interests, the Issuer and
the Indenture Trustee.
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(e) Prior to the execution of any amendment to the Origination Trust
Agreement or this 1999-1A Sold SUBI Supplement, the Issuer and the Indenture
Trustee shall be entitled to receive and conclusively rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by the Origination Trust Agreement or this 1999-1A Sold SUBI Supplement and that
all conditions precedent to the execution and delivery of such amendment have
been satisfied.
Section 14.2. Governing Law. THIS 1999-1A SOLD SUBI SUPPLEMENT SHALL
BE CREATED UNDER AND GOVERNED BY AND CONSTRUED UNDER THE INTERNAL LAWS OF THE
STATE OF DELAWARE, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF
CONFLICTS OF LAWS.
Section 14.3. Notices. The notice provisions of Section 9.3 of the
Origination Trust Agreement shall apply equally to this 1999-1A Sold SUBI
Supplement. All demands, notices and communications under this 1999-1A Sold SUBI
Supplement or the Origination Trust Agreement shall be in writing and shall be
delivered or mailed by registered or certified first class United States mail,
postage prepaid, return receipt requested; hand delivery; prepaid courier
service; or telecopier, and;
(i) if to the SUBI Trustee, addressed to:
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
(at Telecopier No. 302-651-8882)
or at such other address as shall be designated by such Person to the
other parties hereto;
(ii) if to the Initial Beneficiary, addressed to:
RAVEN FUNDING LLC
900 Old Country Road
Garden City, New York 11530
Attention: General Counsel
Telecopier: 516-222-3751
or at such other address as shall be designed by the holder of the 1999-1A
Sold SUBI Certificate to the other parties hereto; and
(iii) if to the Indenture Trustee, addressed to:
The Chase Manhattan Bank
450 West 33rd Street, 14th Floor
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New York, New York 10001-2597
Attention: Capital Markets Fiduciary Services
(iv) if to the Issuer, addressed to:
Greyhound Funding LLC
900 Old Country Road
Garden City, New York 11530
Attention: General Counsel
Telecopier: 516-222-3751
or at such other address as shall be designated by such Person to the
parties hereto.
Section 14.4. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this 1999-1A Sold SUBI Supplement
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this 1999-1A Sold SUBI Supplement
and shall in no way affect the validity or enforceability of the other
provisions of this 1999-1A Sold SUBI Supplement or of the 1999-1A Sold SUBI
Certificate or the rights of the holder thereof. To the extent permitted by law,
the parties hereto waive any provision of law that renders any provision of this
1999-1A Sold SUBI Supplement invalid or unenforceable in any respect.
Section 14.5. Effect of 1999-1A Sold SUBI Supplement on Origination
Trust Agreement and Transaction Documents. (a) Except as otherwise specifically
provided herein: (i) the parties shall continue to be bound by all provisions of
the Origination Trust Agreement; and (ii) the provisions set forth herein shall
operate either as additions to or modifications of the obligations of the
parties under the Origination Trust Agreement, as the context may require. In
the event of any conflict between the provisions of this 1999-1A Sold SUBI
Supplement and the Origination Trust Agreement with respect to the 1999-1A Sold
SUBI, the provisions of this 1999-1A Sold SUBI Supplement shall prevail.
(b) For purposes of determining the parties' obligations under this
1999-1A Sold SUBI Supplement with respect to the 1999-1A Sold SUBI, general
references in the Origination Trust Agreement to: (i) the SUBI Portfolio shall
be deemed to refer more specifically to the 1999-1A Sold SUBI Portfolio; (ii)
the SUBI Supplement shall be deemed to refer more specifically to this 1999- 1A
Sold SUBI Supplement; and (iii) the SUBI Servicing Agreement Supplement shall be
deemed to refer more specifically to the 1999-1 Sold SUBI Servicing Supplement.
(c) Anything contained in the Origination Trust Agreement to the
contrary notwithstanding (including, without limitation, Section 5.5 thereof),
no Origination Trustee that is an Affiliate of VMS shall be entitled to any
indemnification out of any 1999-1A Sold SUBI Assets for any matter for which VMS
or any Affiliate of VMS shall have indemnified SPV or shall otherwise be
responsible under the Transaction Documents.
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Section 14.6. Series Liability. Each party hereto represents,
warrants and covenants (and each holder or pledgee of the 1999-1A Sold SUBI, by
virtue of its acceptance of such 1999-1A Sold SUBI or pledge thereof represents,
warrants and covenants) that (a) the 1999-1A Sold SUBI is a separate series of
the Origination Trust as provided in Section 3806(b)(2) of Chapter 38 of Title
12 of the Delaware Code, 12 Del. C. ss. 3801, et seq., (b)(i) the debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to the 1999-1A Sold SUBI or the 1999-1A Sold SUBI
Portfolio shall be enforceable against the 1999-1A Sold SUBI Portfolio only, and
not against any other SUBI Assets or the UTI Portfolio and (ii) the debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to any other SUBI, any other SUBI Portfolio, the UTI or
the UTI Portfolio shall be enforceable against such other SUBI Portfolio or the
UTI Portfolio only, as applicable, and not against any other SUBI Assets, (c)
except to the extent required by law or specified in the Origination Trust
Agreement or in this 1999-1A Sold SUBI Supplement, UTI Assets or SUBI Assets
with respect to any SUBI (other than the 1999-1A Sold SUBI) shall not be subject
to the claims, debts, liabilities, expenses or obligations arising from or with
respect to the 1999-1A Sold SUBI in respect of such claim, (d)(i) no creditor or
holder of a claim relating to assets allocated to the 1999-1A Sold SUBI or the
1999-1A Sold SUBI Portfolio shall be entitled to maintain any action against or
recover any assets allocated to the UTI or the UTI Portfolio or any other SUBI
or the assets allocated thereto, and (ii) no creditor or holder of a claim
relating to the UTI, the UTI Portfolio or any SUBI other than the 1999-1A Sold
SUBI or any SUBI Assets other than the 1999-1A Sold SUBI Portfolio shall be
entitled to maintain any action against or recover any assets allocated to the
1999-1A Sold SUBI, and (e) any purchaser, assignee or pledgee of an interest in
the 1999-1A Sold SUBI, the 1999-1A Sold SUBI Certificate, any other SUBI, any
other SUBI Certificate, the UTI or the UTI Certificate must, prior to or
contemporaneously with the grant of any such assignment, pledge or security
interest, (i) give to the Origination Trust a non-petition covenant
substantially similar to that set forth in Section 6.9 of the Origination Trust
Agreement, and (ii) execute an agreement for the benefit of each holder,
assignee or pledgee from time to time of the UTI or UTI Certificate and any
other SUBI or SUBI Certificate to release all claims to the assets of the
Origination Trust allocated to the UTI and each other SUBI Portfolio and in the
event that such release is not given effect, to fully subordinate all claims it
may be deemed to have against the assets of the Origination Trust allocated to
the UTI Portfolio and each other SUBI Portfolio.
Section 14.7. No Petition: Release of Claims. With respect to each
Special Purpose Entity, each party hereto (and each holder and pledgee of the
1999-1A Sold SUBI, by virtue of its acceptance of such SUBI or pledge thereof)
agrees that, prior to the date which is one year and one day after payment in
full of all obligations under each Securitization (i) no party hereto shall
authorize such Special Purpose Entity to commence a voluntary winding-up or
other voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to such Special Purpose Entity or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect in any
jurisdiction or seeking the appointment of an administrator, a trustee,
receiver, liquidator, custodian or other similar official with respect to such
Special Purpose Entity or any substantial part of its property or to consent to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against such
Special Purpose Entity or to make a general assignment for
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the benefit of any party hereto or any other creditor of such Special Purpose
Entity, and (ii) none of the parties hereto shall commence or join with any
other Person in commencing any proceeding against such Special Purpose Entity
under any bankruptcy, reorganization, liquidation or insolvency law or statute
now or hereafter in effect in any jurisdiction. Each of the parties hereto
agrees that, prior to the date which is one year and one day after the payment
in full of all obligations under each Securitization, it will not institute
against, or join any other Person in instituting against, any Special Purpose
Entity an action in bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or similar proceeding under the laws of the United
States or any State of the United States.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the Settlor and the Trustees have caused this
1999-1A Sold SUBI Supplement to be duly executed by their respective officers as
of the day and year first above written.
RAVEN FUNDING LLC,
as Settlor and Initial Beneficiary
By___________________________________________
Name:
Title:
PHH VEHICLE MANAGEMENT SERVICES LLC,
as UTI Trustee and Servicer
By___________________________________________
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Delaware Trustee and SUBI Trustee
By___________________________________________
Name:
Title:
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TABLE OF CONTENTS
Page
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RECITALS ..........................................................1
PART X
DEFINITIONS; THIRD-PARTY BENEFICIARIES....................2
Section 10.1. Definitions...............................................2
Section 10.2. Rights in Respect of 1999-1A Sold SUBI....................3
PART XI
CREATION OF THE 1999-1A SOLD SUBI.........................3
Section 11.1. Initial Creation of 1999-1A Sold SUBI Portfolio and
1999-1A Sold SUBI.......................................3
Section 11.2. Subsequent Additions to the 1999-1A Sold SUBI
Portfolio...............................................4
Section 11.3. Issuance and Form of the 1999-1A Sold SUBI
Certificate.............................................5
Section 11.4. Filings; Termination of 1999-1A Sold SUBI; Related
Matters.................................................5
Section 11.5. Acceptance by SUBI Trustee................................6
Section 11.6. Representations and Warranties of the SUBI Trustee........6
Section 11.7. Merger and Consolidation of Origination Trustees..........7
PART XII
ORIGINATION TRUST FEES AND EXPENSES.......................7
Section 12.1. Origination Trust Fees and Expenses.......................7
PART XIII
ASSIGNMENT OF THE 1999-1A SOLD SUBI.......................7
Section 13.1. Assignment................................................7
PART XIV
MISCELLANEOUS PROVISIONS..................................8
Section 14.1. Amendment, Etc............................................8
Section 14.2. Governing Law.............................................8
Section 14.3. Notices...................................................9
Section 14.4. Severability of Provisions...............................10
(i)
<PAGE>
Page
----
Section 14.5. Effect of 1999-1A Sold SUBI Supplement on Origination
Trust Agreement and Transaction Documents..............10
Section 14.6. Series Liability.........................................10
Section 14.7. No Petition: Release of Claims...........................11
Schedule I - Description of 1999-1A SUBI Assets
Exhibit A - Form of 1999-1A Sold SUBI Certificate
Exhibit B - Form of Assignment Agreement
Exhibit C - Form of Officer's Certificate
(ii)
EXHIBIT 4.42
================================================================================
D.L. PETERSON TRUST
SOLD SUBI SUPPLEMENT 1999-1B
TO ORIGINATION TRUST AGREEMENT
among
RAVEN FUNDING LLC,
as Settlor and Initial Beneficiary
PHH VEHICLE MANAGEMENT SERVICES LLC,
as UTI Trustee and Servicer
and
WILMINGTON TRUST COMPANY,
as Delaware Trustee and SUBI Trustee
Dated as of June 30, 1999
================================================================================
<PAGE>
SOLD SUBI SUPPLEMENT 1999-1B
TO ORIGINATION TRUST AGREEMENT
THIS SOLD SUBI SUPPLEMENT 1999-1B TO ORIGINATION TRUST AGREEMENT
(the "Sold SUBI Supplement") is dated and effective as of June 30, 1999, among
RAVEN FUNDING LLC ("SPV" or, in its capacity as settlor, the "Settlor", or in
its capacity as initial beneficiary, the "Initial Beneficiary"), PHH VEHICLE
MANAGEMENT SERVICES LLC, a Delaware limited liability company, ("VMS"), as UTI
Trustee (in such capacity, together with any successor or permitted assign, the
"UTI Trustee") and as Servicer (in such capacity, together with any successor or
permitted assign, the "Servicer") and WILMINGTON TRUST COMPANY, as Delaware
Trustee (in such capacity, together with any successor or permitted assign, the
"Delaware Trustee"), and as trustee with respect to the Sold SUBI (in such
capacity, together with any successor or permitted assign, the "SUBI Trustee";
together with the UTI Trustee and the Delaware Trustee, the "Origination
Trustees").
RECITALS
A. The Settlor, the UTI Trustee and the Delaware Trustee have
entered into that certain Amended and Restated Origination Trust Agreement dated
as of June 30, 1999 (as modified, supplemented or amended from time to time, the
"Origination Trust Agreement") pursuant to which the Settlor continued D.L.
Peterson Trust, formerly a Maryland common law trust, as a Delaware business
trust (the "Origination Trust"), for the purpose of acting as agent and nominee
owner of various Trust Assets in accordance with the Origination Trust
Agreement.
B. The Origination Trust, the Settlor and VMS, as Servicer, also
have entered into that certain Servicing Agreement dated as of June 30, 1999 (as
modified, supplemented or amended from time to time, the "Servicing Agreement"),
which provides, among other things, for the servicing of the Trust Assets by the
Servicer.
C. The Origination Trust Agreement contemplates that, from time to
time, the UTI Trustee, on behalf of the Origination Trust and at the direction
of the Initial Beneficiary, will identify and allocate on the Origination
Trust's books and records certain Trust Assets from the Undivided Trust Interest
to separate SUBI Portfolios (as defined in the Origination Trust Agreement) and
create and issue Certificates to the Initial Beneficiary representing separate
special units of beneficial interest in the Origination Trust or "SUBIs" (as
defined in the Origination Trust Agreement), the beneficiary or beneficiaries of
which generally will hold undivided beneficial interests in the related SUBI
Portfolios (as defined in the Origination Trust Agreement), all as set forth in
the Origination Trust Agreement.
D. The parties hereto desire to supplement the terms of the
Origination Trust Agreement (i) to cause the UTI Trustee to identify and
allocate Trust Assets to a SUBI Portfolio (the "1999- 1B Sold SUBI Portfolio"),
and (ii) to create and issue to the Initial Beneficiary a SUBI Certificate (as
defined in the Origination Trust Agreement) (such SUBI Certificate, together
with any replacements thereof, the "Class X 1999-1B Sold SUBI Certificate"), and
a
<PAGE>
SUBI Certificate (such SUBI Certificate, together with any replacements thereof,
the "Class Y 1999-1B Sold SUBI Certificate", and together with the Class X
1999-1B Sold SUBI Certificate, the "1999-1B Sold SUBI Certificates"), that will
evidence the entire and exclusive beneficial interest in the related SUBI (the
"1999-1B Sold SUBI"), and (iii) to set forth the terms and conditions thereof.
E. Concurrently herewith, the Initial Beneficiary, the UTI Trustee,
the Servicer, the Delaware Trustee and the SUBI Trustee are entering into a
separate SUBI supplement (the "1999-1A SUBI Supplement") to create and issue to
SPV a separate SUBI Certificate (the "1999-1A SUBI Certificate". The 1999-1A
SUBI Certificate evidences the entire and exclusive ownership interest in a
separate SUBI consisting of Trust Vehicles, Leases and related Trust Assets. The
1999-1B Sold SUBI represents the entire and exclusive ownership interest in the
Fleet Receivables and related Trust Assets.
F. Concurrently herewith, SPV is transferring all of its right,
title and interest in and to the portion of the 1999-1B Sold SUBI, represented
by the Class X 1999-1B Sold SUBI Certificate, the Class X 1999-1B Sold SUBI
Certificate, the 1999-1A SUBI and the 1999-1A SUBI Certificate to the Issuer
pursuant to the Transfer Agreement.
G. Issuer will issue (i) debt securities pursuant to an Indenture
dated as of June 30, 1999 (the "Indenture") between the Issuer and The Chase
Manhattan Bank, as indenture trustee (the "Indenture Trustee"), and (ii)
preferred membership interests in the Issuer pursuant to the LLC Agreement and
will use the proceeds thereof on the date hereof to satisfy certain claims on
the Trust Assets allocated to the 1999-1A Sold SUBI and to make a distribution
to the Initial Beneficiary and thereafter will use the proceeds thereof to fund
the acquisition of subsequent additions to the Trust Assets allocated to the
1999-1A Sold SUBI.
H. Also concurrently herewith, the Origination Trust, the Settlor
and the Servicer are entering into that certain 1999-1 Sold SUBI Supplement to
Servicing Agreement (the "1999-1 Sold SUBI Servicing Supplement") pursuant to
which, among other things, the terms of the Servicing Agreement will be
supplemented insofar as they apply to the Trust Assets allocated to the 1999-1A
Sold SUBI and the 1999-1B Sold SUBI, providing for specific servicing
obligations that will benefit the Issuer, as the holder of the Class X 1999-1B
Sold SUBI Certificate and the 1999-1A SUBI Certificate and SPV, as the holder of
the Class Y 1999-1B Sold SUBI Certificate and related matters.
PART X
DEFINITIONS; THIRD-PARTY BENEFICIARIES
Section 10.1. Definitions. For all purposes of this 1999-1B Sold
SUBI Supplement, except as otherwise provided or unless the context otherwise
requires, (a) all capitalized terms used herein which are not defined herein and
which are defined in the Origination Trust Agreement shall have the meanings
attributed to them by the Origination Trust Agreement, (b) all capitalized terms
used herein which are not defined herein or in the
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<PAGE>
Origination Trust Agreement and which are defined in the Indenture shall have
the meanings attributed to them by the Indenture, (c) all references to words
such as "herein," "hereof" and the like shall refer to this 1999-1B Sold SUBI
Supplement as a whole and not to any particular article or section within this
1999-1B Sold SUBI Supplement, (d) the term "include" and all variations thereon
shall mean "include without limitation", and (e) the term "or" shall include
"and/or".
Section 10.2. Rights in Respect of 1999-1B Sold SUBI. The holder and
pledgees of the Sold SUBI Certificates (including the SPV, the Issuer and the
Indenture Trustee, on behalf of the Investor Noteholders) and their respective
successors and permitted assigns are third-party beneficiaries of the
Origination Trust Agreement and this 1999-1B Sold SUBI Supplement, insofar as
they apply to the 1999-1B Sold SUBI and said holders or pledgees. Therefore, to
that extent, references in the Origination Trust Agreement and herein to the
ability of any "holder of a SUBI Certificate", "pledgee or assignee of a SUBI
Certificate" or the like to take any action shall be deemed to refer to, in the
case of the Class X 1999-1B Sold SUBI Certificate, the Issuer acting with the
consent or upon the instruction of the Indenture Trustee during such time as any
Investor Note shall remain outstanding and, if no Investor Notes remain
outstanding, shall be deemed to refer to the Issuer acting in accordance with
the LLC Agreement or, in the case of the Class Y 1999-1B Sold SUBI Certificate,
SPV.
PART XI
CREATION OF THE 1999-1B SOLD SUBI
Section 11.1. Initial Creation of the 1999-1B Sold SUBI Portfolio
and the 1999-1B Sold SUBI. (a) Pursuant to Section 4.2(a) of the Origination
Trust Agreement, the Initial Beneficiary hereby directs the UTI Trustee to
identify and allocate or cause to be identified and allocated on the books and
records of the Origination Trust a separate portfolio of SUBI Assets (the
"1999-1B Sold SUBI Portfolio") consisting of an ownership interest in all Trust
Assets consisting of Fleet Receivables, the Trust's rights under the Receivables
Purchase Agreement and all Trust Assets to the extent related thereto,
including, without limitation, the Initial Beneficiary's rights under the
Contribution Agreement and the Asset Sale Agreement related thereto (the
"1999-1B Sold SUBI Assets").
(b) Also pursuant to Section 4.2(a) of the Origination Trust
Agreement, the UTI Trustee hereby creates a SUBI which shall be known as the
"1999-1B Sold SUBI" and which shall represent an exclusive and specific
beneficial interest solely in the 1999-1B Sold SUBI Portfolio.
(c) As required by Section 4.2(d) of the Origination Trust
Agreement, the SPV has appointed Wilmington Trust Company as the SUBI Trustee
for the 1999-1B Sold SUBI and the 1999-1B Sold SUBI Portfolio.
Section 11.2. [Reserved.]
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<PAGE>
Section 11.3. Issuance and Form of the 1999-1B Sold SUBI
Certificates. (a) The 1999-1B Sold SUBI shall be represented by a Class X
1999-1B Sold SUBI Certificate and a Class Y 1999-1B Sold SUBI Certificate which,
collectively shall represent the entire and exclusive beneficial interest in the
1999-1B Sold SUBI and the 1999-1B Sold SUBI Portfolio, as further set forth
herein. The 1999-1B Sold SUBI Certificates shall be substantially in the form of
Exhibit A attached hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required by this Sold SUBI Supplement
and may have such letters, numbers or other marks of identification and such
legends and endorsements placed thereon as may, consistently herewith and with
the Origination Trust Agreement, be directed by the Initial Beneficiary. Any
portion of the 1999-1B Sold SUBI Certificates may be set forth on the reverse
thereof. The 1999-1B Sold SUBI Certificates shall be printed, lithographed,
typewritten, photocopied or otherwise produced or may be produced in any other
manner as may, consistently herewith and with the Origination Trust Agreement,
be determined by the Initial Beneficiary.
(b) As required by Section 4.2(b) of the Origination Trust
Agreement, the 1999-1B Sold SUBI Certificates shall contain an express written
release and subordination of any claim by any holder thereof to any proceeds or
assets of the Origination Trust other than those from time to time included
within the 1999-1B Sold SUBI Portfolio.
(c) The Class X 1999-1B Sold SUBI Certificate represents the right
to the Class X 1999-1B Invested Amount and the Class Y 1999-1B Sold SUBI
Certificate represents the right to the Class Y 1999-1B Invested Amount, after
the holder of the Class X 1999-1B Sold SUBI Certificate shall have received the
Class X 1999-1B Invested Amount. For the purposes of this 1999-1B Sold SUBI
Supplement, (i) "Class X 1999-1B Invested Amount" means for each Monthly Period,
an amount equal to the lesser of (x) $80,000,000 and (y) the Aggregate
Receivables Amount as of the close of business on the first day of such Monthly
Period, (ii) "Class Y 1999-1B Invested Amount" means, for any Monthly Period, an
amount equal to the excess, if any, of (x) the Aggregate Receivables Amount as
of the close of business on the first day of such Monthly Period over (y)
$80,000,000, and (iii) the "Aggregate Receivables Amount" as of any date is
equal to the sum for all Eligible Receivables held by the Trust on such date of
the amounts owing by the Obligors thereunder as of such date. A list identifying
the Obligors with respect to the Fleet Receivables as of June, 24, 1999 is
attached hereto as Schedule I. The UTI Trustee hereby identifies and allocates
as 1999-1B Sold SUBI Assets such portfolio of SUBI Assets, such SUBI Assets to
be identified on the books and accounts of the Origination Trust as belonging
exclusively to the 1999-1B Sold SUBI Portfolio.
Section 11.4. Filings; Termination of 1999-1B Sold SUBI; Related
Matters. (a) The Settlor, the UTI Trustee and the SUBI Trustee will undertake
all other and future actions and activities as may be required by the Servicer
to perfect (or evidence) and confirm the foregoing allocations of 1999-1B SUBI
Assets to the 1999-1B Sold SUBI Portfolio, including filing or causing to be
filed UCC financing statements and executing and delivering all related filings,
documents or writings as may be deemed reasonably necessary by the Servicer
hereunder or under any of the Transaction Documents and as are presented to them
in final execution form. The Settlor hereby irrevocably makes and appoints each
of the SUBI Trustee and the Servicer, and any of their respective officers,
employees or agents, as the true and lawful attorney-in-fact
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<PAGE>
of the Settlor (which appointment is coupled with an interest and is
irrevocable) with power to sign on behalf of the Settlor any financing
statements, continuation statements, security agreements, mortgages,
assignments, affidavits, letters of authority, notices or similar documents
necessary or appropriate to be executed or filed pursuant to this Section.
(b) If all of the 1999-1B Sold SUBI Assets have been liquidated into
cash and all of such cash shall have been distributed in accordance with the
1999-1 Sold SUBI Servicing Supplement, then at the direction of the Initial
Beneficiary the 1999-1B Sold SUBI shall be terminated and the 1999-1B Sold SUBI
Certificates shall be returned to the SUBI Trustee and canceled thereby and all
1999-1B Sold SUBI Assets shall be allocated to the UTI.
Section 11.5. Acceptance by SUBI Trustee. The SUBI Trustee shall
have the rights, powers and duties set forth herein and in the Origination Trust
Agreement with respect to the 1999-1B Sold SUBI. Pursuant to Section 3.1(c) of
the Origination Trust Agreement, the SUBI Trustee hereby accepts its appointment
as SUBI Trustee with respect to the 1999-1B Sold SUBI hereunder and agrees to
act as a trustee of the Origination Trust for the benefit of the holder or
holders of each 1999-1B Sold SUBI Certificates in accordance with the terms of
this 1999-1B Sold SUBI Supplement and the Origination Trust Agreement. The Class
X 1999-1B Sold SUBI Certificate shall be initially registered in the name of the
Issuer and the Class Y 1999-1B Sold SUBI Certificate shall be initially
registered in the name of the Initial Beneficiary.
Section 11.6. Representations and Warranties of SUBI Trustee. The
SUBI Trustee hereby makes the following representations and warranties on which
the Settlor and Initial Beneficiary, each of their permitted assignees and
pledgees, and each pledgee or holder of the 1999-1B Sold SUBI Certificates may
rely:
(a) Organization and Good Standing. The SUBI Trustee is a banking
corporation, duly organized, validly existing and in good standing under
the laws of the State of Delaware.
(b) Power and Authority. The SUBI Trustee has full power, authority
and right to execute, deliver and perform this 1999-1B Sold SUBI
Supplement and has taken all necessary action to authorize the execution,
delivery and performance by it of this 1999-1B Sold SUBI Supplement.
(c) Due Execution. This 1999-1B Sold SUBI Supplement has been duly
executed and delivered by the SUBI Trustee, and this 1999-1B Sold SUBI
Supplement and the Origination Trust Agreement are legal, valid and
binding instruments enforceable against the SUBI Trustee in accordance
with their respective terms, except as such enforceability may be limited
by bankruptcy, insolvency and other similar laws relating to the
enforcement of creditors' rights generally and to general principles of
equity.
(d) No Conflict. Neither the execution and delivery of this 1999-1B
Sold SUBI Supplement nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict
with or result in a breach of, or constitute a default (with notice or
passage of time or both) under any provision of any
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<PAGE>
law, governmental rule, regulation, judgment, decree or order of any
Governmental Authority in the State of Delaware binding on the SUBI
Trustee or the charter or bylaws of the SUBI Trustee or any provision of
any mortgage, indenture, contract, agreement or other instrument to which
the SUBI Trustee is a party or by which it is bound. No consent, approval
or authorization of, or filing, registration or qualification with, or the
giving of notice or the taking of any other action with respect to, any
Governmental Authority of the State of Delaware is required on the part of
the SUBI Trustee in connection with the execution, delivery and
performance by the SUBI Trustee of the Origination Trust Agreement, the
Servicing Agreement, the 1999-1 Sold SUBI Servicing Supplement and this
1999-1B Sold SUBI Supplement.
(e) Location of Records. The office where the SUBI Trustee keeps its
records concerning the transactions contemplated hereby is located at 1100
North Market Street, Wilmington, Delaware 19890-0001.
Section 11.7. Merger and Consolidation of Origination Trustees. Each
Origination Trustee shall give notice to the Initial Beneficiary, the Servicer,
SPV, the Issuer, and the Indenture Trustee within 30 days after effecting any
merger, consolidation, or other transaction set forth in Section 6.5 of the
Origination Trust Agreement.
PART XII
ORIGINATION TRUST FEES AND EXPENSES
Section 12.1. Origination Trust Fees and Expenses. Notwithstanding
Sections 5.5, 6.8 or 7.1 or any other provision of the Origination Trust
Agreement, the rights of the Origination Trustees to receive fees or be
indemnified or reimbursed for expenses incurred in connection with or allocated
to the 1999-1B Sold SUBI out of the 1999-1B Sold SUBI Assets shall be paid by
the Servicer pursuant to Section 7.5 of the 1999-1 Sold SUBI Servicing
Supplement.
PART XIII
ASSIGNMENT OF THE CLASS X 1999-1B SOLD SUBI
Section 13.1. Assignment. The parties to this 1999-1B Sold SUBI
Supplement hereby acknowledge and consent to (i) the transfer, pledge,
assignment by SPV to the Issuer pursuant to the Transfer Agreement of all of the
SPV's right, title and interest in and to the portion of 1999-1B Sold SUBI,
represented by the Class X 1999-1B Sold SUBI Certificate, and the Class X
1999-1B Sold SUBI Certificate and (ii) the pledge, assignment and grant of a
security interest by the Issuer to the Indenture Trustee for the benefit of the
Investor Noteholders pursuant to the Indenture of all of the Issuers right,
title and interest in and to the portion of 1999-1B Sold SUBI, represented by
the Class X 1999-1B Sold SUBI Certificate, and the Class X 1999-1B Sold SUBI
Certificate. The parties to this 1999-1B Sold SUBI Supplement hereby acknowledge
and agree that the SPV shall be prohibited from transferring any of its right,
title
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<PAGE>
and interest in and to the portion of 1999-1B Sold SUBI, represented by the
Class Y 1999-1B Sold SUBI Certificate, to any Person.
PART XIV
MISCELLANEOUS PROVISIONS
Section 14.1. Amendment, Etc. (a) Notwithstanding Section 9.1 of the
Origination Trust Agreement, the Origination Trust Agreement, as supplemented by
this 1999-1B Sold SUBI Supplement, to the extent that it deals solely with the
1999-1B Sold SUBI and the 1999-1B Sold SUBI Portfolio, may be amended only in
accordance with this Section 14.1.
(b) The Origination Trust Agreement or this 1999-1B Sold SUBI
Supplement may be amended by SPV with the consent of the Origination Trustees,
but without the consent of any other Person, to correct any inconsistency or
cure any ambiguity or errors in the Origination Trust Agreement or this 1999-1B
Sold SUBI Supplement only in a manner which would have no adverse effect on any
holder of 1999-1B Sold SUBI Certificate or any pledgee or assignee thereof.
(c) The Origination Trust Agreement or this 1999-1B Sold SUBI
Supplement may be amended in any respect from time to time by SPV, with the
consent of the Origination Trustees (to the extent adversely affected thereby),
each holder of the 1999-1B Sold SUBI Certificates and each pledgee or assignee
thereof.
(d) Prior to the execution of any such amendment or consent, the
Servicer shall furnish at least five (5) Business Days prior written
notification of the substance of such amendment or consent (together with a copy
of the related Opinion of Counsel) to each Rating Agency with respect to each
Series of Investor Notes and each series of Preferred Membership Interests;
provided that the Servicer shall have no obligation to furnish any such Rating
Agency with prior written notice of the substance of any amendment or consent to
the Origination Trust Agreement. No later than ten (10) Business Days after the
execution of any such amendment or consent, the Servicer shall furnish a copy of
such amendment or consent to each Rating Agency with respect to each Series of
Investor Notes and each series of Preferred Membership Interests, the Issuer and
the Indenture Trustee.
(e) Prior to the execution of any amendment to the Origination Trust
Agreement or this 1999-1B Sold SUBI Supplement, the Issuer and the Indenture
Trustee shall be entitled to receive and conclusively rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by the Origination Trust Agreement or this 1999-1B Sold SUBI Supplement and that
all conditions precedent to the execution and delivery of such amendment have
been satisfied.
Section 14.2. Control. The Initial Beneficiary hereby agrees that,
so long as Class X 1999-1B Invested Amount is greater than zero, the holder of
the Class Y 1999-1B
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<PAGE>
Certificate, or its pledgee, shall have no right to control the exercise of all
rights, remedies, powers, interests and privileges in respect of the 1999- 1B
Sold SUBI Portfolio.
Section 14.3. Governing Law. THIS 1999-1B SOLD SUBI SUPPLEMENT SHALL
BE CREATED UNDER AND GOVERNED BY AND CONSTRUED UNDER THE INTERNAL LAWS OF THE
STATE OF DELAWARE, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF
CONFLICTS OF LAWS.
Section 14.4. Notices. The notice provisions of Section 9.3 of the
Origination Trust Agreement shall apply equally to this 1999-1B Sold SUBI
Supplement. All demands, notices and communications under this 1999-1B Sold SUBI
Supplement or the Origination Trust Agreement shall be in writing and shall be
delivered or mailed by registered or certified first class United States mail,
postage prepaid, return receipt requested; hand delivery; prepaid courier
service; or telecopier, and;
(i) if to the SUBI Trustee, addressed to:
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
(at Telecopier No. 302-651-8882)
or at such other address as shall be designated by such Person to the
other parties hereto;
(ii) if to the Initial Beneficiary, addressed to:
RAVEN FUNDING LLC
900 Old Country Road
Garden City, New York 11530
Attention: General Counsel
(at Telecopier No. (516) 222-3751)
or at such other address as shall be designed by the holders of the
1999-1B Sold SUBI Certificates to the other parties hereto; and
(iii) if to the Indenture Trustee, addressed to:
The Chase Manhattan Bank
450 West 33rd Street, 14th Floor
New York, New York 10001-2597
Attention: Capital Markets Fiduciary Services
(iv) if to the Issuer, addressed to:
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<PAGE>
Greyhound Funding, LLC
900 Old Country Road
Garden City, New York 11530
Attention: General Counsel
(at Telecopier No. (516) 222-3751)
or at such other address as shall be designated by such Person to the
parties hereto.
Section 14.5. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this 1999-1B Sold SUBI Supplement
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this 1999-1B Sold SUBI Supplement
and shall in no way affect the validity or enforceability of the other
provisions of this 1999-1B Sold SUBI Supplement or of the 1999-1B Sold SUBI
Certificates or the rights of the holders thereof. To the extent permitted by
law, the parties hereto waive any provision of law that renders any provision of
this 1999-1B Sold SUBI Supplement invalid or unenforceable in any respect.
Section 14.6. Effect of 1999-1B Sold SUBI Supplement on Origination
Trust Agreement and Transaction Documents. (a) Except as otherwise specifically
provided herein: (i) the parties shall continue to be bound by all provisions of
the Origination Trust Agreement; and (ii) the provisions set forth herein shall
operate either as additions to or modifications of the obligations of the
parties under the Origination Trust Agreement, as the context may require. In
the event of any conflict between the provisions of this 1999-1B Sold SUBI
Supplement and the Origination Trust Agreement with respect to the 1999-1B Sold
SUBI, the provisions of this 1999-1B Sold SUBI Supplement shall prevail.
(b) For purposes of determining the parties' obligations under this
Sold SUBI Supplement with respect to the 1999-1B Sold SUBI, general references
in the Origination Trust Agreement to: (i) the SUBI Portfolio shall be deemed to
refer more specifically to the 1999-1B Sold SUBI Portfolio; (ii) the SUBI
Supplement shall be deemed to refer more specifically to this 1999-1B Sold SUBI
Supplement; and (iii) the SUBI Servicing Agreement Supplement shall be deemed to
refer more specifically to the 1999-1 Sold SUBI Servicing Supplement.
(c) Anything contained in the Origination Trust Agreement to the
contrary notwithstanding (including, without limitation, Section 5.5 thereof),
no Origination Trustee that is an Affiliate of VMS shall be entitled to any
indemnification out of any 1999-1B Sold SUBI Assets for any matter for which VMS
or any Affiliate of VMS shall have indemnified SPV or shall otherwise be
responsible under the Transaction Documents.
Section 14.7. Series Liability. Each party hereto represents,
warrants and covenants (and each holder or pledgee of the 1999-1B Sold SUBI, by
virtue of its acceptance of such Sold SUBI or pledge thereof represents,
warrants and covenants) that (a) the 1999-1B Sold SUBI is a separate series of
the Origination Trust as provided in Section 3806(b)(2) of Chapter 38 of Title
12 of the Delaware Code, 12 Del. C. ss. 3801, et seq., (b)(i) the debts,
liabilities,
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obligations and expenses incurred, contracted for or otherwise existing with
respect to the 1999-1B Sold SUBI or the 1999-1B Sold SUBI Portfolio shall be
enforceable against the 1999-1B Sold SUBI Portfolio only, and not against any
other SUBI Assets or the UTI Portfolio and (ii) the debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to any other SUBI, any other SUBI Portfolio, the UTI or the UTI
Portfolio shall be enforceable against such other SUBI Portfolio or the UTI
Portfolio only, as applicable, and not against any other SUBI Assets, (c) except
to the extent required by law or specified in the Origination Trust Agreement or
in this 19991-1B Sold SUBI Supplement, UTI Assets or SUBI Assets with respect to
any SUBI (other than the 1999-1B Sold SUBI) shall not be subject to the claims,
debts, liabilities, expenses or obligations arising from or with respect to the
1999-1B Sold SUBI in respect of such claim, (d)(i) no creditor or holder of a
claim relating to assets allocated to the 1999-1B Sold SUBI or the 1999-1B Sold
SUBI Portfolio shall be entitled to maintain any action against or recover any
assets allocated to the UTI or the UTI Portfolio or any other SUBI or the assets
allocated thereto, and (ii) no creditor or holder of a claim relating to the
UTI, the UTI Portfolio or any SUBI other than the 1999-1B Sold SUBI or any SUBI
Assets other than the 1999-1B Sold SUBI Portfolio shall be entitled to maintain
any action against or recover any assets allocated to the 1999-1B Sold SUBI, and
(e) any purchaser, assignee or pledgee of an interest in the 1999-1B Sold SUBI,
the 1999-1B Sold SUBI Certificate, any other SUBI, any other SUBI Certificate,
the UTI or the UTI Certificate must, prior to or contemporaneously with the
grant of any such assignment, pledge or security interest, (i) give to the
Origination Trust a non-petition covenant substantially similar to that set
forth in Section 6.9 of the Origination Trust Agreement, and (ii) execute an
agreement for the benefit of each holder, assignee or pledgee from time to time
of the UTI or UTI Certificate and any other SUBI or SUBI Certificate to release
all claims to the assets of the Origination Trust allocated to the UTI and each
other SUBI Portfolio and in the event that such release is not given effect, to
fully subordinate all claims it may be deemed to have against the assets of the
Origination Trust allocated to the UTI Portfolio and each other SUBI Portfolio.
Section 14.8. No Petition: Release of Claims. With respect to each
Special Purpose Entity, each party hereto (and each holder and pledgee of the
1999-1B Sold SUBI, by virtue of its acceptance of such SUBI or pledge thereof)
agrees that, prior to the date which is one year and one day after payment in
full of all obligations under each Securitization (i) no party hereto shall
authorize such Special Purpose Entity to commence a voluntary winding-up or
other voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to such Special Purpose Entity or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect in any
jurisdiction or seeking the appointment of an administrator, a trustee,
receiver, liquidator, custodian or other similar official with respect to such
Special Purpose Entity or any substantial part of its property or to consent to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against such
Special Purpose Entity, or to make a general assignment for the benefit of any
party hereto or any other creditor of such Special Purpose Entity, and (ii) none
of the parties hereto shall commence or join with any other Person in commencing
any proceeding against such Special Purpose Entity under any bankruptcy,
reorganization, liquidation or insolvency law or statute now or hereafter in
effect in any jurisdiction. Each of the parties hereto agrees that, prior to the
date which is one year and one day after the payment in full of all
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<PAGE>
obligations under each Securitization, it will not institute against, or join
any other Person in instituting against, any Special Purpose Entity an action in
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or similar proceeding under the laws of the United States or any State of the
United States.
[SIGNATURES ON NEXT PAGE]
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<PAGE>
IN WITNESS WHEREOF, the Settlor and the Trustees have caused this
1999-1B Sold SUBI Supplement to be duly executed by their respective officers as
of the day and year first above written.
RAVEN FUNDING LLC, as Settlor and
Initial Beneficiary
By___________________________________________
Name:
Title:
PHH VEHICLE MANAGEMENT SERVICES LLC,
as UTI Trustee and Servicer
By___________________________________________
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Delaware Trustee and SUBI Trustee
By___________________________________________
Name:
Title:
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<PAGE>
TABLE OF CONTENTS
Page
----
RECITALS .............................................................1
PART X
DEFINITIONS; THIRD-PARTY BENEFICIARIES....................2
Section 10.1. Definitions...............................................2
Section 10.2. Rights in Respect of 1999-1B Sold SUBI...................3
PART XI
CREATION OF THE 1999-1B SOLD SUBI.........................3
Section 11.1. Initial Creation of the 1999-1B Sold SUBI Portfolio
and the 1999-1B Sold SUBI...............................3
Section 11.2. ..........................................................3
Section 11.3. Issuance and Form of the 1999-1B Sold SUBI Certificates...4
Section 11.4. Filings; Termination of 1999-1B Sold SUBI; Related
Matters.................................................4
Section 11.5. Acceptance by SUBI Trustee................................5
Section 11.6. Representations and Warranties of SUBI Trustee............5
Section 11.7. Merger and Consolidation of Origination Trustees..........6
PART XII
ORIGINATION TRUST FEES AND EXPENSES.......................6
Section 12.1. Origination Trust Fees and Expenses.......................6
PART XIII
ASSIGNMENT OF THE CLASS X 1999-1B SOLD SUBI...............6
Section 13.1. Assignment................................................6
PART XIV
MISCELLANEOUS PROVISIONS..................................7
Section 14.1. Amendment, Etc............................................7
Section 14.2. Control...................................................7
Section 14.3. Governing Law.............................................8
Section 14.4. Notices...................................................8
(i)
<PAGE>
EXHIBIT 4.43
================================================================================
D.L. PETERSON TRUST,
RAVEN FUNDING LLC
AND
PHH VEHICLE MANAGEMENT SERVICES LLC
SERVICING AGREEMENT
DATED AS OF JUNE 30, 1999
================================================================================
<PAGE>
SERVICING AGREEMENT
SERVICING AGREEMENT, dated as of June 30, 1999 (as it may be further
amended, supplemented or modified, the "Agreement") , between D.L. PETERSON
TRUST, a Delaware business trust (the "Trust"), RAVEN FUNDING LLC, a Delaware
limited liability company ("SPV") and PHH VEHICLE MANAGEMENT SERVICES LLC, a
Delaware limited liability company (hereinafter, together with its successors
and assigns, "VMS" or, in its capacity as servicer hereunder, the "Servicer").
R E C I T A L S
A. RAVEN FUNDING LLC ("SPV"), as Settlor and Initial Beneficiary,
VMS, as UTI Trustee, and Wilmington Trust Company, as Delaware Trustee, have
entered into that certain Amended and Restated Origination Trust Agreement dated
as of June 30,1999 (the same, as amended, supplemented or modified and in effect
from time to time, the "Trust Agreement"), pursuant to which SPV and the
Trustees continued the Trust for the purpose of taking assignments and
conveyances of and holding and dealing in various Trust Assets in accordance
with the Trust Agreement.
B. The Trustees, on behalf of the Trust and at the direction of SPV,
which also is the sole Initial Beneficiary of the Trust, intend to create and
issue from time to time to or upon the order of SPV various special units of
beneficial interest in the Trust ("SUBIs"), whose beneficiaries generally will
be entitled to the cash flow arising from designated portfolios of Trust Assets
owned by the Trust, and which SUBIs may be used in connection with various
Securitizations (as defined in the Trust Agreement).
C. The parties desire to enter into this Agreement to provide for,
among other things, the servicing of the Trust Assets (including those evidenced
by the SUBIs) by the Servicer.
D. The parties acknowledge that, in connection with one or more
Securitizations, it may be necessary or desirable to enter into supplemental
agreements hereto, including one or more SUBI Servicing Agreement Supplements,
providing for further specific servicing obligations with respect to each
Securitization.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires, (a)
unless otherwise defined herein, all capitalized terms shall have the meanings
attributed to them in the Trust Agreement, (b) the capitalized terms defined in
this Article have the meanings assigned to them in this Article and include (i)
all genders and (ii) the plural as well as the singular, (c) all references to
words such
<PAGE>
as "herein", "hereof" and the like shall refer to this Agreement as a whole and
not to any particular article or section within this Agreement, (d) the term
"include" and all variations thereon shall mean "include without limitation",
(e) the term "or" shall include "and/or", and (f) any reference herein to a
"Trustee, acting on behalf of the Trust", or words of similar import, shall be
deemed to mean the applicable Trustee, acting on behalf of the Trust and all
applicable beneficiaries of the Trust.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such Person. For the purposes of this definition, "control"
when used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" has the meaning set forth in the preamble.
"Certificate" or "Certificates" shall mean the UTI Certificate and
each SUBI Certificate issued and outstanding.
"Certificate of Title" shall have the meaning set forth in the Trust
Agreement.
"Charged-Off Lease" means a Lease which has been or should have been
written off by the Servicer in accordance with the Policies.
"Collections" means all payments on the Trust Assets, including,
without limitation, (i) all monthly lease payments and other lease payments on
the Leases, (ii) all proceeds from the sale or other disposition of the Trust
Vehicles, including Recoveries, (iii) all insurance proceeds and warranty
payments with respect to the Trust Vehicles, (iv) all termination payments
received in respect of the Leases, (v) all other payments in respect of the
Leases and (vi) all payments in respect of the Fleet Receivables, whether such
payments are in the form of cash, checks, wire transfers or other forms of
payment.
"Consumer Lease" means each Lease relating to a single vehicle (i)
between an Obligor and PHH and sold by PHH to the Initial Beneficiary pursuant
to the Asset Sale Agreement and contributed by the Initial Beneficiary to the
Trust pursuant to the Contribution Agreement or (ii) between an Obligor and the
Trust.
"Cost" means the total of all amounts paid to manufacturers, dealers
and vendors in connection with the purchase and delivery of a Trust Vehicle plus
delivery charges, taxes and any registration or titling fees.
"Custodian Agreement" means the Custodian Agreement dated as of June
30, 1999 among Allfirst Financial Center, National Association, as Custodian,
the Trust and the Servicer.
"Delaware Trustee" has the meaning set forth in the Recitals.
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"Fleet Service Contract" means a fleet maintenance contract, fleet
management contract, fuel card contract or any other service contract the fees
for which are billed together with the Leases.
"Governmental Authority" means the United States of America, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Holder" means the holder of a Certificate as indicated in the Trust
Register.
"Initial Beneficiary" has the meaning set forth in the Recitals.
"Insurance Policy" shall have the meaning set forth in the Trust
Agreement.
"Insurance Proceeds" means, with respect to any Lease or Trust
Vehicle or Obligor, proceeds paid to the Servicer, the Trust or a Trustee, on
behalf of the Trust, pursuant to an Insurance Policy.
"Lease" shall have the meaning set forth in the Trust Agreement.
"Lease Agreement" means a Consumer Lease or a Master Lease
Agreement.
"Lease Documents" means, with respect to each Lease, the fully
executed Master Lease Agreement or Consumer Lease, as the case may be, and any
agreements modifying such Lease Agreement (including, without limitation, any
extension agreements relating to extended Leases).
"Lease Files" has the meaning provided in Section 2.2(a) of the
Custodian Agreement.
"Lease Termination Date" means, with respect to any Lease, the date
such Lease actually terminates.
"Leased Vehicles" shall have the meaning set forth in the Trust
Agreement.
"Lessee" means the lessee of a Leased Vehicle or any Person who is
obligated to make payments on the related Lease.
"Liquidation Expenses" means, to the extent not reimbursed to the
Servicer through disposition or other fees pursuant to the relevant Lease,
reasonable out-of-pocket expenses incurred by the Servicer in connection with
the attempted realization of the full amounts due or to become due under any
Lease, including, without limitation, expenses incurred in connection with the
repossession of any related Leased Vehicle, the sale of such Leased Vehicle,
whether upon its repossession or upon return of a Leased Vehicle, any collection
effort (whether or not resulting in a lawsuit against the Obligor under such
Lease) or any application for Insurance Proceeds, costs for repairs, painting
and repossession, auction fees, sale or consignment fees, and expenses incurred
in the course of pursuing available remedies. Liquidation
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Expenses shall not include "overhead" expenses of the Servicer or any Affiliate
or any expenses paid or incurred by the Servicer or any Affiliate in connection
with the routine administration of Leases that are not in default.
"Liquidation Proceeds" means (1) gross amounts received by the
Servicer, the Trust or a Trustee, on behalf of the Trust in connection with the
realization of the full amounts due or to become due under any Charged-Off
Lease, (before reimbursement for Liquidation Expenses relating to such Lease),
whether from the sale or other disposition of the related Leased Vehicle, the
proceeds of any collection effort (whether or not resulting in a lawsuit against
the Obligor under such Lease), receipt of Insurance Proceeds relating to loss or
damage to the related Leased Vehicle, or collection of amounts due hereunder in
respect of that Lease or otherwise minus (2) any amounts remitted to the related
Lessee as required by the Lease or applicable law.
"Lockbox Agreement" means the Lockbox Services Agreement dated as of
June 30, 1999 between Bank of America National Trust and Savings Association and
the Trust.
"Master Lease Agreement" means (i) each master lease agreement
between an Obligor and VMS and sold by VMS to the Initial Beneficiary pursuant
to the Asset Sale Agreement and contributed by the Initial Beneficiary to the
Trust pursuant to the Contribution Agreement and (ii) each master lease
agreement between an Obligor and the Trust.
"Obligee" means each Person who is the lessor under a Lease or the
assignee thereof, including the Trust.
"Obligor" has the meaning set forth in the Trust Agreement.
"Officer's Certificate" means a certificate signed by the chairman
of the board, the president, any executive vice president, any senior vice
president, any assistant vice-president, the treasurer, any assistant treasurer,
or the controller of the Servicer.
"Opinion of Counsel" means a written opinion of counsel who may be
counsel for the Servicer (including in-house counsel employed by the Servicer or
any Affiliate thereof) and who, in the case of opinions delivered to the Trust
or the Trustees, shall be reasonably satisfactory to the Trustees.
"Original Trust" has the meaning set forth in the recitals to the
Trust Agreement.
"Origination Trust Account" means an account maintained in the name
of the Trust for the benefit of the Certificateholders, their pledgees and their
assigns which account shall be subject to a Lockbox Agreement.
"Paid-In Advance Vehicle" means a Vehicle acquired at the request of
an Obligor who is either a party to a Master Lease Agreement or who has agreed
to be bound by a Master Lease Agreement but not yet accepted by such Obligor.
"PHH" means PHH Personal Lease Corporation, a Maryland corporation.
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<PAGE>
"Policies" means the Servicer's customary standards, policies and
procedures, including but not limited to the credit and residual accrual
policies applied by the Servicer in originating Leases and those applied by the
Servicer in its collection and repossession activities.
"Portfolio" has the meaning set forth in the Trust Agreement.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Rating Agency" means any nationally recognized statistical rating
organization then rating any securities issued in connection with a
Securitization.
"Recoveries" means any amounts received by the Servicer with respect
to Charged-Off Leases, including collections received from Obligors and
liquidation proceeds of the related Trust Vehicles, net of (i) any applicable
rental receipts tax, sales and use tax, personal property tax, ad valorem tax or
any other tax or any governmental fees or charges, (ii) any and all
out-of-pockets costs and expenses incurred by the Servicer in connection with
such recovery and (iii) any amounts remitted to the related Obligor as required
by applicable law or the related Lease.
"Registrar of Titles" shall have the meaning set forth in the Trust
Agreement.
"Responsible Officer" means, (a) when used with respect to a Trustee
other than the UTI Trustee, any officer in the corporate trust office of the
Trustee with direct responsibility for the administration of the Trust Agreement
or any other officer of the Trustee to whom any corporate trust matter is
referred because of his or her knowledge of or any familiarity with the
particular subject, and (b) when used with respect to the UTI Trustee, the
President, Chief Financial Officer, the General Counsel or any other officer of
the UTI Trustee to whom any matter concerning the administration of the Trust is
referred because of his or her knowledge of or any familiarity with the
particular subject.
"Sale Proceeds" means the net proceeds actually received by the
Servicer or the applicable Trustee, on behalf of the Trust, with respect to the
disposition of a Trust Vehicle.
"Schedule of Trust Assets" means the list of Leases, Trust Vehicles
and Fleet Receivables, on microfiche, microfilm or hard paper copy, that are
included as Trust Assets in the Trust, as such list may be revised and
supplemented from time to time.
"Securitization" shall have the meaning set forth in the Trust
Agreement.
"Security Deposit" means, with respect to any Obligor, an amount
paid by such Obligor in respect of its Master Lease Agreement and held by the
Servicer on behalf of the Trust to be applied, if necessary, by the Servicer to
offset any amounts owed by such Obligor.
"Servicer" has the meaning set forth in the preamble.
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"Servicer Termination Event" means any of the acts, events or
occurrences set forth in Section 3.1(a).
"Servicing Fee" shall have the meaning specified in Section 2.5(a).
"Servicing Records" shall have the meaning specified in Section
2.6(a).
"Settlor" has the meaning set forth in the Recitals.
"SUBI" has the meaning set forth in the Recitals.
"SUBI Asset" has the meaning set forth in the Trust Agreement.
"SUBI Portfolio" has the meaning set forth in the Trust Agreement.
"SUBI Servicing Agreement Supplement" means any supplement or
amendment to this Agreement entered into from time to time to accommodate the
creation and issuance of a particular SUBI and to specify any special
responsibilities or obligations that the Servicer may be required to undertake
in connection therewith.
"SUBI Supplement" means any supplement or amendment to the Trust
Agreement executed from time to time in connection with the creation and
issuance of a particular SUBI.
"SUBI Trustee" means, as to each SUBI, the separate trustee
appointed by the Initial Beneficiary for each SUBI.
"Trust" has the meaning set forth in the preamble.
"Trust Agent" means any Person with whom a Trustee contracts to act
as its agent with respect to carrying out certain of its duties as Trustee
hereunder, as provided for in the Trust Agreement.
"Trust Agreement" has the meaning set forth in the Recitals.
"Trust Asset" has the meaning set forth in the Trust Agreement.
"Trust Documents" means and includes this Agreement, the Trust
Agreement, and all amendments or supplements or modifications hereto or thereto.
"Trust Vehicle" has the meaning set forth in the Trust Agreement.
"Trustees" means the Delaware Trustee, the UTI Trustee and any SUBI
Trustee.
"Uniform Commercial Code" and "UCC" mean the Uniform Commercial Code
as in effect in any applicable jurisdiction.
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<PAGE>
"United States" means the United States of America, its territories
and possessions and areas subject to its jurisdiction.
"UTI" means the undivided trust interest in the Trust created
pursuant to Section 4.1 of the Trust Agreement.
"UTI Certificate" has the meaning set forth in the Trust Agreement.
"UTI Holder" means, initially, SPV and any other registered holder
of the UTI Certificate.
"UTI Portfolio" has the meaning set forth in the Trust Agreement.
"UTI Servicing Agreement Supplement" means any supplement or
amendment to this Agreement entered into from time to time to specify any
special responsibilities or obligations that the Servicer may be required to
undertake in connection with the UTI.
"UTI Trustee" has the meaning set forth in the Recitals.
"Vehicle" has the meaning set forth in the Trust Agreement.
"VMS" has the meaning set forth in the preamble.
ARTICLE II
ADMINISTRATION AND SERVICING OF TRUST ASSETS
Section 2.1. Servicer to Act as Servicer. (a) As agent for and
subject to the supervision, direction and control of the Trust as set forth in
the Trust Agreement, the Servicer shall originate new Lease Agreements in
accordance with the Policies, originate Leases under the Master Lease Agreements
in accordance with the Policies and service, administer and make collections on
the Leases, the Fleet Receivables and the other Trust Assets in accordance with
the terms of this Agreement, and shall have full power and authority, acting
alone and subject only to the specific requirements and prohibitions of this
Agreement, to do any and all things in connection with such servicing,
administering and collecting that it may reasonably deem necessary or desirable.
The duties of the Servicer shall include, without limitation, contracting
potential lessees, evaluating the creditworthiness of potential lessees,
negotiating Lease Agreements, collecting and posting payments, responding to
inquiries of Obligors, investigating delinquencies, sending invoices or billing
statements to Obligors, disposing of Trust Vehicles, paying costs of disposition
of Leased Vehicles related to Charged-Off Leases and of Paid-In-Advance Vehicles
that have been rejected by the applicable Obligors, administering the Leases,
Trust Vehicles and Fleet Receivables, amending payment due dates and making
other modifications to the Leases and Fleet Receivables in accordance with the
Policies, approving repairs to Trust Vehicles, accounting for Collections,
monitoring the Leases in cases of Obligor defaults and filing all tax returns
(if any) of the Trust.
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<PAGE>
(b) Without limiting the generality of the foregoing, the Servicer
hereby expressly agrees to perform and carry out on behalf of the Trust, all of
the obligations on the part of the Obligee under the Lease Agreements and is
hereby authorized and empowered by the Trust to execute and deliver, in its own
name or on behalf of the Trust, or both of them, as the case may be, any and all
instruments of satisfaction, extension or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Lease Agreements or the Trust Vehicles in accordance with the Policies.
(c) The Servicer shall cause the Trust to (i) apply for and maintain
(or cause to be applied for and maintained) all licenses, permits and
authorizations necessary and appropriate to acquire, hold and manage Trust
Assets as contemplated by the Trust Agreement in each jurisdiction where the
ownership of its assets or the nature of its operations would require it to
maintain such licenses, permits or authorizations, (ii) file (or cause to be
filed) all notices, reports and other required filings in each jurisdiction
where the location of its assets or the nature of its operations would require
it to make such filing, and (iii) pay or cause to be paid all applicable taxes
and fees properly due and owing in connection with its activities.
(d) If the Servicer shall commence a legal proceeding to enforce a
Lease Agreement or Fleet Receivable, the Trust shall thereupon be deemed to have
automatically assigned, solely for the purpose of collection on behalf of the
Trust, its interest in such Lease Agreement (and the related Leased Vehicles) or
Fleet Receivable to the Servicer to the extent necessary for the purposes of
participating in such proceeding. If in any enforcement suit or legal proceeding
it is held that the Servicer may not enforce a Lease Agreement or Fleet
Receivable on the grounds that it is not the real party in interest or a holder
entitled to enforce such Lease Agreement or Fleet Receivable, the Trust shall,
at the expense and direction of the Servicer, take steps to enforce the Lease
Agreement or Fleet Receivable, including bringing suit in its name. The Trust
shall furnish the Servicer with any powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
(e) In performing its duties hereunder, the Servicer shall use
reasonable care, following the Policies and using that degree of skill and
attention that the Servicer exercises with respect to all comparable fleet
vehicle leases and receivables that it services for itself.
Section 2.2. Origination of Leases; Acquisition and Titling of Trust
Vehicles. (a) As agent for the SPV, the Servicer shall acquire Vehicles at the
request of Obligors party to the Lease Agreements for contribution to the Trust
in accordance with the terms of this Agreement, and shall have the power and
authority, acting alone and subject only to the specific requirements and
prohibitions of this Agreement, to do any and all things in connection with such
acquisition of Vehicles that it may deem reasonably necessary or desirable. The
Servicer shall cause the Manufacturer's Certificate of Ownership with respect to
each Vehicle acquired by the Servicer on behalf of the SPV to be assigned to the
Trust at the time that such Vehicle is contributed to the Trust by the SPV.
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(b) The Servicer shall maintain, during the term of this Agreement,
a staff and a system reasonably sufficient to originate Lease Agreements, assess
the credit worthiness of potential Obligors, open and service customer accounts,
bill and collect payments on Leases and Fleet Receivables, obtain Vehicles for
lease under the Lease Agreements and dispose of Trust Vehicles and otherwise
perform its obligations hereunder.
(c) The Servicer shall cause the Certificate of Title for each Trust
Vehicle to be issued in the name of the Trust or its nominee under a Nominee
Agreement in accordance with the Trust Agreement, with the address of the
Servicer (or such other address as the Servicer and the Trustees shall agree) as
the address of the recorded owner of such Trust Vehicle. The Servicer shall
cause the Certificate of Title for each Trust Vehicle to name the SPV as first
lienholder; provided that with respect to Trust Vehicles acquired prior to July
15, 1999, the related Certificates of Title may name VMS or PHH Personal Lease
Corporation as first lienholder. The Servicer shall cause to be made all filings
necessary to evidence the security interest of SPV (or VMS, in the case of
Vehicles acquired by the Trust on or prior to the date hereof) in all Vehicles
not subject to a certificate of title, act or statue.
(d) The Servicer shall deliver or cause to be delivered to the
Custodian the original copy of each Lease Agreement prior to the date of the
first acquisition of Vehicles to be leased by the Trust thereunder.
(e) To the extent not already paid, the Servicer shall pay to the
respective tax authorities on behalf of the Trust or the SPV all sales, use,
gross receipts, general corporation, tangible personal property, intangible,
franchise, privilege or license taxes required to be paid by the Trust or the
SPV, as such amounts become due.
Section 2.3. Collections; Extensions and Adjustments; Applications
of Collections. (a) In accordance with the Policies, the Servicer shall use
commercially reasonable efforts to collect all payments called for under the
terms and provisions of the Leases and Fleet Receivables as and when the same
shall become due. Subject to any provisions of a SUBI Servicing Agreement
Supplement, the Servicer may grant extensions, rebates, credits or adjustments
in respect of a Lease or Fleet Receivable provided that any such extension,
rebate, credit or adjustment is in accordance with the Policies. The Servicer
may in its discretion waive any late payment charge that may be collected in the
ordinary course of servicing a Lease or a Fleet Receivable in accordance with
the Policies.
(b) The Servicer shall direct the Obligors to make all payments in
respect of the Leases and the Fleet Receivables to an Origination Trust Account.
The Servicer shall direct any other Person making a payment constituting a
Collection to make such payment directly to an Origination Trust Account. Any
Collections received by the Servicer at any time otherwise than in an
Origination Trust Account shall be held in trust by the Servicer for the benefit
of the Trust and deposited in an Origination Trust Account or applied in
accordance with the next sentence as promptly as practicable and, in any event,
within two (2) Business Days following receipt. All Collections shall be applied
as follows: (i) if such Collections relate to a SUBI Asset, the Servicer shall
deposit such funds as set forth in the related SUBI Servicing Agreement
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Supplement and (ii) if such Collections relate to a Trust Asset other than a
SUBI Asset, the Servicer shall pay such funds as directed by the UTI
Certificateholder.
(c) The Servicer shall, on behalf of the UTI Trustee and at the
direction of the Initial Beneficiary, from time to time, in accordance with the
Trust Agreement or the applicable SUBI Supplement thereto, identify and allocate
on the books and records of the Trust certain Leases, Trust Vehicles and/or
Fleet Receivables into one or more SUBI Portfolios, either upon the initial
creation of such SUBI or periodically following its creation. The Servicer shall
account to the applicable Trustee for each Portfolio of Trust Assets separately
and in accordance with any supplement or amendment to this Agreement entered
into with respect to such Portfolio.
Section 2.4. Collection and Application of Security Deposits. The
Servicer shall retain any Security Deposit remitted to it as agent and bailee
for the Trust and as proceeds of the Leases and the Fleet Receivables, and shall
apply the proceeds of such Security Deposits in accordance with applicable law,
the Policies and any contract or agreement pursuant to which such Security
Deposit is being provided to the Trust, including but not limited to using the
Security Deposit in respect of any payment that the related Obligor failed to
pay. Upon the termination of a Master Lease Agreement, the related Security
Deposit, after deduction for amounts applied towards the payment of any amount
resulting from the related Obligor's default or failure to pay any amounts
required to be paid under such Master Lease Agreement or in respect of Fleet
Receivables, shall be returned to the related Obligor by the Servicer; provided,
however, that the Servicer may retain a Security Deposit until the Obligor has
repaid all other charges owed to the Trust under such Lease or otherwise.
Section 2.5. Servicing Compensation; Fees, Costs and Expenses. (a)
As compensation for the performance of its obligations under this Agreement and
subject to the terms of this Section and the terms of any applicable SUBI
Servicing Agreement Supplement, the Servicer shall be entitled to receive from
the Trust, a fee (the "Servicing Fee") equal to:
(i) With respect to each SUBI Portfolio, the amount set forth in the
related SUBI Servicing Agreement Supplement; and
(ii) With respect to each UTI Portfolio, such amount as shall be
agreed from time to time between the holder of the UTI and the Servicer.
The Servicer shall pay all expenses of the Trust and all expenses
incurred by it in connection with its servicing activities hereunder, including
the costs of any separate trustee or co-trustee appointed by a Trustee pursuant
to Section 5.7 of the Trust Agreement, and shall not be entitled to
reimbursement of such expense. Notwithstanding anything contained in the
foregoing sentence to the contrary, the Servicer shall not be liable to pay the
expenses of the Trust or expenses incurred by the Servicer which constitute
Liquidation Expenses, losses with respect to Trust Assets or expenses
recoverable under an applicable Insurance Policy.
(b) As additional servicing compensation, the Servicer also shall be
entitled to the earnings from the investment of Security Deposits retained as
provided in Section 2.4 and as permitted by applicable law.
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Section 2.6. Records. (a) The Servicer shall maintain or cause to be
maintained such computer and manual records with respect to the Leases, Trust
Vehicles, Fleet Receivables and other Trust Assets, and the Collections thereon,
as are sufficient to permit (i) it to perform its servicing duties hereunder and
(ii) the UTI Trustee to identify and allocate Trust Assets on a segregated basis
in accordance with the terms and provisions of the Trust Agreement and any SUBI
Supplements thereto. The Servicer shall retain or cause to be retained all data
(including, without limitation, computerized records), together with all
operating software and appropriate documentation, relating directly to or
maintained in connection with the servicing of the Trust Assets (the "Servicing
Records"). The Servicer shall provide or cause to be provided to the Trustees,
on behalf of the Trust, upon its request, access to such Servicing Records at
the respective offices of the Servicer, upon reasonable prior notice and during
normal business hours. Nothing in this Section 2.6 shall affect the obligation
of the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Leases or Fleet Receivables, and the failure of the
Servicer to provide access to information as a result of such obligation shall
not constitute a breach of this Section 2.6.
(b) Upon the occurrence and during the continuance of a Servicer
Termination Event with respect to a Portfolio, if the duties of the Servicer in
respect of such Portfolio are to be terminated, the Servicer shall deliver to
any successor Servicer appointed pursuant to the terms hereof, or, if otherwise
directed by the applicable Trustee, to such Trustee, all such data, operating
software and appropriate documentation necessary for the servicing of the Trust
Assets included in such Portfolio, including but not limited to the related
Lease Documents (other than any Lease Files held by the Custodian), Certificate
of Titles and Fleet Service Contracts, all monies collected by it and required
to be deposited in any account on behalf of the Trust relating to that Portfolio
and all related Security Deposits. In addition to delivering such data,
operating software and appropriate documentation and moneys, the Servicer shall
use all commercially reasonable efforts to effect the orderly and efficient
transfer of the servicing of the Trust Assets included in that Portfolio with
respect to which such termination shall have occurred to the party that will be
assuming responsibility for such servicing, including, without limitation, (i)
directing Obligors to remit payments in respect of those Trust Assets to an
account or address designated by the applicable Trustee or such new Servicer and
(ii) at the expense of the Servicer, cooperating as may be requested by such
Trustee or such new Servicer to achieve a transfer of data held in electronic or
other form to the new Servicer's or such Trustee's computer systems.
Section 2.7. Custody of Lease Files; Custodial Duties. (a) In
accordance with the Custodian Agreement, the Custodian shall maintain custody of
the Lease Files. The Custodian shall act for the UTI Holder with respect to the
UTI Portfolio and for the Holders of each SUBI, and any pledgee or assignee
thereof, with respect to the related SUBI Portfolio. The Custodian shall follow
the direction, if any, of such Certificateholders and their assignees and
pledgees with respect to the related Portfolio.
(b) With respect to the documents constituting each Lease File which
are delivered to the Custodian (or at any time come into the possession of the
Custodian), the Custodian is exclusively the bailee of the Trustees. The
Trustees, the Certificateholders and all other persons with an interest in the
Trust hereby acknowledge and consent on behalf of them-
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selves and their successors and assigns that the duty of care applicable to the
Custodian shall be that applicable to a bailee.
Section 2.8. Maintenance of Record Ownership Interests in Trust
Vehicles. In accordance with the Policies, the Servicer shall take all necessary
steps to maintain evidence of the ownership interest of the Trust in each Trust
Vehicle on its Certificate of Title. The Trustees hereby authorize the Servicer
to take such steps as are reasonably necessary to record such ownership interest
on behalf of the Trust in the event of the relocation of a Trust Vehicle or for
any other reason.
Section 2.9. Covenant of Servicer. The Servicer shall not impair the
rights of the Trust in the Leases, the Trust Vehicles, the Fleet Receivables or
any other Trust Assets; provided that the Servicer shall be entitled to
undertake the actions permitted by 2.3(a) hereof, and shall also be entitled to
permit, in accordance with the Policies, the assignment by a Lessee of its
obligations under its Master Lease Agreement to a new lessee.
Section 2.10. Third Party Claims. The Servicer shall promptly notify
VMS (in the event that VMS is not acting as the Servicer hereunder) and the
Trustees, on behalf of the Trust, upon its learning that a claim of whatever
kind is being made that could have a material adverse effect on the UTI Holder,
any Trustee, any SUBI Certificateholder, the Trust or the Trust Assets.
Section 2.11. Insurance Policies. The Servicer shall at all times
maintain or cause to be maintained by an Affiliate of the Servicer, on behalf of
the Trust, Insurance Policies (which may be blanket policies covering the
Servicer, the Trust and some or all Affiliates of the Servicer) with respect to
the Leases, the Trust Vehicles and the Lessees (and shall cause each such
Insurance Policy maintained by it or any of its Affiliates to name the Trust as
an additional insured or loss payee, as appropriate) of at least the types and
in at least the same amounts as are customarily maintained by the Servicer and
its Affiliates for its own portfolio of fleet vehicle leases and related leased
vehicles.
Section 2.12. Obligor Insurance Coverage in Respect of Leased
Vehicles. Unless otherwise required by the Policies, the Servicer shall use
reasonable efforts to ensure that the Obligor under each Lease Agreement shall
have, and maintain in full force and effect during the term of such Lease
Agreement, a comprehensive, collision and property damage insurance policy
covering the actual cash value of the Leased Vehicles to which such Lease
Agreement relates and naming the Trust as a loss payee and additional insured,
as well as public liability, bodily injury and property damage coverage equal to
the greater of the amounts required by applicable state law or industry
standards as set forth in the Lease Agreement, and naming the Trust as an
additional insured.
Section 2.13. Sale of Trust Vehicles; Realization on Charged-Off
Leases.
(a) Sale upon Expiration or Termination of a Lease or Return of a
Trust Vehicle. Upon the termination or expiration of a Lease, or in the event
that any Trust Vehicle is otherwise returned to the Trust, the Servicer shall
arrange for the sale of such Trust Vehicle in
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accordance with the terms of the related Lease Agreement and the Policies and
will collect from the related Lessee any amounts payable by the Lessee pursuant
to the Lease Agreement in connection with such expiration, termination, return
and/or disposal.
(b) Sale of Paid-In-Advance Vehicles If Lessee does not Accept the
Paid-In Advance Vehicle. If the Lessee does not accept delivery of a
Paid-In-Advance Vehicle, the Servicer shall arrange for the sale or other
disposition of such Paid-In-Advance Vehicle and collect from the related Lessee
any fee, penalty or other amount payable in connection therewith.
(c) Realization on Repossessed Vehicles. On behalf of the Trust and
in accordance with the Policies, the Servicer shall use reasonable efforts to
repossess or otherwise convert the possession of any Leased Vehicle subject to a
delinquent Lease. In accordance with the Policies, the Servicer shall take such
actions as it shall deem necessary or advisable to realize against the Lessee
which executed such Lease, and to sell such Leased Vehicle at public or private
sale, subject to and in accordance with the provisions of the applicable Lease.
The Servicer shall be entitled to reimbursement out of Sales Proceeds for all
reasonable Liquidation Expenses incurred by it in the course of converting the
Leased Vehicle into cash proceeds. The foregoing shall be subject to the
provisions that, in any case in which the related Leased Vehicle shall have
suffered damage, the Servicer shall not incur Liquidation Expenses in connection
with the repair or the repossession of such Leased Vehicle unless it shall
determine in its sole discretion that such repair and/or repossession will
increase the Liquidation Proceeds by an amount greater than the amount of such
Liquidation Expenses.
Section 2.14. Limitation on Liability of Servicer and Others. (a)
Neither the Servicer nor any of the directors or officers or employees or agents
of the Servicer shall be under any liability to the Trust or the
Certificateholders (except as explicitly provided under this Agreement or
explicitly provided in any SUBI Servicing Agreement Supplement) or to the
Trustees (except as provided under this Agreement) for the taking of any action
or for refraining from the taking of any action pursuant to this Agreement or
for errors in judgment; provided, however, that this Section 2.14 shall not
protect the Servicer or any such person against any liability that would
otherwise be imposed by reason of willful misfeasance or bad faith in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement or any SUBI Servicing Agreement Supplement, or by
reason of negligence in the performance of its duties under this Agreement or
any SUBI Servicing Agreement Supplement (except for errors in judgment). The
Servicer and any director, officer or employee or agent of the Servicer may rely
in good faith on any Opinion of Counsel or on any Officer's Certificate or
certificate of auditors or accountants believed to be genuine and to have been
signed by the proper party in respect of any matters arising under this
Agreement.
(b) Except as provided in this Agreement or in any SUBI Servicing
Agreement Supplement, the Servicer shall not be under any obligation to appear
in, prosecute, or defend any legal action that shall not be incidental to its
duties to service the Trust Assets in accordance with this Agreement or the
related SUBI Servicing Agreement Supplement, and that in its opinion may involve
it in any expense or liability; provided, however, that the Servicer may
undertake any reasonable action that it may, in good faith, deem necessary or
desirable in respect
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of this Agreement or any SUBI Servicing Agreement Supplement, the rights and
duties of the parties to this Agreement or any SUBI Servicing Agreement
Supplement, and the interests of the Certificateholders under this Agreement or
any SUBI Servicing Agreement Supplement. The Servicer shall be entitled to
reimbursement for the legal expenses and costs of any such action with respect
to the UTI Portfolio from the UTI Holder and with respect to SUBI Assets from
the holders of the related SUBI Certificates. Any liability resulting from any
such action shall be expenses, costs, and liabilities of the UTI Holder or the
holders of the related SUBI Certificates, as the case may be.
Section 2.15. Servicer Not to Resign; Assignment. (a) The Servicer
shall not resign from the duties and obligations hereby imposed on it as
Servicer except upon a determination that the continued performance by the
Servicer of its duties as Servicer under this Agreement is no longer permissible
under applicable law, said determination to be evidenced by an Opinion of
Counsel reasonably satisfactory to the Trustees, to such effect. No such
resignation shall become effective unless and until a new servicer is willing to
service the Trust Assets and enters into a servicing agreement with the Trust.
The Trust shall not unreasonably fail to consent to such a servicing agreement.
(b) Subject to paragraph (c) of this Section, the Servicer may not
assign this Agreement or any of its rights, powers, duties or obligations
hereunder; provided, however, that the Servicer may assign this Agreement in
connection with a consolidation, merger, conveyance, transfer or lease made in
compliance with Section 2.16.
(c) The Servicer may, at any time without notice or consent,
delegate (i) any or all duties under this Agreement to any Person more than 50%
of the voting securities of which are owned, directly or indirectly, by Avis
Rent A Car, Inc., or (ii) specific duties to sub-contractors who are in the
business of performing such duties; provided, however, that no such delegation
shall relieve the Servicer of its responsibility with respect to such duties and
the Servicer shall remain obligated and liable to the Trustees and the holders
of the UTI and the SUBIs for servicing and administering the Trust Assets in
accordance with this Agreement as if the Servicer alone were performing such
duties. The Servicer may delegate its duty to originate Consumer Leases in
accordance with the Policies to PHH Personal Lease Corporation, a wholly-owned
subsidiary of VMS.
(d) Except as provided in paragraphs (a), (b) and (c) above, the
duties and obligations of the Servicer under this Agreement shall continue until
this Agreement shall have been terminated as provided herein and shall survive
the exercise by any Trustee, on behalf of the Trust, of any right or remedy
under this Agreement or the enforcement by any Trustee, on behalf of the Trust,
of any provision of the Trust Documents.
Section 2.16. Corporate Existence; Status; Merger. (a) The Servicer
shall keep in full effect its existence, rights and franchises as a limited
liability company and shall continue to be duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization and shall
take such actions under the laws of each state as shall be necessary to protect
the validity and enforceability of, or to permit the Servicer to perform its
obligations
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(including but not limited to its origination and servicing obligations) under,
the Trust Documents.
(b) Any corporation or other entity (i) into which the Servicer is
merged or consolidated, (ii) that may result from any merger, conversion, or
consolidation to which the Servicer is a party, or (iii) that may succeed by
purchase and assumption of all or substantially all of the business of the
Servicer, where the Servicer in any of the foregoing cases is not the surviving
entity, which corporation or other entity in any of the foregoing cases shall
execute an agreement of assumption to perform every obligation of the Servicer
under this Agreement, shall be the successor to the Servicer under this
Agreement without any further act on the part of any of the parties to this
Agreement; provided, however, that the Servicer shall have delivered to the
Trustees a certificate and an Opinion of Counsel each stating that such merger,
conversion, consolidation or succession and such agreement of assumption comply
with this Section. The Servicer shall promptly inform the Trustees and each
Rating Agency of any such merger, conversion, consolidation or purchase and
assumption where the Servicer is not the surviving entity.
Section 2.17. Power of Attorney. In connection with this Agreement,
the Trust grants to the Servicer the authority to and will execute and deliver
to the Servicer any necessary Power of Attorney as the Servicer may require in
order to effect its responsibilities hereunder and under any Supplement to this
Agreement.
ARTICLE III
SERVICER TERMINATION EVENTS
Section 3.1. Servicer Termination Events; Termination of Servicer
(a) Any of the following acts or occurrences shall constitute a Servicer
Termination Event with respect to a SUBI Portfolio:
(i) The Servicer shall have failed to deposit or transfer any
amounts in excess of $100,000 in the aggregate at any time outstanding
that are required to be deposited or transferred with respect to such SUBI
Portfolio pursuant to Section 2.2 hereof, which failure continues for five
(5) Business Days after receipt by the Servicer of written notice thereof
from the SUBI Trustee with respect to such SUBI Portfolio or any Holder of
the SUBI Certificate with respect to such SUBI Portfolio;
(ii) The Servicer shall default in the due performance and
observance of any other provision of this Agreement with respect to such
SUBI Portfolio, which default materially and adversely affects the rights
of any Holder of a SUBI Certificate with respect to such SUBI Portfolio,
and such default shall have continued for a period of 30 days after
written notice thereof shall have been given to the Servicer by the SUBI
Trustee with respect to such SUBI Portfolio;
(iii) The entry of a decree or order for relief by a court or
regulatory authority having jurisdiction over the Servicer in an
involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future federal or state bank-
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ruptcy, insolvency or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of
the Servicer or of any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Servicer and the
continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days; or
(iv) The commencement by the Servicer of a voluntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar law,
or the consent by the Servicer to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, seques- trator or
other similar official of the Servicer or of any substantial part of its
property or the making by the Servicer of an assignment for the benefit of
creditors or the failure by the Servicer generally to pay its debts as
such debts become due or the taking of corporate action by the Servicer in
furtherance of any of the foregoing.
(b) If a Servicer Termination Event shall have occurred and be
continuing with respect to a SUBI Portfolio, the SUBI Trustee of that particular
SUBI Portfolio may, by notice given to the Servicer, terminate all or a portion
of the rights and powers of the Servicer under this Agreement with respect to
such SUBI Portfolio, including all or a portion of the rights of the Servicer to
receive the servicing compensation with respect to such SUBI Portfolio provided
for in Section 2.5 hereof for all periods following such termination; provided,
however, that in no event shall the rights and powers of the Servicer be
terminated until such time as the SUBI Trustee for such SUBI Portfolio shall
have appointed a successor Servicer in the manner set forth below. Upon any such
termination, all rights, powers, duties and responsibilities of the Servicer
under this Agreement with respect to such SUBI Portfolio, whether with respect
to the related Lease Documents, the related Certificates of Title or Servicing
Records, the Servicing Fee or otherwise, so terminated shall vest in and be
assumed by any successor Servicer appointed by the Trustee for such SUBI
Portfolio pursuant to a servicing agreement containing substantially the same
provisions as this Agreement (including with respect to the compensation of such
successor servicer), and the successor Servicer is hereby irrevocably authorized
and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments (including
any notices to Obligors deemed necessary or advisable by the SUBI Trustee for
such SUBI Portfolio), and to do or accomplish all other acts or things necessary
or appropriate to effect such vesting and assumption, including, without
limitation, directing some or all of the Obligors with respect to such SUBI
Portfolio to remit payments on or in respect of the Leases, the Leased Vehicles,
the Fleet Receivables and the other Trust Assets to an account or address
designated by such new Servicer. Further, in such event, the Servicer shall use
its commercially reasonable efforts to effect the orderly and efficient transfer
of the servicing of the affected Trust Assets with respect to such SUBI
Portfolio to the new Servicer (including transfer of any Security Deposits being
held by the Servicer with respect to such SUBI Portfolio pursuant to Section
2.4), and as promptly as practicable, the Servicer shall provide to the new
Servicer a current computer tape containing all information from the Servicing
Records with respect to such SUBI Portfolio required for the servicing of the
affected Trust Assets, together with documentation containing any and all
information necessary for use of the tape. In no event shall the Wilmington
Trust Company be responsible for any duties of the Servicer hereunder.
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(c) The SUBI Trustee of a SUBI Portfolio, acting at the direction of
the related Certificateholders, may waive in writing any Servicer Termination
Event by the Servicer in the performance of its obligations hereunder and its
consequences with respect to such SUBI Portfolio. Upon any such waiver of a past
Servicer Termination Event, such Servicer Termination Event shall cease to
exist, and any Servicer Termination Event arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other Servicer Termination Event or impair any right
consequent thereon.
(d) The UTI Holder may, upon written notice to the Servicer,
terminate all or a portion of the rights and powers of the Servicer with respect
to the UTI under this Agreement, unless otherwise provided in a UTI Servicing
Agreement Supplement.
ARTICLE IV
MISCELLANEOUS
Section 4.1. Termination of Agreement. This Agreement shall, except
as otherwise provided herein, terminate upon the earliest of (a) the termination
of the Trust; (b) the discharge of the Servicer in accordance with the terms
hereof; or (c) the mutual written determination of the parties hereto. Upon
termination of this Agreement, the Servicer shall pay over to the Trust, or any
other Person entitled thereto, all monies held by the Servicer on behalf of the
Trust pursuant to this Agreement.
Section 4.2. Amendment. (a) Subject to any restriction set forth in
a SUBI Servicing Agreement Supplement, this Agreement may be amended from time
to time in a writing signed by the Trustees, on behalf of the Trust, and the
Servicer. Any amendment affecting particular Trust Assets need not be signed by
any Trustee which does not administer such particular Trust Assets.
(b) In particular, but without limiting the foregoing, this
Agreement may be amended by means of one or more SUBI Servicing Agreement
Supplements in connection with any Securitizations. Such supplemental agreements
may provide, among other things, for further specific servicing obligations
relating to SUBI Assets for the particular benefit of holders of related SUBIs.
Such supplemental agreements may permit the termination of this Agreement
insofar as it applies to such SUBI Assets upon the terms and conditions set
forth therein; however, no such supplemental agreement shall permit the
termination of this Agreement insofar as it applies to other Trust Assets except
as provided herein.
(c) Any amendment or modification effected contrary to the provision
of this Section shall be void.
Section 4.3. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
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Section 4.4. Notices. All demands, notices and communications
hereunder shall be in writing and shall be delivered or mailed by registered or
certified first-class United States mail, postage prepaid, hand delivery, any
prepaid courier service, or by telecopier, and addressed in each case as
follows: (a) if to the Servicer or SPV at 900 Old Country Road, Garden City, NY
11530, Attention: General Counsel (telecopier no. 516- 222-3751); and (b) if to
the Trust, at Wilmington Trust Company, 1100 N. Market Street, Wilmington,
Delaware 19890, Attention: Corporate Trust Administration (telecopier no.
302-651-8882). The Servicer or any Trustee may change its address for notices
hereunder by giving notice of such change to the other such Persons. All notices
and demands shall be deemed to have been given upon delivery or tender of
delivery thereof to any officer of the Person entitled to receive such notices
and demands at the address of such Person for notices hereunder.
Section 4.5. Severability. If one or more of the provisions of this
Agreement shall be for any reason whatever held invalid or unenforceable, such
provisions shall be deemed severable from the remaining covenants, agreements
and provisions of this Agreement, and such invalidity or unenforceability shall
in no way affect the validity or enforceability of such remaining covenants,
agreements and provisions, or the rights of any parties hereto. To the extent
permitted by law, the parties hereto waive any provision of law that renders any
provision of this Agreement invalid or unenforceable in any respect.
Section 4.6. Inspection Rights. The Servicer agrees that, on
reasonable prior notice, it will permit any representative, agent or designee of
the Trust, during the normal business hours of the Servicer, to examine all
books of account, records, reports and other papers of the Servicer relating to
the Trust Assets, to make copies and extracts therefrom, to cause such books to
be audited by independent accountants selected by any Trustee, and to discuss
the affairs, finances and accounts relating to the Trust Assets with its
officers and employees in such manner as will not unreasonably interfere with
the Servicer's normal operations. Such rights shall include, but shall not be
limited to, any off-site storage facilities at which any data (including,
without limitation, computerized records), together with all operating software
and appropriate documentation, may be held. The Trust and the Trustees agree to
keep confidential all the confidential information of the Servicer acquired
during any such examination as if such information were its own confidential
information, except to the extent necessary for the purposes of this Agreement.
Section 4.7. Binding Effect. The provisions of this Agreement shall
be binding upon and inure to the benefit of the respective successors and
permitted assigns of the parties hereto, and all such provisions shall inure to
the benefit of the Trust.
Section 4.8. Article and Section Headings. The article and section
headings herein are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof.
Section 4.9. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which so executed and delivered
shall be deemed to be an original, but all of which counterparts shall together
constitute but one and the same instrument.
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Section 4.10. Rights Cumulative. All rights and remedies from time
to time conferred upon or reserved to the Trust, the Trustees (or any of them),
on behalf of the Trust, or the Servicer or to any or all of the foregoing are
cumulative, and none is intended to be exclusive of another. No delay or
omission in insisting upon the strict observance or performance of any provision
of this Agreement, or in exercising any right or remedy, shall be construed as a
waiver or relinquishment of such provision, nor shall it impair such right or
remedy. Every right and remedy may be exercised from time to time and as often
as deemed expedient.
Section 4.11. Further Assurances. Each party will do such acts, and
execute and deliver to any other party, such additional documents or instruments
as may be reasonably requested in order to effect the purposes of this Agreement
and to better assure and confirm unto the requesting party its rights, powers
and remedies thereunder.
Section 4.12. Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto and each of the
beneficiaries of the Trust (and each pledgee of a Certificate) who shall be
considered to be third-party beneficiaries hereof. Except as otherwise provided
in this Agreement, no other Person will have any right or obligation hereunder.
Section 4.13. No Waiver. No waiver by any party hereto of any one or
more defaults by any other party or parties in the performance of any of the
provisions of this Agreement shall operate or be construed as a waiver of any
future default or defaults, whether of a like or different nature. No failure or
delay on the part of any party in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to any party hereto at law, in equity or
otherwise.
Section 4.14. Non-Petition Covenant. The Servicer covenants and
agrees that prior to the date which is one year and one day after the date upon
which all obligations under each Securitization has been paid in full, the
Servicer will not institute against, or join any other person in instituting
against the Trust, any Special Purpose Entity, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other proceedings under any
federal or state bankruptcy or similar law. This Section shall survive the
termination of this Agreement or the resignation or removal of the Servicer
under this Agreement.
Section 4.15. Limitation of Liability. It is expressly understood
and agreed by the parties hereto that (a) this Agreement is executed and
delivered by Wilmington Trust Company, not individually or personally but solely
as trustee of the Trust in the exercise of the powers and authority conferred
and vested in it under the Trust Agreement, (b) each of the representations,
undertakings and agreements herein made on the part of the Trust is made and
intended not as a personal representation, undertaking and agreement by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Trust and (c) under no circumstances shall Wilmington Trust Company be
personally liable for the payment of any
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indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement or the other Trust Documents except in accordance
with the provisions of the Trust Agreement.
Section 4.16. Series Liabilities. It is expressly understood and
agreed by the Servicer, and all persons claiming through the Servicer, the Trust
is a series trust pursuant to Sections 3804 and 3806(b) (2) of the Delaware
Business Trust Act. As such, separate and distinct records shall be maintained
for the UTI Portfolio and each SUBI Portfolio and the Trust Assets associated
with the UTI Portfolio and each SUBI Portfolio shall be held and accounted for
separately from the other assets of the Trust. The debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to the UTI and each SUBI shall be enforceable against the UTI Portfolio
or the related SUBI Portfolio only, and not against the Trust Assets generally
or the assets of any other SUBI Portfolio.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers duly authorized as of the day and
year first above written.
PHH VEHICLE MANAGEMENT SERVICES
LLC, as UTI Trustee and Servicer
By:_________________________________________
Name:
Title:
RAVEN FUNDING LLC
By:_________________________________________
Name:
Title:
D.L. PETERSON TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Delaware Trustee
By:_________________________________________
Name:
Title:
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS.............................................................1
Section 1.1. Definitions...............................................1
ARTICLE II
ADMINISTRATION AND SERVICING OF TRUST ASSETS............................7
Section 2.1. Servicer to Act as Servicer..............................7
Section 2.2. Origination of Leases; Acquisition and Titling of Trust
Vehicles ..............................................8
Section 2.3. Collections; Extensions and Adjustments; Applications
of Collections .........................................9
Section 2.4. Collection and Application of Security Deposits..........10
Section 2.5. Servicing Compensation; Fees, Costs and Expenses.........10
Section 2.6. Records .................................................11
Section 2.7. Custody of Lease Files; Custodial Duties ................11
Section 2.8. Maintenance of Record Ownership Interests in Trust
Vehicles ..............................................12
Section 2.9. Covenant of Servicer ....................................12
Section 2.10. Third Party Claims.......................................12
Section 2.11. Insurance Policies.......................................12
Section 2.12. Obligor Insurance Coverage in Respect of Leased
Vehicles ..............................................12
Section 2.13. Sale of Trust Vehicles; Realization on Charged-Off
Leases ................................................12
(a) Sale upon Expiration or Termination of a Lease or
Return of a Trust Vehicle ...............................12
(b) Sale of Paid-In-Advance Vehicles If Lessee does not
Accept the Paid-In Advance Vehicle.......................13
(c) Realization on Repossessed Vehicles......................13
Section 2.14. Limitation on Liability of Servicer and Others...........13
Section 2.15. Servicer Not to Resign; Assignment.......................14
Section 2.16. Corporate Existence; Status; Merger......................14
Section 2.17. Power of Attorney........................................15
ARTICLE III
SERVICER TERMINATION EVENTS.............................................15
Section 3.1. Servicer Termination Events; Termination of Servicer.....15
(i)
<PAGE>
Exhibit 4.44
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D.L. PETERSON TRUST,
WILMINGTON TRUST COMPANY,
Not in its Individual Capacity
but Solely as SUBI Trustee,
RAVEN FUNDING LLC
and
PHH VEHICLE MANAGEMENT SERVICES LLC
as Servicer
SOLD SUBI SUPPLEMENT 1999-1 TO
SERVICING AGREEMENT
DATED AS OF JUNE 30,1999
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<PAGE>
SOLD SUBI SUPPLEMENT 1999-1 TO
SERVICING AGREEMENT
THIS SOLD SUBI SUPPLEMENT 1999-1 TO SERVICING AGREEMENT (the "Sold SUBI
Servicing Supplement"), dated as of June 30, 1999, is among D.L. PETERSON TRUST,
a Delaware business trust (the "Trust"), WILMINGTON TRUST COMPANY, a Delaware
banking corporation, not in its individual capacity but solely as a SUBI Trustee
(hereinafter, together with its successors and assigns, the "SUBI Trustee") of
the Trust, RAVEN FUNDING LLC, a Delaware limited liability company ("SPV") and
PHH VEHICLE MANAGEMENT SERVICES LLC, a Delaware limited liability company
("VMS") as Servicer (in such capacity, the "Servicer").
RECITALS
A. SPV, as settlor (in such capacity, the "Settlor") and VMS, as UTI
Trustee, (in such capacity, together with any successor or permitted assign, the
"UTI Trustee") and Wilmington Trust Company, as Delaware Trustee (in such
capacity, together with any successor or permitted assign, the "Delaware
Trustee"; together with the UTI Trustee, the "Trustees") have entered into that
certain Amended and Restated Origination Trust Agreement dated as of June
30,1999 (as modified, supplemented or amended from time to time, the
"Origination Trust Agreement") pursuant to which the Settlor continued the Trust
for the purpose of acting as agent and nominee owner of various Trust Assets (as
defined in the Origination Trust Agreement) in accordance with the Origination
Trust Agreement.
B. The Trust, the SPV and the Servicer also have entered into that certain
Servicing Agreement dated as of June 30,1999 (as modified, supplemented or
amended from time to time, the "Servicing Agreement"), which provides, among
other things, for the servicing of the Trust Assets by the Servicer.
C. The Origination Trust Agreement contemplates that, from time to time
the UTI Trustee, on behalf of the Trust and at the direction of the Initial
Beneficiary, will identify and allocate on the Trust's books and records certain
Trust Assets within separate SUBI Portfolios (as defined in the Origination
Trust Agreement) and create and issue to the Initial Beneficiary separate
special units of beneficial interest in the Trust or "SUBIs" (as defined in the
Origination Trust Agreement), the beneficiary or beneficiaries of which
generally will hold undivided beneficial interests in the related SUBI
Portfolios, all as set forth in the Origination Trust Agreement.
D. Concurrently herewith, the Initial Beneficiary, the UTI Trustee, the
Servicer, the Delaware Trustee and the SUBI Trustee are entering into two
separate SUBI supplements (the "1999-1A SUBI Supplement" and the "1999-1B SUBI
Supplement" to create and issue to SPV three separate SUBI Certificates (the
"1999-1A SUBI Certificate", the "Class X 1999-1B SUBI Certificate" and the
"Class Y 1999-1B SUBI Certificate; and collectively, the "Sold SUBI
Certificates"). The 1999-1A SUBI Certificate evidences the entire and exclusive
beneficial interest in a separate SUBI consisting of Trust Vehicles, Leases and
related Trust Assets (the "1999-1A SUBI Portfolio") and the Class X 1999-1B SUBI
Certificate and the Class Y 1999-B
<PAGE>
SUBI Certificate (collectively referred to as the "1999-1B SUBI Certificates")
collectively evidence the entire and exclusive beneficial interest in a separate
SUBI consisting of an ownership interest in the Fleet Receivables and related
Trust Assets (the "1999-1B SUBI Portfolio"). The 1999-1A SUBI and the 1999-1B
SUBI are referred to herein as the "Sold SUBIs" and the 1999-1A SUBI Portfolio
and the 1999-1B SUBI Portfolio are referred to herein as the "Sold SUBI
Portfolios".
E. Concurrently herewith, SPV is entering into a Transfer Agreement with
Greyhound Funding LLC (the "Issuer") pursuant to which SPV is transferring all
of its right, title and interest in and to the 1999-1A Sold SUBI, the 1999-1A
Sold SUBI Certificate, the portion of the 1999-1B Sold SUBI represented by the
Class X 1999-1B Sold SUBI Certificate and the Class X 1999-1B Sold SUBI
Certificate.
G. Issuer will issue (i) debt securities pursuant to an Indenture between
the Issuer and the Chase Manhattan Bank, as indenture trustee (the "Indenture
Trustee") and (ii) preferred membership interests in the Issuer, pursuant to the
LLC Agreement and use the proceeds thereof on the date hereof to satisfy certain
claims on the Trust Assets allocated to the Sold SUBI Portfolios and to make a
distribution to SPV and thereafter will use the proceeds thereof to fund the
acquisition of subsequent additions to the Trust Assets allocated to the 1999-1A
SUBI.
H. The parties hereto desire, pursuant to this Sold SUBI Servicing
Supplement, to supplement the terms of the Servicing Agreement insofar as they
apply to the Sold SUBI Portfolios providing for specific servicing obligations
that will benefit the SPV, as holder of the Class Y 1999-1B SUBI Certificate,
the Issuer, as the holder of the 1999-1A SUBI Certificate and Class X 1999-1B
SUBI Certificate, and the Indenture Trustee, as the pledgee of the Class X
1999-1B SUBI Certificate and 1999-1A SUBI Certificate.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and in the Servicing Agreement, the parties hereto agree to the
following supplemental obligations with regard to the Sold SUBI Portfolio:
ARTICLE V
DEFINITIONS
Section 5.1. Definitions.
For all purposes of this Sold SUBI Servicing Supplement, except as
otherwise expressly provided or unless the context otherwise requires, (a)
unless otherwise defined herein, all capitalized terms used herein shall have
the meanings attributed to them (i) by Schedule 1 to the Indenture, (ii) if not
defined therein, by the Servicing Agreement, (iii) if not defined therein, by
the Origination Trust Agreement, or (iv) if not defined therein, by the Sold
SUBI Supplement, (b) the capitalized terms defined in this Sold SUBI Servicing
Supplement have the meanings assigned to them in this Sold SUBI Servicing
Supplement and include (i) all genders and (ii) the plural as well as the
singular, (c) all references to words such as "herein", "hereof' and the like
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<PAGE>
shall refer to this Sold SUBI Servicing Supplement as a whole and not to any
particular article or section within this Sold SUBI Servicing Supplement, (d)
the term "include" and all variations thereon shall mean "include without
limitation", and (e) the term "or" shall include "and/or".
ARTICLE VI
REPRESENTATIONS AND
WARRANTIES OF SERVICER
The Servicer represents and warrants to the Trustees, the SPV, the Issuer
and the Indenture Trustee on behalf of the Investor Noteholders as follows:
Section 6.1. Organization and Power.
Servicer is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full power,
authority and legal right to carry on its business as now conducted and to enter
into and perform its obligations hereunder and under each of the other
Transaction Documents to which it is a party. The Servicer is qualified to do
business and in good standing in every other jurisdiction where the failure to
do so would have a Material Adverse Effect.
Section 6.2. Authorization, Execution and Validity.
Servicer has duly authorized, executed and delivered this Sold SUBI
Servicing Supplement and the Servicing Agreement and (assuming the due
authorization, execution and delivery by each other party thereto) this Sold
SUBI Servicing Supplement and the Servicing Agreement constitute the legal,
valid and binding obligations of Servicer, enforceable against Servicer in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other laws affecting
the enforcement of creditors', mortgagees' or lessors' rights in general and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 6.3. No Conflict.
The execution, delivery and performance by Servicer of this Sold SUBI
Servicing Supplement and the Servicing Agreement and compliance by Servicer with
its obligations hereunder and thereunder do not (1) require any approval of the
shareholders of Servicer or any approval or consent of any trustee or holder of
any indebtedness or obligation of Servicer, other than such consents and
approvals as have been obtained, (2) contravene any Applicable Law, (3) breach
or contravene Servicer's limited liability company agreement, or (4) contravene
or result in any breach of or creation of any Lien (other than pursuant to the
Transaction Documents) upon any property of Servicer under any indenture,
mortgage, loan agreement, lease or other agreement or instrument to which
Servicer is a party or by which Servicer or any of its properties is bound.
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<PAGE>
Section 6.4. Litigation.
There are no actions, suits or proceedings pending or, to the knowledge of
Servicer, threatened against the Servicer, before any Governmental Authority
which individually or in the aggregate would impair the ability of Servicer to
perform its obligations under this Sold SUBI Servicing Supplement or the
Servicing Agreement or which question the validity of this Sold SUBI Servicing
Supplement or the Servicing Agreement or any action taken or to be taken
pursuant hereto or thereto. Servicer is not in default with respect to any order
of any Governmental Authority, the default under which would adversely affect
the ability of Servicer to perform its obligations under this Sold SUBI
Servicing Supplement or the Servicing Agreement.
Section 6.5. Consents.
No consent, approval or authorization of, or filing, registration or
qualification with, or giving of notice or taking of any other action with
respect to, any Governmental Authority is required in connection with the
execution, delivery and performance by Servicer of this Sold SUBI Servicing
Supplement or the Servicing Agreement, or the performance by Servicer of the
transactions contemplated hereby or of any of the transactions contemplated by
any of the Servicing Agreement, other than any such consent, approval,
authorization, filing, registration, qualification, notice or action as has been
duly obtained, given or taken and is in full force and effect.
Section 6.6. Year 2000 Compliance.
Servicer has reviewed the areas within its business and operations which
could be adversely affected by, and has developed or is developing a program to
address on a timely basis, the risk that certain computer applications used by
the Servicer (or any of its material suppliers, customers or vendors) may be
unable to recognize and perform properly date-sensitive functions involving
dates prior to and after December 31, 1999 (the "Year 2000 Problem"). The Year
2000 Problem will not have a Material Adverse Effect on the interests of the
holders of any SUBI Certificate or any pledgee of any SUBI Certificate.
ARTICLE VII
SPECIFIC REQUIREMENTS FOR
ADMINISTRATION AND SERVICING
OF THE SOLD SUBI PORTFOLIO
Section 7.1. Servicing Obligations.
(a) The Servicer, until terminated pursuant to Section 9.1 shall service,
administer and make collections on the Trust Assets allocated to the Sold SUBI
Portfolios in accordance with terms and provisions of the Servicing Agreement.
(b) The Servicer shall account to the SUBI Trustee, the Issuer and the
Indenture Trustee with respect to the 1999-1A Sold SUBI Portfolio and the
portion of the 1999-1B Sold
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<PAGE>
SUBI Portfolio represented by the Class X 1999-1B SUBI Certificate separately
from any other Portfolio. The Servicer shall account to the SUBI Trustee and SPV
with respect to the portion of the 1999-1B SUBI Portfolio, represented by the
Class Y 1999-1B Sold SUBI Certificate, separately from any other Portfolio.
Section 7.2. Servicer Bound by Servicing Agreement.
(a) The Servicer shall continue to be bound by all provisions of the
Servicing Agreement with respect to the Trust Assets allocated to the Sold SUBI
Portfolios, including the provisions of Article II thereof relating to the
administration and servicing of Trust Vehicles, Leases and Fleet Receivables;
and the provisions set forth herein shall operate either as additions to or
modifications of the existing obligations of the Servicer under the Servicing
Agreement, as the context may require. In the event of any conflict between the
provisions of this Sold SUBI Servicing Supplement and the Servicing Agreement
with respect to the Sold SUBIs, the provisions of this Sold SUBI Servicing
Supplement shall prevail.
(b) For purposes of determining the Servicer's obligations with respect to
the servicing of the Sold SUBI Portfolios under this Sold SUBI Servicing
Supplement, general references in the Servicing Agreement to: (i) a SUBI
Portfolio shall be deemed to refer more specifically to a Sold SUBI Portfolio;
(ii) a SUBI Servicing Agreement Supplement shall be deemed to refer more
specifically to this Sold SUBI Servicing Supplement; and (iii) a Sold SUBI
Supplement shall be deemed to refer more specifically to a Sold SUBI Supplement
relating to one of the Sold SUBI Portfolios.
Section 7.3. Application of Proceeds.
In accordance with Section 2.2(c) of the Servicing Agreement, Servicer
shall pay all Collections received in respect of the Sold SUBIs as follows:
(a) The Servicer shall deposit all Collections received in respect of to
the Sold SUBIs into the Collection Account within two (2) Business Days of
receipt thereof. In addition, at any time when either any Series of Investor
Notes or Preferred Membership Interests is outstanding, if the Servicer obtains
confirmation from each Rating Agency with respect to such Series of Investor
Notes and such series of Preferred Membership Interests, and provides evidence
of such confirmation to the Indenture Trustee and the Issuer, of the utilization
by the Servicer of an alternative remittance schedule with respect to
Collections (including the use of an alternative remittance schedule pursuant to
which the obligations of the Servicer to make such remittances are secured by a
letter of credit satisfactory to such Rating Agencies), the Servicer may remit
such Collections in accordance with that alternative remittance schedule.
Without limiting the generality of the foregoing, if VMS is the Servicer and (i)
shall have the Required Rating or (ii) the Indenture Trustee and the Issuer
otherwise shall have received written notice from each of the Rating Agencies
with respect to each Series of Investor Notes and each series of Preferred
Membership Interests that the then outstanding rating on each Series of Investor
Notes and each Series of Preferred Membership Interests would not be lowered or
withdrawn as a result, the Servicer may deposit all amounts referred to above
for any Monthly Period into the Collection Account not later than the related
Settlement Date; provided that (i) if a Servicer Termination
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<PAGE>
Event has occurred and is continuing or (ii) the Servicer has been terminated as
such pursuant to Section 9.1 or (iii) the Servicer ceases to have the Required
Rating, Servicer shall deposit all amounts (including any amounts then being
held by Servicer) into the Collection Account as provided above.
(b) After the payment in full of each Series of Investor Notes and the
redemption in full of each series of Preferred Membership Interests, the
Servicer shall pay all Collections in accordance with the instructions provided
by the Issuer from time to time.
Section 7.4. Monthly Servicer Advances.
On or prior to each Settlement Date, the Servicer shall make a Monthly
Servicer Advance in an amount equal to the amount by which the aggregate monthly
lease payments billed and unpaid under all Unit Leases and all Fleet Receivables
billed and unpaid during the preceding Monthly Period exceeds the amount of
Collections in respect of such payments during such Monthly Period provided,
however, that the Servicer shall not (a) be required to make any Monthly
Servicer Advance in respect of any Unit Lease or Fleet Receivable that it
reasonably determines, in its sole discretion, is unlikely to be paid from
subsequent Collections on such Unit Lease or Fleet Receivable or (b) make any
Monthly Servicer Advance with respect to any Charged-Off Lease. On each
Settlement Date, the Servicer shall be entitled to be reimbursed in accordance
with the Indenture for amounts previously advanced by the Servicer hereunder in
respect of delinquent monthly lease payments or delinquent Fleet Receivables out
of amounts collected in respect of such delinquent monthly lease payment or
delinquent Fleet Receivables during the immediately preceding Monthly Period.
Section 7.5. Payment of Fees and Expenses.
Servicer shall pay all expenses incurred in connection with the
administration and servicing of the Sold SUBIs, the Sold Units and the Fleet
Receivables, including, without limitation, expenses incurred by it in
connection with its activities hereunder, including fees and disbursements of
the SUBI Trustee, independent accountants, taxes imposed on Servicer and any
SUBI Trustee or Delaware Trustee indemnity claims, including those arising under
Sections 5.5, 6.8 and 7.1 of the Origination Trust Agreement.
Section 7.6. Servicing Compensation.
Notwithstanding anything to the contrary in Section 2.5 of the Servicing
Agreement, the Servicing Fee with regard to the Sold SUBI Portfolios shall be
calculated and paid on each Settlement Date pursuant to the Indenture.
Section 7.7. Insurance Policies.
(a) So long as the 1999-1A SUBI Certificate is outstanding, the Servicer
shall have in effect, maintain and keep in force for the benefit of the
Origination Trust, or cause the Origination Trust to have in effect, maintain
and keep in force, insurance with respect to the SUBI Trust Assets against such
hazards, in such form and in such amounts as follows:
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<PAGE>
(i) Contingent and excess automobile liability insurance policies
with Continental Casualty Company (or other nationally recognized
insurance company with a rating of at least A by A.M. Best), with limits
of no less than $1,000,000 per occurrence, covering losses in the event
that an Obligor's primary insurance policy is not collectible at the time
of loss or that a liability claim exceeds the policy limit of the Lessee
primary insurance.
(ii) Interim automobile liability insurance coverage with
Continental Casualty Company (or other nationally recognized insurance
company with a rating of at least A by A.M. Best), with limits of no less
than $1,000,000 per occurrence, covering losses (i) prior to the time that
an Obligor's primary insurance becomes effective and (ii) after a Unit
Lease has terminated.
(iii) Umbrella excess liability insurance of not less than
$25,000,000 with an insurer that has a rating of at least A by A.M. Best.
Such coverage shall be on a per occurrence basis and over and above the
coverage provided by the policies described in paragraphs (i) and (ii)
above. The umbrella excess liability policies shall not restrict coverages
as set forth in paragraphs (i) and (ii) above.
(iv) All policies of insurance required to be maintained pursuant to
this section shall be subject to such deductibles or retentions as are
consistent with industry practices of prudent automobile and light truck
vehicle lease companies or lessors.
(b) All policies of insurance required to be maintained pursuant to this
section shall name the Origination Trust, SPV and the Issuer as additional
insureds as their interests shall appear (the "Additional Insured"). Each policy
of insurance required under the provisions of this section shall contain an
endorsement by the insurer that any loss shall be payable in accordance with the
terms of such policy notwithstanding any act or negligence of the Servicer or
other insured that might otherwise give rise to a defense by the insurer to its
payment of such loss. Each policy shall expressly provide that all provisions
thereof, except liability for premiums (which shall be solely a liability of the
Servicer) and the limits of the insurer's liability under the policy shall
operate in the same manner as if there were a separate policy covering each
Additional Insured. Each such policy shall provide that if such insurance is to
be canceled, terminated or materially changed for any reason whatsoever, the
insurers (or their representatives) will promptly notify the Additional
Insureds, and any such cancellation, termination or change shall not be
effective until 30 days (10 days for non-payment of premium) after receipt of
such notice by the Additional Insureds.
(c) The Servicer will advise the Additional Insureds in writing promptly
of any default in the payment of any premium and of any other act or omission on
the part of the Servicer which may invalidate or render unenforceable, in whole
or in part, any insurance being maintained pursuant to this section. The
Servicer will deliver to the Additional Insureds, promptly upon request and in
any event within 30 days after the end of each fiscal year of the Servicer, a
certificate signed by an authorized officer of the Servicer (x) attaching
certificates of all insurance policies relating to the Sold SUBI Portfolios, and
stating that all premiums then due
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<PAGE>
thereon have been paid and that such policies are in full force and effect and
(y) stating that such insurance policies comply with the requirements of this
section.
Section 7.8. Corporate Existence: Status; Merger.
(a) With reference to Section 2.16(a) of the Servicing Agreement, the
Servicer also will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of, or to permit the
Servicer to perform its obligations under, this Supplement and the Servicing
Agreement.
(b) With reference to Section 2.16(b) of the Servicing Agreement, whenever
a successor to the Servicer by merger or consolidation is required to execute
and deliver to the SUBI Trustee an agreement as to the assumption by the
successor of the Servicer's obligations under the Servicing Agreement, such
agreement also must contain a similar assumption of the Servicer's obligations
under this Supplement.
Section 7.9. Indemnification.
The Servicer agrees to indemnify, defend and hold harmless the UTI Holder,
the Origination Trust, the Trustees and their respective agents, SPV, the Issuer
and the Indenture Trustee, on behalf of the Investor Noteholders, for any and
all liabilities, losses, damages and expenses that may be incurred as a result
of any negligent act or omission by the Servicer in connection with its
maintenance and custody of the Lease Documents and Certificates of Title, the
servicing of the Sold SUBI Portfolios or any other activity undertaken or
omitted by the Servicer with respect to any Sold SUBI, this Sold SUBI Servicing
Supplement or the Servicing Agreement. The obligations set forth in this Section
7.9 shall survive the termination of this Sold SUBI Servicing Supplement, the
Servicing Agreement and the Origination Trust Agreement or the resignation or
removal of the Servicer or any Origination Trustee.
Section 7.10. Liens.
The Servicer will not directly or indirectly create, allow or suffer to
exist any Lien on the Sold SUBI Certificates, the Sold SUBIs, the Sold Units or
any other Trust Assets included in the Sold SUBI Portfolios, other than
Permitted Liens.
Section 7.11. Record Keeping.
The Servicer shall maintain its computer systems relating to the Sold
Units so that, from and after the time of the allocation of Sold Units to the
1999-1A SUBI Portfolio, the Servicer's master computer records (including any
backup archives) that refer to a Sold Unit shall indicate clearly the interest
of the Issuer therein allocated at the UTI Trustee's direction by the
Origination Trustee to the 1999-1A SUBI Portfolio. The Servicer shall maintain
its computer systems relating to the Fleet Receivables so that, from and after
the time of the allocation of the Fleet Receivables to the 1999-1B SUBI
Portfolio, the Servicer's master computer records
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(including any backup archives) that refer to a Fleet Receivable shall indicate
clearly the interests of SPV and the Issuer therein.
Section 7.12. Other Transactions.
If at any time VMS shall propose to sell, grant a security interest in or
otherwise transfer an interest in Origination Trust Assets allocated to the UTI
Interest or any SUBI (other than the Sold SUBIs to any prospective purchaser,
lender or other transferee, the Servicer will not give such prospective
purchaser, lender or other transferee any computer tapes, records or printouts
(including any restored from backup archives) unless, if they shall refer in any
manner whatsoever to any Sold Unit allocated to the 1999-1A SUBI Portfolio or
any Fleet Receivable allocated to the 1999-1B SUBI Portfolio, such computer
tapes, records or printouts shall indicate clearly that a beneficial interest in
such Sold Unit or Fleet Receivable has been issued to the SPV and, as
applicable, sold or pledged by SPV to any other Person.
Section 7.13. Amendment of Policies.
So long as the 1999-1A SUBI Certificate is outstanding, the Servicer shall
not amend or modify the Policies if such amendment or modification would have a
material adverse effect on the collectibility of amounts owing in respect of the
Leases or on the interests of the holders of the Sold SUBIs or any assignee or
pledgee thereof therein.
Section 7.14. Amendment of Leases.
So long as the 1999-1A SUBI Certificate is outstanding, the Servicer shall
not (i) amend or modify any Lease if such amendment or modification would (x)
decrease any amount payable under such Lease upon the early termination thereof
or reduce any payment due under any such Lease upon the expiration thereof or
(y) extend the final termination date for such Lease if such Lease would not
have been an Eligible Lease at the time it was first included in the Aggregate
Lease Balance had such extension been effected at such time or (ii) convert the
floating interest rate under any Lease to a rate which is lower than the greater
of (x) the fixed rate into which such floating rate is converted in accordance
with such Lease and (y) 1/2 of 1% in excess of the PHH Treasury Note Rate on the
conversion date.
Section 7.15. Servicer Payment in Respect of Certain Leases and Trust
Vehicles.
(a) In connection with SPV's contribution of certain of the Trust Assets
to the Trust pursuant to the Contribution Agreement and the allocation of the
Trust Assets to the 1999-1A SUBI on the Closing Date, the Servicer will deliver
a certificate of an Authorized Officer, substantially in the form of Exhibit A,
representing and warranting to SPV, the Issuer and the Indenture Trustee that
(i) all of the Master Lease Agreements allocated to the 1999-1A SUBI on the
Initial Closing Date were Eligible Master Leases as of the Initial Cut-Off Date,
(ii) all of the Leases under such Master Lease Agreements included in the
Initial Aggregate Lease Balance were Eligible Leases as of the Initial Cut-Off
Date and (iii) all of the Consumer Leases allocated to the
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1999-1A SUBI on the Initial Closing Date were Eligible Consumer Leases as of the
Initial Cut-Off Date.
(b) At the time of its origination of a new Lease under a Master Lease
Agreement allocated to the 1999-1A SUBI Portfolio pursuant to Section 2.2 of the
Servicing Agreement, the Servicer shall determine whether such Lease is an
Eligible Lease and, if it so determines that a new Lease is an Eligible Lease
and, as a result thereof, increases the Aggregate Lease Balance to include such
Lease, the Servicer shall be deemed to have represented to the holder of the
1999-1A SUBI Certificate and each assignee or pledgee thereof that such Lease
constitutes an Eligible Lease as of the first date on which such Lease is
included by the Servicer in the Aggregate Lease Balance.
(c) In connection with, and as a condition to, any allocation of a new
Master Lease Agreement to the 1999-1A SUBI Portfolio pursuant to Section 11.2(b)
of the 1999-1A Sold SUBI Supplement, the Servicer shall determine that such
Master Lease Agreement is an Eligible Master Lease of the date of such
allocation and deliver to SPV, the Issuer and the Indenture Trustee a
certification of an Authorized Officer in accordance with Section 11.2(d) of the
1999-1A Sold SUBI Supplement.
(d) In connection with, and as a condition to, any allocation of a new
Consumer Lease to the 1999-1A SUBI Portfolio pursuant to Section 11.2(c) of the
1999-1A Sold SUBI Supplement, the Servicer shall determine that such Consumer
Lease is an Eligible Consumer Lease as of the date of such allocation and shall
deliver to SPV, the Issuer and the Indenture Trustee a certification of an
Authorized Officer in accordance with Section 11.2(d) of the 1999-1A Sold SUBI
Supplement.
(e) At the time of any acquisition of a Paid-In-Advance Vehicle, the
Servicer shall be deemed to have represented to the holder of the 1999-1A SUBI
Certificate and each assignee or pledgee thereof that the Master Lease Agreement
under which such Paid-In-Advance Vehicle is being acquired is not an Ineligible
Delinquent Lease.
(f) The certifications of the Servicer described in Sections 7.15(a)
through (e) (each a "Certification") shall survive delivery of the related
Certification. Upon discovery by SPV, the Issuer, the Indenture Trustee or the
Servicer that any such Certification was incorrect when made or deemed made and
such breach of representation and warranty materially and adversely affects the
collectibility of, or the interest of the holder of the 1999-1A SUBI
Certificate, or any assignee or pledgee thereof in, such Master Lease Agreement,
Consumer Lease or Lease, as the case may be, the party discovering such
incorrectness shall give prompt written notice to the others. Within 30 days of
its discovery of such breach or notice to such effect to the Servicer, the
Servicer shall cure in all material respects the circumstances or condition
giving rise to such breach. If the Servicer is unable or unwilling to so cure
any such breach, it shall, as the sole remedy for such breach (i) deposit (or
cause to be deposited) into the Collection Account on the first Settlement Date
following such 30-day period an amount equal to the Aggregate Lease Balance of
all Leases under such Master Lease Agreement as of the last day of the
immediately preceding Monthly Period plus, in the case of a Closed-End Lease,
the aggregate Net Book Value of the Leased
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Vehicles subject to such Master Lease Agreement as of such day, in the case of a
repurchase of a Master Lease Agreement, the Lease Balance of such Consumer Lease
as of the last day of the immediately preceding Monthly Period plus, in the case
of a Closed-End Lease, the Net Book Value of the Leased Vehicle subject to such
Consumer Lease as of such day, in the case of a repurchase of a Consumer Lease,
the Lease Balance of such Lease as of the last day of the immediately preceding
Monthly Period plus, in the case of a Closed-End Lease, the Net Book Value of
the Leased Vehicle subject to such Lease as of such day, in the case of a
repurchase of a Lease, or the cost of the Paid-In-Advance Vehicle, in the case
of a repurchase of a Paid-In-Advance Vehicle (which deposit shall constitute the
full purchase price in respect of the purchase of such Master Lease Agreement,
such Consumer Lease, such Lease or such Paid-In-Advance Vehicle, as the case may
be), (ii) purchase such Master Lease Agreement, such Consumer Lease or such
Lease and the related Leased Vehicle or Vehicles or such Paid-In-Advance
Vehicles from the Origination Trust, and (iii) indemnify, defend and hold
harmless the holders of any 1999-A SUBI Certificate (including, without
limitation, SPV, the Issuer and the Indenture Trustee on behalf of the Investor
Noteholders) and any subsequent servicer (if other than the current Servicer)
from and against, any and all loss or liability with respect to or resulting
from any such Master Lease, Consumer Lease, Lease, Leased Vehicle or
Paid-In-Advance (including, without limitation, the reasonable fees and expenses
of counsel). At any time following such repurchase, if requested by the
Servicer, the Trust Vehicle or Vehicle will be re-titled in the name of the
Servicer or its designee (other than the Trust, the SPV or the Issuer).
(g) The obligations of the Servicer pursuant to this Section 7.15 shall
survive any termination of the Servicer with respect to the Sold SUBI Portfolio
under this Supplement or the Servicing Agreement.
ARTICLE VIII
STATEMENTS AND REPORTS
Section 8.1. Reporting by the Servicer.
(a) The Servicer shall deliver to SPV, the Issuer and the Indenture
Trustee or any subsequent holder or pledgee of the Sold SUBI Certificates all
reports and other documents required to be delivered to the Origination Trustee
pursuant to the Servicing Agreement concurrently with their delivery to the
Origination Trustee.
(b) On each Determination Date, the Servicer shall deliver to the
Origination Trustee, SPV, the Issuer and the Indenture Trustee and each Rating
Agency, a certificate of an Authorized Officer in respect of the immediately
preceding Monthly Period with respect to each Series of Investor Notes (each a
"Settlement Statement") substantially in the form attached to the related
Indenture Supplement.
(c) Prior to 1:00 p.m. (New York City time), on each Deposit Date, the
Servicer shall deliver to the Origination Trustee, SPV, the Issuer and the
Indenture Trustee, a Deposit Report, setting forth the aggregate amount of
Collections deposited in the Collection Account on such Deposit Date.
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(d) Within ten Business Days of the last Business Day of each fiscal
quarter of the Issuer, the Servicer shall deliver to the Origination Trustee,
SPV, the Issuer and the Indenture Trustee a copy of a Quarterly Compliance
Certificate of an Authorized Officer, substantially in the form of Exhibit B,
dated as of the end of the preceding fiscal quarter, stating that (i) review of
the activities of the Servicer during the preceding fiscal quarter (or, in the
case of the first such certificate, from the Initial Closing Date) and of its
performance under this Agreement has been under such Authorized Officer's
supervision and (ii) to the best of such Authorized Officer's knowledge, based
on such review, the Servicer has fulfilled all its obligations in all material
respects under this Agreement, throughout such fiscal quarter or, if there has
been a default in any material respect in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
Section 8.2. Annual Accountants' Reports.
The Servicer shall cause Deloitte & Touche LLP or another firm of
nationally recognized independent certified public accountants, who may also
render other services to the Servicer, to deliver to SPV, the Issuer, the
Indenture Trustee, and each Rating Agency on or before March 31 of each year
concerning the 12-month period ended December 31 of the preceding year (or such
other first period since the date of this Sold SUBI Servicing Supplement),
beginning March 31, 2000, (i) a report to the effect that such firm (A) has
reviewed certain documents and records relating to the servicing of the Trust
Assets allocated to the 1999-1A SUBI Portfolio and (B) based on such review,
such firm is of the opinion that the Settlement Statements for such year were
prepared in compliance with this Sold SUBI Servicing Supplement; except for such
exceptions as it believes to be immaterial and such other exceptions as will be
set forth in such firm's report, and (ii) a report to the effect that such firm
has examined the assertion of Servicer's management as to its compliance with
the servicing requirements set forth in Article II of the Servicing Agreement
with respect to such 12-month (or other) period and that (A) such examination
was made in accordance with standards established by the American Institute of
Certified Public Accountants, and (B) except as described in the report,
management's assertion is fairly stated in all material respects. The report
will also indicate that the firm is independent of the Servicer within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
Section 8.3. Other Certificates and Notices from Servicer.
(a) The Servicer shall deliver to SPV, the Issuer, the Indenture Trustee
and each Rating Agency promptly after having obtained knowledge thereof, but in
no event later than three Business Days thereafter, an Officer's Certificate
specifying the nature and status of any event which with the giving of notice or
lapse of time, or both, would become a Servicer Termination Event.
(b) The Servicer shall deliver to SPV, the Issuer, the Indenture Trustee
and each Rating Agency on a quarterly basis, within 45 days following the end of
each quarter, a certificate executed by a duly authorized officer of the
Servicer stating whether or not, if all "employee benefit plans" subject to
Title IV of ERISA which Servicer, or any entity which is a
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member of a "Controlled Group", of which the Servicer is also a member,
maintains or sponsors were terminated on the last day of the immediately
preceding quarter or immediately after such date, there would be any unfunded
liabilities with respect to any such plan, its participants or beneficiaries, or
the Pension Benefit Guarantee Corporation.
Section 8.4. Period End Dates.
The Servicer shall establish the Period End Dates for each calendar year.
The Period End Date will generally be the last Saturday of each calendar month
unless the last Saturday of a calendar month is too close to the end of such
month to permit orderly billing, in which event the Period End Date shall be the
second to last Saturday of the month. The remaining Period End Dates for
calendar year 1999 are set forth on Schedule X. On or prior to December 1 of
each calendar year, commencing December 1, 1999, the Servicer shall deliver to
SPV, the Issuer and the Indenture Trustee a list of the Period End Dates for the
next calendar year and Schedule X shall be deemed to be amended thereby.
ARTICLE IX
TERMINATION OF SERVICER
Section 9.1. Termination of Servicer as to Sold SUBI Portfolios.
(a) Notwithstanding any statement to the contrary contained in Article III
of the Servicing Agreement, the Servicer may be terminated by the Issuer,
subject to Section 10.1 of this Sold SUBI Servicing Supplement, upon written
notice to the Servicer, with respect to the Sold SUBI Portfolios to the extent a
Servicer Termination Event shall have occurred and be continuing. As used
herein, the term "Servicer Termination Event" shall mean any of the following
acts or occurrences:
(i) The Servicer shall have failed to deposit or transfer any
amounts that are required to be deposited or transferred related to the
Sold SUBIs as provided in Section 7.3 of this Sold SUBI Servicing
Supplement, and such failure continues for two (2) Business Days after the
discovery of such failure by the Servicer or the receipt by the Servicer
of written notice thereof from the Issuer or the Indenture Trustee;
(ii) The Origination Trustee, the Issuer or the Indenture Trustee
shall not have received the Monthly Report within three (3) Business Days
after the date any such report is due;
(iii) The Servicer shall default in the due performance and
observance of any other provision of this Agreement, and such default
shall have continued for a period of 30 days after the earlier to occur of
(x) written notice thereof shall have been given to the Servicer, by the
Issuer or the Indenture Trustee or (y) discovery of such failure by the
Servicer;
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(iv) The occurrence of a "Servicer Termination Event" described in
Section 3.1(a) of the Servicing Agreement;
(v) Any representation, warranty or statement of the Servicer made
under the Servicing Agreement or this Agreement or any certificate, report
or other writing delivered pursuant hereto or thereto relating to the Sold
SUBI Portfolio shall prove to be incorrect in any material respect as of
the time when the same shall have been made and, within 30 days after the
earlier to occur of (x) written notice thereof shall have been given to
the Servicer, by the Issuer or the Indenture Trustee or (y) discovery of
such failure by the Servicer, the circumstance or condition in respect of
which such representation, warranty or statement was incorrect shall not
have been eliminated or otherwise cured; or
(vi) The Servicer shall have created, either indirectly or directly,
or allowed to suffer to exist, any Lien on the Sold SUBI Certificates, the
Sold SUBIs or any Origination Trust Assets included in the Sold SUBIs
Portfolios, other than Permitted Liens.
(b) Upon the giving of any such notice of the occurrence of a Servicer
Termination Event to the Servicer, the Issuer, subject to Section 10.1 of this
Sold SUBI Servicing Supplement, may replace the Servicer with a successor
Servicer satisfactory to it and upon the effective date of the assumption by the
successor Servicer of its duties, all rights, powers, duties and
responsibilities of the Servicer with respect to the Sold SUBI Portfolios under
the Servicing Agreement as supplemented by this Sold SUBI Servicing Supplement,
but excluding the obligations set forth in Section 9.1(d) hereof as being
retained by the Servicer, shall vest in and be assumed by, such successor
Servicer, and the Issuer and the SUBI Trustee are each hereby irrevocably
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, or to direct the Servicer to deliver, all
documents and other instruments (including any notices to Obligors deemed
necessary or advisable by the SUBI Trustee), and to do or accomplish all other
acts or things necessary or appropriate to effect such vesting and assumption,
including, without limitation, (i) directing the Obligors to remit payments on
or in respect of the Sold SUBIs to an account or address designated by such new
Servicer and (ii) directing the Servicer to deliver and transfer to the
successor Servicer (A) all cash amounts (including all Security Deposits being
held by the predecessor Servicer pursuant to Section 2.4 of the Servicing
Agreement) that shall at the time be held by the predecessor Servicer under the
Servicing Agreement and this Sold SUBI Servicing Supplement or otherwise or
shall thereafter be received by it with respect to the Sold SUBI, and (B) all
related Lease Documents, Certificates of Title and other related items that from
time to time come into possession of the predecessor Servicer with respect to
the Sold Units or the Fleet Receivables. Further, within 10 Business Days of the
receipt by the Servicer of such direction, the Servicer shall use commercially
reasonable efforts to effect the orderly and efficient transfer of the servicing
of the Sold SUBI Portfolios to the new Servicer, and as promptly as practicable,
the Servicer shall provide to the new Servicer a current computer tape
containing all information from the Servicing Records required for the proper
servicing of the Sold SUBI Portfolios, (including all origination and servicing
information, records and data relating to the Sold Units or the Fleet
Receivables, in a form readily and immediately usable by such new Servicer)
together with
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documentation containing any and all information necessary for use of the tape.
All reasonable costs and expenses (including attorney's fees) incurred by the
successor Servicer in connection with the transfer of the servicing of the Sold
SUBI Portfolios to the new Servicer (including the transfer of such Lease
Documents and Certificates of Title) and amending the Servicing Agreement and
this Sold SUBI Servicing Supplement to reflect the succession to successor
Servicer shall be paid by the predecessor Servicer.
(c) Upon the effectiveness of the assumption by the successor Servicer of
its duties pursuant to this Section 9.1, the successor Servicer shall be the
successor in all respects to the Servicer in its capacity as Servicer under the
Servicing Agreement with respect to the Sold SUBI Portfolios, and shall be
subject to all the responsibilities, duties and liabilities relating thereto,
except with respect to the obligations of the predecessor Servicer that survive
its termination as the Servicer as set forth in Section 9.1(d). No Servicer
shall resign or be relieved of its duties under the Servicing Agreement, as
Servicer of the Sold SUBI Portfolios, until a newly appointed Servicer for the
Sold SUBI Portfolios shall have assumed the responsibilities and obligations of
the terminated Servicer under the Servicing Agreement and this Sold SUBI
Servicing Supplement.
(d) No termination of the Servicer as to the Sold SUBI Portfolios shall
affect the obligations of the Servicer pursuant to Section 7.9 or Section 7.15
(but only to the extent of the Certifications made or deemed made prior to such
termination) of this Sold SUBI Servicing Supplement.
Section 9.2. No Effect on Other Parties.
Upon any termination of the rights and powers of the Servicer with respect
to the Sold SUBI Portfolios pursuant to Section 9.1 hereof, or upon any
appointment of a successor to the Servicer with respect to the Sold SUBI
Portfolios, all the rights, powers, duties and obligations of the Trustees, the
UTI Holder and the Settlor under the Origination Trust Agreement, the Servicing
Agreements, the Sold SUBI Supplements, any other SUBI Supplements, any other
SUBI Servicing Agreement Supplements or any other Trust Document shall remain
unaffected by such termination or appointment and shall remain in full force and
effect thereafter, except as otherwise expressly provided herein or therein.
ARTICLE X
ASSIGNMENT OF SERVICING AGREEMENT RIGHTS
Section 10.1. Assignment.
Each party hereto hereby acknowledges and consents to (i) the pledge and
assignment by SPV to the Issuer pursuant to the Transfer Agreement of all of the
SPV's rights under the Servicing Agreement and this Sold SUBI Servicing
Supplement and (ii) the pledge, assignment and grant of a security interest by
the Issuer to the Indenture Trustee for the benefit of the
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Investor Noteholders pursuant to the Indenture of all of the Issuer's right,
title and interest in and to the Servicing Agreement and this Sold SUBI
Servicing Supplement.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Termination of Agreement.
(a) If all of the interest in the Sold SUBIs is transferred to the UTI
Holder, then the Servicer, upon the direction of the UTI Holder as provided in
Section 11.4 of each of the Sold SUBI Supplements, shall reallocate all Sold
SUBI Assets to the UTI Portfolio and the respective duties and obligations of
the Servicer and the SUBI Trustee with respect to the Sold SUBIs created by the
Servicing Agreement and this Sold SUBI Servicing Supplement shall terminate.
(b) Except as provided in this Section 11.1, the respective duties and
obligations of the Servicer and the SUBI Trustee with respect to the Sold SUBI
Portfolios created by the Servicing Agreement and this Sold SUBI Servicing
Supplement shall terminate upon the termination of the Servicing Agreement
pursuant to Section 4.1 thereof (and with the consent of SPV, the Issuer and the
Indenture Trustee in the case of a termination pursuant to Section 11.1(a)
hereof). Upon such a termination, the Servicer shall pay over to the UTI Holder
or any other Person entitled thereto all moneys held by the Servicer with
respect to the Sold SUBI Portfolios pursuant to the Servicing Agreement and this
Sold SUBI Servicing Supplement.
Section 11.2. Amendment.
(a) Notwithstanding Section 4.2 of the Servicing Agreement and subject to
Section 10.1 hereof, the Servicing Agreement, as supplemented by this Sold SUBI
Servicing Supplement, to the extent that it deals with the Sold SUBI Portfolios,
may be amended from time to time in accordance with this Section 11.2.
(b) Subject to Section 10.1 hereof, the Servicing Agreement and this Sold
SUBI Servicing Supplement may be amended from time to time to the extent that it
relates to the Sold SUBIs by SPV, with the consent of the SUBI Trustee but
without the consent of any other Person, to correct any inconsistency or cure
any ambiguity or errors in the Servicing Agreement or this Sold SUBI Servicing
Supplement in a manner which would have no adverse effect on any holder of the
Sold SUBI Certificates or any pledge or assignee thereof.
(c) Subject to Section 10.1 hereof, the Servicing Agreement or this Sold
SUBI Servicing Supplement may be amended in any respect from time to time to the
extent that it relates to the Sold SUBIs by SPV, with the consent of the holder
of the Sold SUBI Certificates and any pledgee or assignee thereof.
(d) Prior to the execution of any such amendment or consent, the Servicer
shall furnish at least five (5) Business Days prior written notification of the
substance of such
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amendment or consent to each Rating Agency with respect to each Series of
Investor Notes and each series of Preferred Membership Interests; provided, that
the Servicer shall have no obligation to furnish either Rating Agency with prior
written notice of the substance of any amendment or consent to the Servicing
Agreement. No later than ten (10) Business Days after the execution of any such
amendment or consent, the Servicer shall furnish a copy of such amendment or
consent to each Rating Agency with respect to each Series of Investor Notes and
each series of Preferred Membership Interests, the Issuer and the Indenture
Trustee.
(e) Prior to the execution of any amendment to the Servicing Agreement or
this Sold SUBI Servicing Supplement, the Issuer and the Indenture Trustee shall
be entitled to receive and conclusively rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by the Servicing
Agreement or this Sold SUBI Servicing Supplement and that all conditions
precedent to the execution and delivery of such amendment have been satisfied.
Section 11.3. Governing Law.
THIS SOLD SUBI SERVICING SUPPLEMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW BUT EXCLUDING TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL OTHER
CHOICE OF LAW AND CONFLICTS OF LAW RULES).
Section 11.4. Notices.
The notice provisions of Section 4.4 of the Servicing Agreement shall
apply equally to this Sold SUBI Servicing Supplement.
Section 11.5. Third Party Beneficiary.
SPV and each assignee or pledgee of the SPVs interest in this Sold SUBI
Servicing Agreement is an express third party beneficiary of the obligations of
the parties hereto and may directly enforce the performance of any of such
obligations hereunder.
Section 11.6. Severability.
If one or more of the provisions of this Sold SUBI Servicing Supplement
shall be for any reason whatever held invalid or unenforceable, such provisions
shall be deemed severable from the remaining covenants, agreements and
provisions of this Sold SUBI Servicing Supplement, and such invalidity or
unenforceability shall in no way affect the validity or enforceability of such
remaining covenants, agreements and provisions, or the rights of any parties
hereto. To the extent permitted by law, the parties hereto waive any provision
of law that renders any provision of this Sold SUBI Servicing Supplement invalid
or unenforceable in any respect.
Section 11.7. Binding Effect.
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The provisions of the Servicing Agreement and this Sold SUBI Servicing
Supplement, insofar as they relate to the Sold SUBI Portfolios, shall be binding
upon and inure to the benefit of the respective successors and permitted assigns
of the parties hereto, including, but not limited to, SPV, the Issuer and the
Indenture Trustee.
Section 11.8. Article and Section Headings.
The article and section headings herein are for convenience of reference
only, and shall not limit or otherwise affect the meaning hereof.
Section 11.9. Execution in Counterparts.
This Sold SUBI Servicing Supplement may be executed in any number of
counterparts, each of which so executed and delivered shall be deemed to be an
original, but all of which counterparts shall together constitute but one and
the same instrument.
Section 11.10. Further Assurances.
Each party will do such acts, and execute and deliver to any other party
such additional documents or instruments as may be reasonably requested in order
to effect the purposes of this Sold SUBI Servicing Supplement and to better
assure and confirm unto the requesting party its rights, powers and remedies
hereunder.
Section 11.11. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a) this
Sold SUBI Servicing Supplement is executed and delivered by Wilmington Trust
Company, not individually or personally but solely as SUBI Trustee of the Trust
under the Origination Trust Agreement, in the exercise of the powers and
authority conferred and vested in it, (b) nothing herein contained shall be
construed as creating any liability on Wilmington Trust Company, individually or
personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties hereto
and by any Person claiming by, through or under the parties hereto and (c) under
no circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by any party under the Transaction Documents.
Section 11.12. Series Liabilities.
Each party hereto represents, warrants and covenants that (a) each of the
Sold SUBIs is a separate series of the Origination Trust as provided in Section
3806(b)(2) of Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. ss. 3801
et seq., (b)(i) the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to the Sold SUBIs or the Sold
SUBI Portfolios shall be enforceable against the respective Sold SUBI Portfolios
only, as applicable, and not against any other SUBI Assets or the UTI Portfolio
and (ii) the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to
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any other SUBI, any other SUBI portfolio, the UTI or the UTI Portfolio shall be
enforceable against such other SUBI portfolio or the UTI portfolio only, as
applicable, and not against any other SUBI Assets, (c) except to the extent
required by law, UTI Assets or SUBI Assets with respect to any SUBI (other than
the respective Sold SUBIs) shall not be subject to the claims, debts,
liabilities, expenses or obligations arising from or with respect to the Sold
SUBIs, respectively, in respect of such claim, (d)(i) no creditor or holder of a
claim relating to the Sold SUBIs or the Sold SUBI Portfolios shall be entitled
to maintain any action against or recover any assets allocated to the UTI or the
UTI Portfolio or any other SUBI or the assets allocated thereto, and (ii) no
creditor or holder of a claim relating to the UTI, the UTI Portfolio or any SUBI
other than the Sold SUBIs or any SUBI Assets other than the Sold SUBI Portfolios
shall be entitled to maintain any action against or recover any assets allocated
to the Sold SUBIs, and (e) any purchaser, assignee or pledgee of an interest in
the Sold SUBIs, the Sold SUBI Certificates, any other SUBI, any other SUBI
Certificate, the UTI or the UTI Certificate must, prior to or contemporaneously
with the grant of any such assignment, pledge or security interest, (i) give to
the Origination Trust a non-petition covenant substantially similar to that set
forth in Section 6.9 of the Origination Trust Agreement, and (ii) execute an
agreement for the benefit of each holder, assignee or pledgee from time to time
of the UTI or UTI Certificate and any other SUBI or Sold SUBI Certificate (as
defined in the Origination Trust Agreement), to release all claims to the assets
of the Origination Trust allocated to the UTI and each other SUBI Portfolio and
in the event that such release is not given effect, to fully subordinate all
claims it may be deemed to have against the assets of the Origination Trust
allocated to the UTI Portfolio and each other SUBI Portfolio.
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Section 11.13. No Petition.
With respect to each Special Purpose Entity, each party hereto agrees
that, prior to the date which is one year and one day after payment in full of
all obligations under each Securitization (i) no party hereto shall authorize
such Special Purpose Entity to commence a voluntary winding-up or other
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to such Special Purpose Entity or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect in any
jurisdiction or seeking the appointment of an administrator, a trustee,
receiver, liquidator, custodian or other similar official with respect to such
Special Purpose Entity or any substantial part of its property or to consent to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against such
Special Purpose Entity, or to make a general assignment for the benefit of any
party hereto or any other creditor of such Special Purpose Entity, and (ii) none
of the parties hereto shall commence or join with any other Person in commencing
any proceeding against such Special Purpose Entity under any bankruptcy,
reorganization, liquidation or insolvency law or statute now or hereafter in
effect in any jurisdiction. Each of the parties hereto agrees that, prior to the
date which is one year and one day after the payment in full of all obligations
under each Securitization, it will not institute against, or join any other
Person in instituting against, any Special Purpose Entity an action in
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or similar proceeding under the laws of the United States or any State of the
United States.
[SIGNATURES ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers duly authorized as of the day and
year first above written.
D.L. PETERSON TRUST
By: Wilmington Trust Company, not in its individual
capacity but solely as Delaware Trustee
By: _______________________________________________
Name: _________________________________________
Title: ________________________________________
PHH VEHICLE MANAGEMENT SERVICES LLC
By: _______________________________________________
Name: _________________________________________
Title: ________________________________________
RAVEN FUNDING LLC
By: _______________________________________________
Name: _________________________________________
Title: ________________________________________
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as SUBI Trustee
By: _______________________________________________
Name: _________________________________________
Title: ________________________________________
<PAGE>
Acknowledged and Agreed:
GREYHOUND FUNDING LLC,
as the Issuer
By: _________________________________
Name: ___________________________
Title: __________________________
THE CHASE MANHATTAN BANK,
not in its individual capacity but solely
as the Indenture Trustee
By: _________________________________
Name: ___________________________
Title: __________________________
RAVEN FUNDING LLC
By: _________________________________
Name: ___________________________
Title: __________________________
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE V
DEFINITIONS....................................................................2
Section 5.1.Definitions......................................................2
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SERVICER.....................................3
Section 6.1. Organization and Power.........................................3
Section 6.2. Authorization, Execution and Validity..........................3
Section 6.3. No Conflict....................................................3
Section 6.4. Litigation.....................................................4
Section 6.5. Consents.......................................................4
Section 6.6. Year 2000 Compliance...........................................4
ARTICLE VII
SPECIFIC REQUIREMENTS FOR
ADMINISTRATION AND SERVICING
OF THE SOLD SUBI PORTFOLIO ....................................................4
Section 7.1. Servicing Obligations..........................................4
Section 7.2. Servicer Bound by Servicing Agreement..........................5
Section 7.3. Application of Proceeds........................................5
Section 7.4. Monthly Servicer Advances......................................6
Section 7.5. Payment of Fees and Expenses...................................6
Section 7.6. Servicing Compensation.........................................6
Section 7.7. Insurance Policies.............................................6
Section 7.8. Corporate Existence: Status; Merger............................8
Section 7.9. Indemnification................................................8
Section 7.10. Liens..........................................................8
Section 7.11. Record Keeping.................................................8
Section 7.12. Other Transactions.............................................9
Section 7.13. Amendment of Policies..........................................9
Section 7.14. Amendment of Leases............................................9
Section 7.15. Servicer Payment in Respect of Certain Leases and
Trust Vehicles ................................................9
ARTICLE VIII
STATEMENTS AND REPORTS........................................................11
Section 8.1. Reporting by the Servicer.....................................11
Section 8.2. Annual Accountants Reports....................................12
Section 8.3. Other Certificates and Notices from Servicer..................12
(i)
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Section 8.4. Period End Dates.............................................13
ARTICLE IX
TERMINATION OF SERVICER.......................................................13
Section 9.1. Termination of Servicer as to Sold SUBI Portfolios...........13
Section 9.2. No Effect on Other Parties...................................15
ARTICLE X
ASSIGNMENT OF SERVICING AGREEMENT RIGHTS......................................15
Section 10.1. Assignment...................................................15
ARTICLE XI
MISCELLANEOUS.................................................................16
Section 11.1. Termination of Agreement.....................................16
Section 11.2. Amendment....................................................16
Section 11.3. Governing Law................................................17
Section 11.4. Notices......................................................17
Section 11.5. Third Party Beneficiary......................................17
Section 11.6. Severability.................................................17
Section 11.7. Binding Effect...............................................17
Section 11.8. Article and Section Headings.................................18
Section 11.9. Execution in Counterparts....................................18
Section 11.10. Further Assurances...........................................18
Section 11.11. Limitation of Liability......................................18
Section 11.12. Series Liabilities...........................................18
Section 11.13. No Petition..................................................19
Exhibit A - Form of Servicer Certificate
Exhibit B - Form of Quarterly Compliance Certificate
Schedule X - Period End Dates for 1999
(ii)
<PAGE>
Exhibit 4.45
ASSET SALE AGREEMENT
dated as of
June 30, 1999
between
PHH VEHICLE MANAGEMENT SERVICES LLC
and
PHH PERSONAL LEASE CORPORATION,
as Sellers
and
RAVEN FUNDING LLC,
as Purchaser
<PAGE>
ASSET SALE AGREEMENT (the "Agreement"), dated as of June 30, 1999,
between PHH Vehicle Management Services LLC ("VMS"), a Delaware limited
liability company, as seller, PHH Personal Lease Corporation, a Maryland
corporation, as seller, ("PHH PLC", and together with VMS, the "Sellers") and
Raven Funding LLC, a Delaware limited liability company, as purchaser (the
"Purchaser").
WHEREAS, the Sellers own certain Leases, Vehicles and interests in
the D.L. Peterson Trust, a Maryland business trust (the "Origination Trust").
WHEREAS, the Sellers propose to sell and Purchaser proposes to
purchase the Leases, the Vehicles and the interests in the Origination Trust
from the Sellers for cash equal to the Purchase Price.
NOW, THEREFORE, the Sellers and Purchaser hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions. (a) Capitalized terms used in the above
recitals and in this Agreement, and not defined in this Agreement, shall have
the respective meanings assigned to them in the Definitions List attached to the
Base Indenture, dated as of the date hereof, between the Issuer and The Chase
Manhattan Bank, as indenture trustee, as the same may be amended, supplemented
or otherwise modified from time to time, exclusive of Indenture Supplements
creating a new Series of Investor Notes (the "Base Indenture").
(b) All references herein to "this Agreement" are to this Asset Sale
Agreement, and all references herein to Articles, Exhibits, Sections and
subsections are to Articles, Exhibits, Sections and subsections of this
Agreement unless otherwise specified.
ARTICLE II
SALE OF ASSETS
Section 2.1 Sale of Vehicles and Leases. The Sellers do hereby sell,
warrant, pledge, convey, transfer and set over unto the Purchaser all of their
respective present and future right, title and interest in, to and under the
rights, interests, powers, privileges and other benefits, in each case whether
now owned or existing or hereafter acquired or arising and wherever the same may
be located in all of the following, (all of which rights, being hereby assigned
and pledged, or intended so to be, are hereinafter collectively referred to as
the "Auto Assets", together with the Existing Interests (as defined below), the
"Sold Assets"):
(a) all automobiles, trucks, truck chassis, truck bodies, truck
tractors, truck trailers or other type of motorized vehicle or equipment set
forth in Exhibit A hereto (the "Sold Vehicles"), together with: (i) all
substitutions, renewals or replacements of the Sold Vehicles
<PAGE>
or any part included therein, (ii) all proceeds, rents, income, revenues and
profits to the Seller therefor, (iii) all accessories, additions and parts from
time to time in or to such Sold Vehicles or equipment and all accessories
thereto, (iv) all logs, books, records and other written materials pertaining to
the Sold Vehicles or any part included therein and all warranties of any kind
relating to the Sold Vehicles and (v) all security interests in such Vehicles or
any of the foregoing;
(b) all the right, title, interest, claims and demands now held or
hereafter acquired by the Sellers, as lessors, in, to and under the leases set
forth in Exhibit B hereto (the "Sold Leases"), together with all rights, powers,
privileges, options, licenses and other benefits of the Sellers, as lessors,
under each thereof, whether arising under the Sold Leases, by law or in equity,
including, without limitation:
(i) the immediate and continuing right to receive and
collect all payments, insurance and disposition proceeds,
condemnation awards and other payments, tenders and security of any
kind now or hereafter payable or receivable by, or for the benefit
or account of, the Seller, as lessor, under the Sold Leases;
(ii) the right to (1) give or receive any instrument,
notice or other communication, (2) exercise any election or option
or accept any surrender of the Sold Vehicle or any part thereof or
grant any waiver, consent or other approval, and (3) enter into any
amendment, supplement or other modification or agreement relating to
the Sold Leases;
(iii) the right to take such action and exercise such
rights and remedies upon the occurrence of a default under a Sold
Lease, including the commencement, conduct and consummation of
legal, administrative or other proceedings, as shall be permitted by
the Sold Leases, or by any other law or in equity, and to do any and
all other things whatsoever which the Seller is or may be entitled
to do under the Sold Leases;
it being the intent and purpose hereof that the assignment and transfer to the
Purchaser of said rights, powers, privileges, options, licenses and other
benefits shall be effective and operative immediately and shall continue in full
force and effect;
(c) each certificate of title or other evidence of ownership of a
Sold Vehicle issued by any applicable department, agency or official responsible
for accepting applications for, and maintaining records regarding, certificates
of title in the respective jurisdiction in which such Sold Vehicle is
registered;
(d) any insurance policy and rights thereunder or proceeds
therefrom, including without limitation, any policy of comprehensive, collision,
public liability, physical damage or personal liability insurance to the extent
that any such policy applies to any Sold Lease or Sold Vehicle; and
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(e) all proceeds (as such term is defined in the Uniform Commercial
Code of the State of New York, or any other applicable Uniform Commercial Code,
each as in effect from time to time) of the foregoing, and in any event shall
include, without limitation: (i) "cash proceeds," (ii) "non-cash proceeds,"
(iii) all amounts payable as proceeds of insurance, as an award or otherwise in
connection with any confiscation, condemnation, requisition or other taking of
any Auto Assets, and (iv) all amounts payable to the Sellers by any
manufacturer, supplier or vendor of any of the Auto Assets or any component
thereof pursuant to any warranty or indemnity covering any of the Auto Assets,
in each case whether now owned or existing or hereafter acquired or arising, or
acquired or arising before or after the commencement of any bankruptcy
proceeding by or against the Sellers; and (v) all monies and securities
deposited or required to be deposited with the Sellers pursuant to any term of
the Sold Leases or required to be held by the Sellers hereunder or thereunder.
Section 2.2 Sale of the Existing Interests. VMS does hereby sell,
warrant, pledge, convey, transfer and set over unto the Purchaser all of VMS'
present and future right, title and interest in, to and under the rights,
interests, powers, privileges and other benefits, in each case whether now owned
or existing or hereafter acquired or arising in the interests in the Origination
Trust set forth in Exhibit C hereto, but in all instances subject to the Loan
(as hereinafter defined) (the "Existing Interests"). For the purposes of this
Agreement, the "Loan" shall mean the loan in the amount of $914,160,108.23 from
The Chase Manhattan Bank made to the Seller and evidenced by a Note dated as of
June 30, 1999 made by the Seller, as borrower.
Section 2.3 Payment for the Sold Assets. Contemporaneously with the
execution and delivery hereof, and in consideration for the purchase of (a) the
Auto Assets hereunder, the Purchaser shall deliver to the Seller $1,922,476,093,
which amount the parties hereto agree is equal to the fair market value of the
Auto Assets (the "Auto Assets Purchase Price"). Contemporaneously with the
execution and delivery hereof, and in consideration for the purchase of (b) the
Existing Interests, hereunder, subject to the Loan, the Purchaser shall deliver
to VMS $167,561,262,which amount the parties hereto agree is equal to the fair
market value of the Existing Interests, subject to the Loan, (the "Existing
Interests Purchase Price" and together with the Auto Assets Purchase Price, the
"Purchase Price").
Section 2.4 Assumption. In consideration of the transfers set forth
in Sections 2.1 and 2.2, the Purchaser hereby accepts the Sold Leases and
assumes and undertakes and agrees to perform and discharge all of the duties and
obligations of the Sellers with respect to the Sold Assets whenever and wherever
accrued.
Section 2.5 Release of the Seller. As of the date hereof, the
Sellers shall be relieved of their respective liabilities under the Sold Leases.
Section 2.6 The Closing. Subject to the conditions set forth in
Article IV, the sale of the Sold Leases, Sold Vehicles and the Existing
Interests shall take place at a closing at the offices of Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York 10017 on or about June 30,
1999 (the "Closing Date").
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Section 2.7 Security Interest in the Transferred Assets. The parties
to this Agreement intend that the transactions contemplated by Article II shall
be, and shall be treated as, absolute sale, assignment, transfer, and conveyance
by the Sellers of the Sold Assets and not as a lending transaction. If this
Agreement does not constitute a valid assignment, transfer and conveyance of all
right, title and interest of the Sellers in, to and under the Sold Assets
despite the intent of the parties hereto, the Sellers hereby grant a first
priority "security interest" (as defined in the UCC as in effect in the State of
New York) in the Sold Assets and all proceeds thereof to the Purchaser and the
parties agree that this Agreement shall constitute a security agreement under
the UCC in effect in New York.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants to the Sellers as of the date hereof
and as of the Closing Date:
(a) Organization and Good Standing. The Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware.
(b) Power and Authority. The Purchaser has full power, authority and
legal right to execute, deliver and perform this Agreement, and has taken all
necessary action to authorize the execution, delivery and performance by it of
this Agreement.
(c) No Violation. The execution, delivery and performance by it of
this Agreement (i) shall not violate any provision of any law or regulation or
any order, writ, judgment or decree of any court, arbitrator or Governmental
Authority applicable to the Purchaser or any of its assets, (ii) shall not
violate any provision of the Purchaser's Limited Liability Company Agreement,
and (iii) shall not violate any provision of, or constitute, with or without
notice or lapse of time, a default under, any mortgage, indenture, contract,
agreement or other undertaking to which the Purchaser is a party.
(d) Governmental Approvals. The execution, delivery and performance
by the Purchaser of this Agreement shall not require the authorization, consent
or approval of, the giving of notice to, the filing or registration with, or the
taking of any other action in respect of, any Governmental Authority or agency
in the jurisdiction in which the Purchaser was formed.
(e) Validity; Binding Obligation. This Agreement has been duly
executed and delivered by the Purchaser and constitutes the legal, valid and
binding agreement of the Purchaser enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of creditors'
rights in general and by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
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<PAGE>
(f) No Litigation. No legal or governmental proceedings are pending
to which the Purchaser is a party or of which any property of the Purchaser is
the subject, and no such proceedings are threatened or contemplated by any
Governmental Authorities or threatened by others.
Section 3.2 Representations and Warranties of the Sellers. (a) The
Sellers hereby represent and warrant to the Purchaser as of the date hereof and
as of the Closing Date:
(i) Organization. VMS has been duly organized and is validly
existing as a limited liability company in good standing under the laws of
the State of Delaware, with power and authority to own its properties and
to conduct its business as such properties are presently owned and such
business is presently conducted. PHH PLC has been duly organized and is
validly existing as a corporation in good standing under the laws of the
State of Maryland, with power and authority to own its properties and to
conduct its business as such properties are presently owned and such
business is presently conducted.
(ii) Good Standing. VMS is duly qualified to do business as a
foreign limited liability company in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business requires
such qualifications. PHH PLC is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business requires such qualifications.
(iii) Power and Authority. Each of the Sellers has the full power
and authority to execute and deliver this Agreement, to carry out its
terms, and to sell and assign the property sold and assigned by it to the
Purchaser hereunder and has duly authorized such sale and assignment by
all necessary corporate action.
(iv) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms of this Agreement do
not conflict with, result in any breach of any of the terms and provisions
of or constitute (with or without notice or lapse of time) a default
under, VMS's limited liability company agreement or PHH PLC's certificate
of incorporation or by-laws, or any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which either of VMS and PHH PLC is
a party or by which either of VMS and PHH PLC is bound (an "Applicable
Agreement"), or result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such Applicable Agreement,
or violate any law, rule or regulation or, to the best of each of VMS' and
the PHH PLC's knowledge, any order applicable to it of any court or of any
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over it or any of its
properties.
(v) Validity; Binding Obligation. This Agreement has been duly
authorized, executed and delivered by it and constitutes the legal, valid
and binding agreement of the Sellers, enforceable in accordance with its
terms, except as enforceability may be limited
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<PAGE>
by bankruptcy, insolvency, reorganization, or other similar laws affecting
the enforcement of creditors' rights in general and by general principles
of equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(vi) No Litigation. No legal or governmental proceedings are pending
to which the Sellers are a party or of which any property of the Sellers
is the subject, and no such proceedings are threatened or contemplated by
any Governmental Authorities or threatened by others, other than such
proceedings which will not have a material adverse effect upon the general
affairs, financial position, net worth or results of operations (on an
annual basis) of such Seller and its subsidiaries considered as a whole
and will not materially and adversely affect the performance by such
Seller of its obligations under, or the validity and enforceability of,
this Agreement.
(vii) No Consent. No consent, action by or in respect of, approval
or other authorization of, or registration, declaration or filing with,
any Governmental Authority or other Person is required for the valid
execution and delivery of this Agreement or for the performance of any of
Sellers' obligations hereunder or thereunder or under any Transaction
Document other than such consents, approvals, authorizations,
registrations, declarations or filing as shall have been obtained by the
Sellers prior to the Closing Date.
(viii) Executive Offices. As of the Closing Date, the current
location of VMS's and PHH PLC's chief executive offices, principal places
of business, and the locations of their records concerning the Sold Assets
are set forth in Schedule 3.2(a)(viii).
(ix) Other Representations. All representations and warranties of
each of the Sellers made in each Transaction Document to which it is a
party are true and correct and are repeated herein as though fully set
forth herein.
(b) The Sellers make the following representations and warranties as
to the Sold Leases, on which the Purchaser relies in accepting the Sold Leases.
Such representations and warranties speak as of the Closing Date, but shall
survive the transfer and assignment of the Sold Leases to the Purchaser and the
transfer thereof by the Purchaser to the Origination Trust pursuant to the
Contribution Agreement:
(i) All right, title and interest to and in each Sold Lease has been
validly transferred by the Sellers directly to the Purchaser under and in
accordance with this Agreement, and the Purchaser has good and marketable
title thereto free and clear of any adverse claim ("Adverse Claim").
(ii) Each Sold Lease and Sold Vehicle and each Lease (the "Existing
Leases") and Vehicle (the "Existing Vehicles") a beneficial interest in
which is represented by the Existing Interests on the date hereof is
listed on Exhibits A, B, D and E attached hereto, respectively.
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(c) The Sellers make the following representations and warranties as
to the Sold Vehicles, on which the Purchaser relies in accepting the Sold
Vehicles. Such representations and warranties speak as of the Closing Date, but
shall survive the transfer and assignment of the Sold Vehicles to the Purchaser
and the transfer thereof by the Purchaser to the Origination Trust pursuant to
the Contribution Agreement:
(i) All right, title and interest to and in each Sold Vehicle has
been validly transferred by the Sellers directly to the Purchaser under
and in accordance with this Agreement, and the Purchaser has good and
marketable title thereto free and clear of any Adverse Claim.
(ii) The transfer of each Sold Vehicle to Purchaser hereunder
complies with and does not contravene any Applicable Law in any material
respect.
(d) VMS makes the following representations and warranties as to the
Existing Interests, on which the Purchaser relies in accepting the Existing
Interests. Such representations and warranties speak as of the Closing Date, but
shall survive the transfer and assignment of the Existing Interests to the
Purchaser and the transfer thereof by the Purchaser to the Origination Trust
pursuant to the Contribution Agreement:
(i) All right, title and interest to and in the Existing Interests
have been validly transferred by the Seller directly to the Purchaser
under and in accordance with this Agreement, and the Purchaser has good
and marketable title thereto free and clear of any Adverse Claim.
(ii) The Existing Interests represent 100% of the beneficial
interest in the Origination Trust Assets.
(e) VMS makes the following representations and warranties as to the
Existing Leases and Existing Vehicles, on which the Purchaser relies in
accepting the Existing Interests. Such representations shall speak as of the
Closing Date, but shall survive the transfer and assignment of the Existing
Interests to the Purchaser and the transfer thereof by the Purchaser to the
Origination Trust pursuant to the Contribution Agreement:
(i) The Origination Trust has good and marketable title to all
Existing Leases and Existing Vehicles, free of any Adverse Claim;
(ii) Each Existing Lease is an Eligible Lease; and
(iii) Each Master Lease Agreement included in the Existing Leases is
an Eligible Master Lease and no adverse selection procedures were employed
in selecting such Master Lease Agreement when such Master Lease Agreement
was transferred to the Origination Trust.
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ARTICLE IV
CONDITIONS
Section 4.1 Conditions to Obligation of the Purchaser. The
obligation of the Purchaser to acquire the Sold Leases, Sold Vehicles and
Existing Interests and assume any obligations thereunder is subject to the
satisfaction of the following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Sellers hereunder shall be true and correct on the Closing
Date with the same effect as if then made, and the Sellers shall have performed
all obligations to be performed by the Sellers hereunder on or prior to the
Closing Date.
(b) Delivery of Sold Leases, Sold Vehicles and Existing Interests.
The Sellers shall deliver the Sold Leases, titles to the Sold Vehicles and all
certificates representing the Existing Interests to the Purchaser.
(c) Other Transactions. On or prior to the Closing Date (i) each of
the Transaction Documents shall have been executed and delivered by the parties
thereto, and (ii) each of the parties to the Transaction Documents shall have
performed all of their respective obligations thereunder required to be
performed on or prior to the Closing Date.
(d) Closing Certifications. In connection with the Purchaser's
transfer of the Sold Assets to the Origination Trust pursuant to the
Contribution Agreement, the Sellers shall have delivered to the Origination
Trust the Certificate in the form attached as Exhibit A to the Series 1999-1
SUBI Servicing Supplement making the representations and warranties as of the
Closing Date set forth therein with respect to the Sold Vehicles and the
Existing Vehicles (the "Vehicles") and the Sold Leases and the Existing Leases
(the "Leases").
Section 4.2 Conditions to Obligation of the Sellers. The obligation
of the Sellers to sell the Sold Assets to the Purchaser on the Closing Date is
subject to each representation and warranty of the Purchaser hereunder being
true and correct on the Closing Date as if such representation and warranty was
then made, and each obligation to be performed by the Purchaser by the Closing
Date having been performed.
ARTICLE V
COVENANTS OF THE SELLERS
The Sellers hereby agrees with the Purchaser as follows:
Section 5.1 Protection of Right, Title And Interest. (a) The Sellers
shall take such actions as are required by law to preserve, maintain, and
protect fully the interest of the Purchaser in the Sold Assets and in the
proceeds thereof. Each of the Sellers shall, at its sole cost and expense,
promptly and duly execute and deliver any and all further instruments and
documents and take such further actions that may be necessary or desirable or
that the Purchaser
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may request to carry out more effectively the provisions and purposes of this
Agreement or any other Transaction Document or to obtain the full benefits of
this Agreement and of the rights and powers herein granted, including (i) using
its best efforts to secure all consents and approvals necessary or appropriate
for the sale to or for the benefit of the Purchaser of any Sold Assets, (ii)
perfecting, protecting, preserving, continuing and maintaining fully the
purchase by, and the assignments, security interests and other Liens granted or
purported to be granted to, the Purchaser under this Agreement (including the
filing any financing or continuation statements under the UCC with respect to
the ownership interests or Liens granted hereunder or under any other
Transaction Document) and (iii) enabling the Purchaser, the Issuer or the
Indenture Trustee to exercise or enforce its rights under this Agreement or any
of the other Transaction Documents. Each of the Sellers hereby authorizes the
Purchaser, the Issuer or the Indenture Trustee to file any such financing or
continuation statements without the signature of the Sellers to the extent
permitted by applicable law. A carbon, photographic or other reproduction of
this Agreement or of any notice or financing statement covering the Sold Assets
shall be sufficient as a notice or financing statement where permitted by law.
If any amount payable under or in connection with any of the Sold Assets is or
shall become evidenced by any instrument, such instrument, other than checks and
notes received in the ordinary course of business, shall be duly endorsed in a
manner satisfactory to the Purchaser immediately upon the Sellers' receipt
thereof and promptly delivered to or at the direction of the Purchaser. If
either of the Sellers fail to perform any agreement or obligation under this
Section 5.1(a), the Purchaser, the Issuer or the Indenture Trustee may (but
shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the reasonable expenses of the Purchaser, the
Issuer or the Indenture Trustee incurred in connection therewith shall be
payable by such Seller upon demand of the Purchaser.
(b) The Sellers shall not change their respective names, identities,
or corporate structures in any manner that would, could, or might make any
financing statement or continuation statement filed by the Sellers, in
accordance with Section 5.1(a) seriously misleading within the meaning of ss. 9-
402(7) of the New York Uniform Commercial Code, unless such Seller shall have
given the Purchaser at least 30 days' prior written notice thereof and shall
have promptly, but in no event later than 10 days after such change, filed
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) The Sellers shall give the Purchaser, the Issuer and the
Indenture Trustee at least 30 days' prior written notice of any relocation of
their principal executive offices if, as a result of such relocation, the
applicable provisions of the Uniform Commercial Code would require the filing of
any amendment of any previously filed financing or continuation statement or of
any new financing statement and shall promptly, but in no event later than 10
days after such relocation, file any such amendment or new financing statement.
(d) The Sellers shall permit the Purchaser and its agents at any
time during normal business hours to inspect, audit, and make copies of and
abstracts from the Sellers' records regarding the Sold Assets.
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(e) On the Closing Date, the Sellers shall furnish to the Purchaser,
a list of all Sold Leases and Sold Vehicles (by vehicle registration number and
account number).
Section 5.2 Other Liens or Interests. Except for the conveyances
hereunder, the Sellers will not sell, pledge, assign or transfer the Sold Assets
to any other Person, or grant, create, incur, assume or suffer to exist any Lien
on any Sold Assets and the Sellers shall defend the right, title, and interest
of the Purchaser in, to and under the Sold Assets against all claims of third
parties claiming through or under the Sellers.
Section 5.3 Costs and Expenses. The Sellers agree to pay all
reasonable costs and disbursements in connection with the perfection, as against
all third parties, of the Purchaser's right, title and interest in and to the
Sold Assets.
Section 5.4 Indemnification. The Sellers shall defend, indemnify and
hold harmless the Purchaser from and against:
(a) any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from the failure of a Sold Lease
or Sold Vehicle to be originated in compliance with all requirements of
law and for any breach of any of either of the Sellers' respective
representations and warranties contained herein;
(b) any and all taxes that may at any time be asserted against the
Purchaser with respect to the transactions contemplated herein, including,
without limitation, any sales, use, gross receipts, transfer taxes,
general corporation, tangible personal property, privilege, license or
income taxes, taxes on or measured by income, or any state or local taxes
assessed on the Purchaser resulting from the transfer of the Sold Assets
hereunder, the location of assets of the Purchaser and costs and expenses
in defending against the same;
(c) any and all costs, expenses, losses, claims, damages, and
liabilities to the extent that such cost, expense, loss, claim, damage, or
liability arose out of, or was imposed upon the Purchaser through, the
breach of any covenants of the Sellers hereunder or the inaccuracy of any
of the representations and warranties of the Sellers hereunder, the
negligence, willful misfeasance, or bad faith of the Sellers in the
performance of its duties under this Agreement or by reason of reckless
disregard of the Sellers' obligations and duties under this Agreement;
(d) the failure of the transfer of the Sold Assets by the Sellers to
the Purchaser to convey to the Purchaser an ownership interest in the Sold
Assets free and clear of Adverse Claims;
(e) any attempt by any person to void the transfer of any portion of
the Sold Assets under statutory provisions or common law or equitable
action, including, without limitation, any provision of the federal
Bankruptcy Code, 11 U.S.C. Section 101 et seq; and
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(f) any dispute, claim, offset or defense of any Obligor under a
Lease (including a defense based on such Lease not being a legal, valid
and binding obligation of such Obligor).
These indemnity obligations shall be in addition to any obligation
that the Sellers may otherwise have.
Section 5.5 Absolute Transfer; Sale or Exchange. The Sellers agree
to treat this conveyance for all purposes (including, without limitation, tax
and financial accounting purposes) as an absolute transfer on all relevant
books, records, tax returns, financial statements and other applicable
documents.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1 Obligations of the Sellers. The obligations of the
Sellers under this Agreement shall not be affected by reason of any invalidity,
illegality or irregularity of any Leases or any Vehicles and the Existing
Interests.
Section 6.2 Amendment. (a) This Agreement may be amended from time
to time by a written amendment duly executed and delivered by the Sellers and
the Purchaser, but without the consent of any other Person, to correct any
inconsistency or cure any ambiguity or errors in this Agreement only in a manner
that would have no adverse effect on any Investor Noteholder or any Preferred
Member.
(b) This Agreement may be amended from time to time by a written
amendment duly executed and delivered by the Sellers and the Purchaser, with the
consent of the Indenture Trustee so long as any Series of Investor Notes is
outstanding.
(c) Prior to the execution of any such amendment or consent, the
Seller shall furnish at least five (5) Business Days prior written notification
of the substance of such amendment or consent to each Rating Agency with respect
to each Series of Investor Notes and each series of Preferred Membership
Interests. No later than ten (10) Business Days after the execution of such
amendment or consent, the Seller shall furnish a copy of such amendment or
consent to each Rating Agency with respect to each Series of Investor Notes and
each series of Preferred Membership Interests and the Indenture Trustee.
Section 6.3 Waivers. No failure or delay on the part of the
Purchaser in exercising any power, right or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude any other or further exercise thereof or
the exercise of any other power, right or remedy.
Section 6.4 Costs and Expenses. The Sellers and the Purchaser will
pay their respective expenses incident to the performance of their obligations
under this Agreement.
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Section 6.5 Representations of the Sellers. The respective
agreements, representations, warranties and other statements by the Sellers set
forth in or made pursuant to this Agreement shall remain in full force and
effect and will survive the closing under Section 2.6.
Section 6.6 Notices. All demands, notices and communications upon or
to the Sellers and the Purchaser shall be in writing, and shall be personally
delivered, sent by electronic facsimile or overnight delivery service or mailed
by certified mail-return receipt requested, and shall be deemed to have been
duly given to the intended recipient upon receipt at the respective addresses
listed below, or at such other address as shall be designated by such Person in
a written notice to the other parties to this Agreement.
(i) In the case of the Sellers:
PHH Vehicle Management Services LLC
PHH Personal Lease Corporation
900 Old Country Road
Garden City, NY 11530
Attn: General Counsel
Fax: 516-222-3751
(ii) In the case of the Purchaser:
Raven Funding LLC
900 Old Country Road
Garden City, NY 11530
Attn: General Counsel
Fax: 516-222-3751
Section 6.7 Severability. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 6.8 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument.
Section 6.9 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
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<PAGE>
Section 6.10 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS.
Section 6.11 No Petition Covenants. The Sellers, by entering into
this Agreement, covenant and agree that it will not at any time institute
against, or join any other Person in instituting against, the Purchaser any
bankruptcy, reorganization, arrangement, insolvency, or liquidation or other
similar proceedings under any U.S. Federal or state bankruptcy or similar law.
Section 6.12 Sucessors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the Sellers and the Purchaser and their
respective successors and permitted assigns, except as otherwise provided
herein. The Sellers may assign, transfer, hypothecate or otherwise convey its
rights, benefits, obligations or duties hereunder without the prior express
written consent of the Purchaser, the Issuer and the Indenture Trustee. Any such
purported assignment, transfer, hypothecation or other conveyance by either of
the Sellers without the prior express written consent of the Purchaser, the
Issuer and the Indenture Trustee shall be void. The Sellers acknowledge that the
Purchaser may assign its rights granted hereunder and any Sold Assets acquired
hereunder to the Origination Trust pursuant to the Contribution Agreement and
that the Purchaser will transfer the Lease SUBI Certificate (representing a
beneficial interest in Origination Trust assets consisting of rights under this
Agreement (including rights to indemnities and to Sold Assets)) to the Issuer
pursuant to the Transfer Agreement. The Issuer shall pledge the Lease SUBI
Certificate to the Indenture Trustee for the benefit of the Investor Noteholders
under the Indenture. The Sellers acknowledge that, upon such assignments and
pledges, the Issuer or the Indenture Trustee, as the case may be, may enforce
directly, without joinder of the Purchaser, the rights set forth in this
Agreement. All such assignees, including parties to the Indenture in the case of
any assignment to such parties, shall be third-party beneficiaries of, and shall
be entitled to enforce the Purchaser's rights and remedies under, this Agreement
to the same extent as if they were parties hereto.
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<PAGE>
IN WITNESS WHEREOF, the parties hereby have caused this Asset Sale
Agreement to be executed by their respective officers thereunto duly authorized
as of the date and year first above written.
PHH VEHICLE MANAGEMENT SERVICES
LLC,
as Seller
By:___________________________________
Name:
Title:
PHH PERSONAL LEASE CORPORATION,
as Seller
By:___________________________________
Name:
Title:
RAVEN FUNDING LLC,
as the Purchaser
By:___________________________________
Name:
Title:
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<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I CERTAIN DEFINITIONS................................................1
Section 1.1 Definitions.................................................1
ARTICLE II SALE OF ASSETS.....................................................1
Section 2.1 Sale of Vehicles and Leases.................................1
Section 2.2 Sale of the Existing Interests..............................3
Section 2.3 Payment for the Sold Assets...........................3
Section 2.4 Assumption............................................3
Section 2.5 Release of the Seller.................................3
Section 2.6 The Closing...........................................3
Section 2.7 Security Interest in the Transferred Assets.................3
ARTICLE III REPRESENTATIONS AND WARRANTIES.....................................4
Section 3.1 Representations and Warranties of
Purchaser...................................................4
Section 3.2 Representations and Warranties of the
Sellers.....................................................5
ARTICLE IV CONDITIONS.........................................................7
Section 4.1 Conditions to Obligation of the Purchaser...................7
Section 4.2 Conditions to Obligation of the Sellers.....................8
ARTICLE V COVENANTS OF THE SELLERS ..........................................8
Section 5.1 Protection of Right, Title And Interest.....................8
Section 5.2 Other Liens or Interests....................................9
Section 5.3 Costs and Expenses..........................................9
Section 5.4 Indemnification.............................................9
Section 5.5 Absolute Transfer; Sale or Exchange........................10
ARTICLE VI MISCELLANEOUS PROVISIONS..........................................10
Section 6.1 Obligations of the Sellers.................................11
Section 6.2 Amendment..................................................11
Section 6.3 Waivers....................................................11
Section 6.4 Costs and Expenses.........................................11
Section 6.5 Representations of the Sellers.............................11
Section 6.6 Notices....................................................11
(i)
<PAGE>
Section 6.7 Severability...............................................12
Section 6.8 Counterparts...............................................12
Section 6.9 Headings...................................................12
Section 6.10 Governing Law..............................................12
Section 6.11 No Petition Covenants......................................12
Section 6.12 Sucessors and Assigns......................................12
Exhibit A - Schedule of Sold Vehicles
Exhibit B - Schedule of Sold Leases
Exhibit C - Schedule of Existing Interests
Exhibit D - Existing Leases
Exhibit E - Existing Vehicles
Schedule 3.2(a)(viii) Executive Offices of Sellers
<PAGE>
Exhibit 4.46
================================================================================
RECEIVABLES PURCHASE AGREEMENT
Dated as of June 30, 1999
by and between
PHH VEHICLE MANAGEMENT SERVICES LLC
and
RAVEN FUNDING LLC
================================================================================
<PAGE>
THIS RECEIVABLES PURCHASE AGREEMENT ("Agreement") is entered into as
of June 30, 1999, by and between PHH VEHICLE MANAGEMENT SERVICES LLC, a Delaware
limited liability company (the "Originator" or "VMS"), and RAVEN FUNDING LLC, a
Delaware limited liability company ("SPV").
RECITALS
A. The Originator owns all of the outstanding membership interests
of SPV.
B. The Originator intends to sell, and SPV intends to purchase,
certain Fleet Receivables, from time to time, as described herein.
C. In addition, the Originator, as sole member of SPV may, from time
to time, contribute capital to SPV in the form of Contributed Fleet Receivables
or cash.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to them in Annex X.
Section 1.2 Rules of Construction. For purposes of this Agreement,
the rules of construction set forth in Annex X shall govern. All annexes,
schedules and exhibits hereto, or expressly identified in this Agreement, are
incorporated herein by reference and, taken together with this Agreement, shall
constitute but a single agreement.
ARTICLE II.
TRANSFERS OF FLEET RECEIVABLES
Section 2.1 Agreement to Transfer.
(a) Fleet Receivables Transfers. Subject to the terms and conditions
hereof, the Originator agrees to sell (without recourse except to the
extent specifically provided herein) or contribute to SPV on the Closing
Date and on each Settlement Date thereafter (each such date, a "Transfer
Date") all Fleet Receivables owned by it as of the close of business on
the first Business Day of the calendar month during which such Transfer
Date occurred (or, in the case of the initial Transfer Date, as of June
29, 1999), together
<PAGE>
with all of the Originator's right, title and interest in and to the
Receivables Property, and SPV agrees to purchase or accept as a capital
contribution all such Fleet Receivables and Receivables Property on each
such date. Each such Transfer shall be evidenced by a certificate of
assignment substantially in the form of Exhibit 2.1(a) (the "Receivables
Assignment"), and the Originator and SPV shall execute and deliver a
Receivables Assignment on or before the Closing Date and each other
Transfer Date.
(b) Determination of Sold Fleet Receivables. On and as of each
Transfer Date, Fleet Receivables sold to, and purchased by, SPV shall
consist of those Fleet Receivables owned by the Originator and identified
by the Originator on Schedule I to the Receivables Assignment for sale to
SPV (each such Fleet Receivable individually, a "Sold Fleet Receivable,"
and collectively, the "Sold Fleet Receivables"). The "Sale Price" of all
Sold Fleet Receivables shall be equal to the fair market value thereof as
agreed upon from time to time by the Originator and SPV.
(c) Payment of Purchase Price. In consideration for each Sale of
Sold Fleet Receivables hereunder, subject to the conditions set forth in
Article III, SPV shall pay to the Originator on the Transfer Date therefor
the Sale Price therefor in Dollars in immediately available funds. All
payments by SPV under this Section 2.1(c) shall be effected by means of a
wire transfer not later than 3:00 p.m. (New York time) on the day when due
to Account No. ______, ABA No. ______, Reference: __________________.
(d) Determination of Contributed Fleet Receivables. On and as of
each Transfer Date, the Originator shall contribute to SPV a capital
contribution of all Fleet Receivables owned by the Originator as of such
Transfer Date that have not been identified as Sold Fleet Receivables
pursuant to Section 2.1(b) (each such contributed Fleet Receivable
individually, a "Contributed Fleet Receivable," and collectively, the
"Contributed Fleet Receivables").
(e) Ownership of Transferred Fleet Receivables. On and after each
Transfer Date and after giving effect to the Transfers to be made on each
such date, SPV shall own the Transferred Fleet Receivables and the
Originator shall not take any action inconsistent with such ownership nor
shall the Originator claim any ownership interest in such Transferred
Fleet Receivables.
(f) Servicing of Transferred Fleet Receivables. The parties hereto
acknowledge that, in accordance with the terms of the Servicing Agreement,
as supplemented by the Sold SUBI Supplement 1999-1 to the Servicing
Agreement, the Servicer shall conduct the servicing and administration of
and collection of the Transferred Fleet Receivables.
Section 2.2 Grant of Security Interest. The parties hereto intend
that each Transfer shall constitute a purchase and sale or capital contribution,
as applicable, and not a loan. Notwithstanding anything to the contrary set
forth in this Section 2.2, if a court of competent jurisdiction determines that
any transaction provided for herein constitutes a loan and not a purchase and
sale or capital contribution, as applicable, then the parties hereto intend that
this
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<PAGE>
Agreement shall constitute a security agreement under applicable law and that
the Originator shall be deemed to have granted, and the Originator does hereby
grant, to SPV a first priority Lien in and to all of the Originator's right,
title and interest in, to and under the Transferred Fleet Receivables and the
Receivables Property.
ARTICLE III.
CONDITIONS PRECEDENT
Section 3.1 Conditions to Initial Transfer. The initial Transfer
hereunder shall be subject to satisfaction of each of the following conditions
precedent:
(a) Agreement; Other Documents. This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, the Originator
and SPV, and SPV shall have received such documents, instruments,
agreements and legal opinions as SPV shall reasonably request in
connection with the transactions contemplated by this Agreement, each in
form and substance reasonably satisfactory to SPV.
(b) Governmental Approvals. SPV shall have received (i) satisfactory
evidence that the Originator has obtained all required consents and
approvals of all Persons, including all requisite Governmental
Authorities, to the execution, delivery and performance of this Agreement
and the other Transaction Documents to which the Originator is a party and
the consummation of the transactions contemplated hereby and thereby or
(ii) an Officer's Certificate from the Originator in form and substance
satisfactory to SPV affirming that no such consents or approvals are
required.
(c) Compliance with Laws. The Originator shall be in compliance with
all appli cable foreign, federal, state and local laws and regulations,
except to the extent that the failure to so comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(d) The Effective Date. The Effective Date (as defined in the
Indenture) shall have occurred.
Section 3.2 Conditions to all Transfers. Each Transfer hereunder
(including the initial Transfer) shall be subject to satisfaction of the
following further conditions precedent as of the Transfer Date therefor:
(a) the representations and warranties of the Originator contained
herein shall be true and correct in all material respects as of such
Transfer Date, both before and after giving effect to such Transfer and to
the application of any Sale Price therefor, except to the extent that any
such representation or warranty expressly relates to an earlier date (in
which case it shall be true and correct in all material respects as of
such earlier date);
(b) no Servicer Termination Event, Receivables Purchase Termination
Event or Potential Receivables Purchase Termination Event shall have
occurred and be
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<PAGE>
continuing or would result after giving effect to such Transfer or the
application of any Sale Price therefor; and
(c) the Originator shall have taken such other action, including
delivery of approvals, consents, opinions, documents and instruments to
SPV as SPV may reasonably request.
The acceptance by the Originator of the Sale Price for any Sold Fleet
Receivables on any Transfer Date shall be deemed to constitute, as of any such
Transfer Date, a representation and warranty by the Originator that the
conditions in this Section 3.2 have been satisfied.
ARTICLE IV.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.1 Representations and Warranties of the Originator. To
induce SPV to purchase the Sold Fleet Receivables and to accept the Contributed
Fleet Receivables, the Originator makes the following representations and
warranties to SPV as of each Transfer Date, each and all of which shall survive
the execution and delivery of this Agreement.
(a) Existence; Compliance with Law. The Originator (i) is a limited
liability com pany duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization; (ii) is duly qualified
to conduct business and is in good standing in each other jurisdiction
where its ownership or lease of property or the conduct of its business
requires such qualification except when the failure to be so qualified
could not reasonably be expected to have a Material Adverse Effect; (iii)
has the requisite limited liability company power and authority and the
legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease, and to conduct
its business as now, heretofore and proposed to be conducted; (iv) has all
licenses, permits, consents or approvals from or by, and has made all
filings with, and has given all notices to, all Governmental Authorities
having jurisdiction, to the extent required for such ownership, operation
and conduct, except to the extent that any failure with respect to any
such license, permit, consent, approval, filing or notice, individually or
in the aggregate, could not reasonably be expected to have a Material
Adverse Effect; (v) is in compliance with its certificate of formation and
limited liability company agreement; and (vi) is in compliance with all
Applicable Law, except where the failure to comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(b) Executive Offices; Collateral Locations; Company Names. As of
the Closing Date, the current location of the Originator's chief executive
office, principal place of business, and the locations of its records
concerning the Transferred Fleet Receivables are set forth in Schedule
4.1(b). During the prior five years, except as set forth in Schedule
4.1(b), the Originator has not been known as or used any corporate,
fictitious or trade name other than PHH Vehicle Management Services
Corporation.
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<PAGE>
(c) Power, Authorization, Enforceable Obligations. The execution,
delivery and performance by the Originator of this Agreement and the other
Transaction Documents to which it is a party, the creation and perfection
of all Liens and ownership interests provided for herein and therein and,
solely with respect to clause (g) below, the exercise by SPV or any
assignee or transferee thereof of any of its rights and remedies under any
Transaction Document to which it is a party: (i) are within the
Originator's limited liability company power; (ii) have been duly
authorized by all necessary or proper company or member action; (iii) do
not contravene any provision of the Originator's limited liability company
agreement or certificate of formation; (iv) do not violate any law or
regulation, or any order or decree of any court or Governmental Authority;
(v) do not conflict with or result in the breach or termination of,
constitute a default under or accelerate or permit the acceleration of any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which the Originator is a party or by
which the Originator or any of its property is bound; (vi) do not result
in the creation or imposition of any Adverse Claim upon any of the
property of the Originator; and (vii) do not require the consent or
approval of, or filing with or notice to, any Governmental Authority or
any other Person, except those referred to in Section 3.1(b), all of which
will have been duly obtained, made or complied with prior to the Closing
Date. On or prior to the Closing Date, each of the Transaction Documents
to which the Originator is party shall have been duly executed and
delivered by the Originator and each such Transaction Document shall then
constitute a legal, valid and binding obligation of the Originator
enforceable against it in accordance with its terms.
(d) No Litigation. No Litigation is now pending or, to the knowledge
of the Originator, threatened against the Originator that (i) challenges
the Originator's right or power to enter into or perform any of its
obligations under the Transaction Documents to which it is a party, or the
validity or enforceability of any Transaction Document or any action taken
thereunder, (ii) seeks to prevent the Transfer, purchase or pledge of any
Fleet Receivable or the consummation of any of the transactions
contemplated under this Agreement or the other Transaction Documents or
(iii) has a reasonable risk of being determined adversely to the
Originator and that, if so determined, could have a Material Adverse
Effect.
(e) Solvency. Both before and after giving effect to (i) the
transactions contem plated by this Agreement and the other Transaction
Documents and (ii) the payment and accrual of all transaction costs in
connection with the foregoing, the Originator is and will be Solvent.
(f) Material Adverse Effect. Between December 31, 1998 and the
Closing Date, no event has occurred that alone or together with other
events could reasonably be expected to have a Material Adverse Effect.
(g) Liens. The Liens granted to SPV pursuant to Section 2.2 are
fully perfected first priority Liens in and to the Transferred Fleet
Receivables and the Receivables Property, subject only to Permitted Liens.
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<PAGE>
(h) Margin Regulations. The use of all funds acquired by the
Originator under this Agreement will not conflict with or contravene any
of Regulations T, U, and X of the Board of Governors of the Federal
Reserve System, as the same may from time to time be amended, supplemented
or otherwise modified.
(i) Nonapplicability of Bulk Sales Laws. No transaction contemplated
by this Agreement requires compliance with any bulk sales act or similar
law.
(j) Government Regulation. The Originator is not, and is not
controlled by, an "investment company" registered or required to be
registered under (and as such term is defined in) the Investment Company
Act. The Originator is not subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, or any other federal
or state statute that restricts or limits its ability to incur
Indebtedness or to perform its obligations hereunder. The purchase or
acquisition of the Transferred Fleet Receivables by SPV hereunder, the
application of the Sale Price therefor and the consummation by the
Originator and SPV of the transactions contemplated by this Agreement and
the other Transaction Documents will not violate any provision of any such
statute or any rule, regulation or order issued by the Securities and
Exchange Commission.
(k) Fleet Receivables. With respect to each Transferred Fleet
Receivable, as of the Transfer Date of such Transferred Fleet Receivable:
(i) such Fleet Receivable satisfies the criteria for an
Eligible Receivable;
(ii) immediately prior to its Transfer to SPV such Fleet
Receivable was owned by the Originator free and clear of any Adverse
Claim (other than Permitted Liens), and the Originator has had at
all relevant times the full right, power and authority to sell,
contribute, assign, transfer and pledge its interest therein as
contemplated under this Agreement and the other Transaction
Documents and, upon such Transfer, SPV will acquire valid and
properly perfected title to and the sole record and beneficial
ownership interest in such Fleet Receivable, free and clear of any
Adverse Claim and, following such Transfer, such Fleet Receivable
will not be subject to any Adverse Claim as a result of any action
or inaction on the part of the Originator;
(iii) the Transfer of each such Fleet Receivable and
Receivables Property pursuant to this Agreement and the Receivables
Assignments constitutes, as applicable, a valid sale or
contribution, transfer, assignment, setover and conveyance to SPV of
all right, title and interest of the Originator in and to such Fleet
Receivable and Receivables Property, which transfer is perfected and
of first priority under Applicable Law; and
(iv) the Originator has no knowledge of any fact (including
any defaults by the Obligor thereunder on any other Fleet
Receivable) that would cause it or should have caused it to expect
that any payments on such Fleet Receivable will
-6-
<PAGE>
not be paid in full when due or that is reasonably likely to cause
or result in any other Material Adverse Effect with respect to such
Fleet Receivable.
(l) ERISA. No notice of a Lien arising under Title IV of ERISA has
been filed under Section 6323(a) of the Internal Revenue Code of 1986, as
amended (or any successor provision) against, or otherwise affecting, the
assets of the Originator.
(m) Tax filings and Expenses. The Originator has filed all federal,
state and local tax returns and all other tax returns which, to the
knowledge of the Originator, are required to be filed (whether
informational returns or not), and has paid all taxes due, if any,
pursuant to said returns or pursuant to any assessment received by the
Originator, except such taxes, if any, as are being contested in good
faith and for which adequate reserves have been set aside on its books.
The Originator has paid all fees and expenses required to be paid by it in
connection with the conduct of its business, the maintenance of its
existence and its qualification as a foreign limited liability company
authorized to do business in each state in which it is required to so
qualify.
(n) Other Representations. All representations and warranties of the
Originator made in each Transaction Document to which it is a party are
true and correct and are repeated herein as though fully set forth herein.
The representations and warranties described in this Section 4.1 shall survive
the Transfer of the Transferred Fleet Receivables to SPV, any subsequent
assignment of the Transferred Fleet Receivables by SPV, and the termination of
this Agreement and the other Transaction Documents and shall continue until the
indefeasible payment in full of all Transferred Fleet Receivables.
Section 4.2 Affirmative Covenants of the Originator. The Originator
covenants and agrees that, unless otherwise consented to by SPV, from and after
the Closing Date :
(a) Offices and Records. The Originator shall maintain its principal
place of business and chief executive office and the office at which it
keeps its Records at the respective locations specified in Schedule 4.1(b)
or, upon 30 days' prior written notice to SPV, at such other location in a
jurisdiction where all action required to be taken pursuant to Section
6.13 shall have been taken with respect to the Transferred Fleet
Receivables. The Originator shall at its own cost and expense, for not
less than three years from the date on which each Transferred Fleet
Receivable was originated, or for such longer period as may be required by
law, maintain adequate Records with respect to such Transferred Fleet
Receivable, including records of all payments received, credits granted
and merchandise returned with respect thereto.
(b) Access. At any reasonable time and from time to time at the
reasonable request of SPV, any Holder of a Fleet Receivable SUBI
Certificate or any pledgee or assignee thereof, the Originator shall
permit such Person as SPV or such Holder or pledgee or assignee, as the
case may be, may designate, at such Person's expense, to conduct audits or
visit and inspect any of the properties of the Originator to examine the
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<PAGE>
Records, internal controls and procedures maintained by the Originator
with respect to the Transferred Fleet Receivables and take copies and
extracts therefrom, and to discuss matters relating to the Transferred
Fleet Receivables or the Originator's performance under this Agreement or
the Originator's affairs, finances and accounts with its officers,
employees, agents and, upon notice to the Originator, independent
accountants. The Originator hereby authorizes such officers, employees,
agents and independent accountants to discuss with SPV and any Holder of a
Fleet SUBI or any pledgee or assignee thereof and their designees such
matters and the affairs, finances and accounts of the Originator. Any
audit provided for herein shall be conducted in accordance with the
Originator's rules respecting safety and security on its premises and
without materially disrupting operations.
(c) Compliance With Policies. The Originator shall originate the
Fleet Receivables in accordance with the Policies and comply in all
material respects with the Policies applicable to each Transferred Fleet
Receivable and the Fleet Service Contracts therefor, and with the terms of
such Fleet Receivables and Fleet Service Contracts.
(d) Assignment. The Originator agrees that SPV may assign all of its
right, title and interest in, to and under the Transferred Fleet
Receivables, the Receivables Property and this Agreement, including its
right to exercise the remedies set forth in Section 4.4, to the
Origination Trust pursuant to the Contribution Agreement and agrees that
the Origination Trust may create and issue to SPV a special unit of
beneficial interest in the Transferred Fleet Receivables, the Receivables
Property and this Agreement (the "Fleet Receivable SUBI"), a portion of
which will be represented by a certificate issued by the Origination Trust
and retained by SPV (the "SPV Fleet Receivable SUBI Certificate") and a
portion of which will be represented by another certificate issued by the
Origination Trust (the "Fleet Receivable SUBI Certificate") which will be
transferred by SPV to the Issuer pursuant to the Transfer Agreement and
pledged by the Issuer to the Indenture Trustee under the Indenture. The
Originator agrees that, upon any such assignment and pledge to the Issuer,
as holder of the Fleet Receivables SUBI Certificate, or the Indenture
Trustee, as the pledgee thereof, may enforce directly, without joinder of
SPV, all of the obligations of such Originator hereunder, including any
obligations of the Originator set forth in Sections 4.2(j), 4.4, 5.1 and
6.13.
(e) Compliance With Agreements and Applicable Laws. The Originator
shall perform each of its obligations under this Agreement and the other
Transaction Documents and comply with all federal, state and local laws
and regulations applicable to it and the Fleet Receivables, including
those relating to truth in lending, retail installment sales, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt
collection practices, privacy, licensing, taxation, ERISA and labor
matters, except to the extent that the failure to so comply, individually
or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
(f) Maintenance of Existence and Conduct of Business. The Originator
shall preserve and maintain its limited liability company existence,
rights, franchise and privi-
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<PAGE>
leges in the jurisdiction of its organization, and qualify and remain
qualified in good standing as a foreign limited liability company in each
jurisdiction where the failure to preserve and maintain such existence,
rights, franchises, privileges and qualification would have a Material
Adverse Effect.
(g) Notice of Material Event. The Originator shall promptly inform
SPV, the Issuer and the Indenture Trustee in writing of the occurrence of
any of the following, in each case setting forth the details thereof and
what action, if any, the Originator proposes to take with respect thereto:
(i) any Litigation commenced or threatened against the
Originator which could reasonably be expected to have a Material
Adverse Effect or with respect to or in connection with all or any
portion of the Transferred Fleet Receivables;
(ii) the commencement of a case or proceeding by or against
the Originator seeking a decree or order in respect of the
Originator (A) under the Bankruptcy Code or any other applicable
federal, state or foreign bankruptcy or other similar law, (B)
appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for the Originator or for any
substantial part of such Person's assets, or (C) ordering the
winding-up or liquidation of the affairs of the Originator;
(iii) the receipt of notice that (A) the Originator is being
placed under regulatory supervision, (B) any license, permit,
charter, registration or approval is to be, or may be, suspended or
revoked, which suspension or revocation may have a Material Adverse
Effect, or (C) the Originator is to cease and desist any practice,
procedure or policy employed by the Originator in the conduct of its
business if such cessation which could reasonably be expected to
have a Material Adverse Effect;
(iv) (A) any Adverse Claim made or asserted against any of the
Transferred Fleet Receivables of which it becomes aware or (B) any
determination that a Transferred Fleet Receivable was not an
Eligible Receivable on the Transfer Date therefor; or
(v) any other event, circumstance or condition that has had or
could reason ably be expected to have a Material Adverse Effect.
(h) Separate Identity. The Originator shall take all actions
required to maintain SPV's status as a separate legal entity, including
(i) not holding SPV out to third parties as other than an entity with
assets and liabilities distinct from the Originator and the Originator's
other Subsidiaries; (ii) not holding itself out to be responsible for the
Indebtedness of SPV or, other than by reason of owning, membership
interests in SPV, for any decisions or actions relating to SPV; (iii)
preparing separate financial statements for SPV; (iv) taking such other
actions as are necessary on its part to ensure that all
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procedures required by its and SPV's respective limited liability company
agreement and certificate of formation are duly and validly taken; (v)
keeping correct and complete records and books of account and minutes; and
(vi) not acting in any manner that could foreseeably mislead others with
respect to SPV's separate identity. In addition to the foregoing, the
Originator and SPV shall take such actions as shall be required in order
that:
(i) The Originator shall maintain records and books of account
separate from those of SPV.
(ii) The resolutions, agreements and other instruments
underlying the trans actions described in this Agreement shall be
continuously maintained by the Originator as official records.
(iii) The Originator shall maintain an arm's-length
relationship with SPV and shall not hold itself out as being liable
for the Indebtedness of SPV.
(iv) The Originator shall keep its assets and liabilities
wholly separate from those of SPV.
(v) The Originator shall not mislead third parties by
conducting or appearing to conduct business on behalf of SPV or
expressly or impliedly representing or suggesting that the
Originator is liable or responsible for the Indebtedness of SPV or
that the assets of the Originator are available to pay the creditors
of SPV.
(vi) The Originator shall at all times have stationery and
other business forms and a mailing address and telephone number
separate from those of SPV.
(vii) The Originator shall at all times limit its transactions
with SPV only to those expressly permitted hereunder or under any
other Transaction Document.
(viii) The Originator shall comply with (and cause to be true
and correct) each of the facts and assumptions relating to the
Originator and SPV contained in the no substantive consolidation
opinion of White & Case LLC delivered on the Closing Date.
(i) Payment, Performance and Discharge of Obligations. (i) Subject
to Section 4.2(i)(ii), the Originator shall pay, perform and discharge or
cause to be paid, performed and discharged all of its obligations and
liabilities, including all taxes, assessments and governmental charges
upon its income and properties and all lawful claims for labor, materials,
supplies and services, promptly when due, except to the extent that the
failure to so act, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
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(ii) The Originator may in good faith contest, by appropriate
proceedings, the validity or amount of any charges or claims
described in Section 4.2(i)(i); provided, that (A) adequate reserves
with respect to such contest are maintained on the books of the
Originator, in accordance with GAAP, (B) such contest is maintained
and prosecuted continuously and with diligence, (C) none of the
Transferred Fleet Receivables may become subject to forfeiture or
loss as a result of such contest, and (D) no Lien may be imposed to
secure payment of such charges or claims other than inchoate tax
liens.
(j) Adjustments to Sale Price. If on any day the Billed Amount of
any Sold Fleet Receivable or Contributed Fleet Receivable is reduced as a
result of any Dilutions, the Originator shall, on or prior to the next
following Settlement Date, make a cash payment to SPV in the amount of
such reduction by remitting such amount to the Collection Account.
(k) Annual Opinion of Counsel. On or before March 31 of each
calendar year, commencing with March 31, 2000, Originator shall furnish to
the SPV, the Issuer and the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of this
Agreement, the Receivables Assignments and any other requisite documents
and with respect to the execution and filing of any financing statements
and continuation statements as are necessary to maintain SPV's perfected
ownership interest in the Transferred Fleet Receivables and Receivables
Property sold by this Agreement and the Receivables Assignments and
reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain the perfection of such
ownership interest. Such Opinion of Counsel shall also describe the
recording, filing, re-recording and refiling of this Agreement and the
Receivables Assignments and any other requisite documents and the
execution and filing of any financing statements and continuation
statements that will, in the opinion of such counsel, be required to
maintain the perfection of the SPV's ownership interest in the Transferred
Fleet Receivables and Receivables Property until March 31 in the following
calendar year.
(l) Protection of Title. (i) Originator shall execute and file such
financing statements, and cause to be executed and filed such continuation
and other statements, all in such manner and in such places as may be
required by law fully to perfect and preserve the transfer, assignment and
conveyance hereunder to the SPV of the Transferred Fleet Receivables and
Receivables Property and in the proceeds thereof. The Originator shall
deliver (or cause to be delivered) to the SPV, the Issuer and the
Indenture Trustee file stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such
filing.
(ii) The Originator shall not change its name, identity or
limited liability company structure in any manner that would, could
or might make any financing statement or continuation statement or
continuation statement filed by the Originator in accordance with
this Agreement seriously misleading within the
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meaning of Section 9-402(7) of the New York UCC, unless it shall
have given SPV, the Issuer and the Indenture Trustee at least 30
days prior written notice thereof and shall file such financing
statements or amendments as may be necessary to continue the
perfection of the Issuer's interest in all Transferred Fleet
Receivables and Receivables Property sold, transferred, conveyed and
assigned hereunder.
(iii) The Originator shall give SPV, the Issuer and the
Indenture Trustee at least 30 days prior written notice of any
relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would require the
filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement. The
Originator shall at all times maintain its principal executive
office within the United States of America.
(m) Computer Files Marked. The Originator shall, at its own expense,
on or prior to each Transfer Date, indicate in its computer files created
in connection with the Transferred Fleet Receivables and Receivables
Property for such Transfer Date that such Transferred Fleet Receivables
and Receivables Property have been transferred, assigned and conveyed to
SPV pursuant to this Agreement.
Section 4.3 Negative Covenants of the Originator. The Originator
covenants and agrees that, without the prior written consent of SPV, from and
after the Closing Date:
(a) Sale of Assets. The Originator shall not sell, transfer, convey,
assign (by operation of law or otherwise) or otherwise dispose of, or
assign any Transferred Fleet Receivable, Receivables Property or Fleet
Service Contract therefor (except as otherwise expressly permitted by this
Agreement or any of the other Transaction Documents).
(b) Liens. The Originator shall not create, incur, assume or permit
to exist any Adverse Claim on or with respect to the Transferred Fleet
Receivables or the Receivables Property except for Permitted Liens.
(c) Modifications of Fleet Receivables or Fleet Service Contracts.
The Originator shall not extend, amend, forgive, discharge, compromise,
cancel or otherwise modify the terms of any Transferred Fleet Receivable,
or amend, modify or waive any payment term or condition of any Fleet
Service Contract therefor as it applies to any outstanding Fleet
Receivable except in accordance with the Policies to the extent permitted
by Section 4.2(j).
(d) Sale Characterization. The Originator shall not make statements
or disclosures or prepare any financial statements for any purpose,
including for federal income tax, reporting or accounting purposes, that
shall account for the transactions contemplated by this Agreement in any
manner other than, with respect to the Sale of each Sold Fleet Receivable
and the Transfer of each Contributed Fleet Receivable, as a true sale
and/or
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absolute assign ment of its full right, title and ownership interest in
such Transferred Fleet Receivable and the Receivables Property to SPV.
(e) Actions Affecting Rights. The Originator shall not (i) take any
action, or fail to take any action, if such action or failure to take
action may interfere with the enforcement of any material rights hereunder
or under the other Transaction Documents, including rights with respect to
the Transferred Fleet Receivables and the Receivables Property (except as
provided in clause (ii) below); (ii) waive or alter any rights with
respect to the Transferred Fleet Receivables (or any agreement or
instrument relating thereto) except in accordance with the Policies; or
(iii) fail to pay any tax, assessment, charge, fee or other obligation of
the Originator with respect to the Transferred Fleet Receivables and the
Receivables Property , or fail to defend any action, if such failure to
pay or defend may adversely affect the priority or enforceability of the
perfected title of SPV to and the sole record and beneficial ownership
interest of SPV in the Transferred Fleet Receivables and the Receivables
Property, or prior to their Transfer hereunder, the Originator's right,
title or interest therein.
(f) Change to Policies. No change that in any respect materially
adversely affects the collectibility of the Fleet Receivables or otherwise
has a Material Adverse Effect shall be made to the Policies without the
prior written consent of SPV, the Issuer and, while any Series of Investor
Notes are outstanding, the Indenture Trustee.
(g) No Proceedings. From and after the Closing Date and until the
date one year plus one day following the date on which each Series of
Investor Notes and each series of Preferred Membership Interests have been
indefeasibly paid in full in cash, the Originator shall not, directly or
indirectly, institute or cause to be instituted against SPV any
bankruptcy, insolvency or other similar proceeding.
(h) Separate Identity. The Originator shall not take any action that
is inconsistent with the terms of Section 4.2(h) hereof, Section 6.18 of
the Transfer Agreement, Section 9.6 of the Origination Trust Agreement or
Section 8.24 of the Indenture.
Section 4.4 Breach of Representations, Warranties or Covenants. Upon
discovery by the Originator, SPV, the Issuer or the Indenture Trustee of any
breach of any representation, warranty or covenant described in Sections 4.1,
4.2 or 4.3, which breach is reasonably likely to have a material adverse effect
on the value of a Transferred Fleet Receivable or the interests of SPV or the
Issuer therein, the party discovering the same shall give prompt written notice
thereof to the other party hereto. The Originator shall, on or prior to the next
succeeding Settlement Date upon the Originator's, SPV's or the Issuer's
discovery of (or otherwise obtaining actual knowledge of) any breach of such
representation, warranty or covenant, either (a) repurchase such Transferred
Fleet Receivable from the Origination Trust for cash, by remitting the purchase
price to the Servicer in such manner as will permit the Servicer to deposit the
same on such date into the Collection Account in accordance with the terms of
the Servicing Agreement (or if the Originator is then the Servicer, by remitting
the purchase price to
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the Collection Account), (b) transfer ownership of a new Eligible Receivable or
new Eligible Receivables to SPV on such Settlement Date (or such Business Day in
exchange for such Transferred Fleet Receivable), or (c) make a capital
contribution in cash to SPV by remitting the amount of such capital contribution
to the Collection Account, in each case in an amount (the "Rejected Amount")
equal to the Billed Amount of such Transferred Fleet Receivable minus the
Collections received by SPV or its assignees in respect thereof.
ARTICLE V.
INDEMNIFICATION
Section 5.1 Indemnification. Without limiting any other rights that
SPV or the Issuer or any of their respective officers, directors, employees,
attorneys, agents or representatives (each, an "SPV Indemnified Person") may
have hereunder or under applicable law, the Originator hereby agrees to
indemnify and hold harmless each SPV Indemnified Person from and against any and
all Indemnified Amounts that may be claimed or asserted against or incurred by
any such SPV Indemnified Person, including any and all legal costs and expenses
arising out of or incurred in connection with disputes between or among any
parties to any of the Transaction Documents, relating to or resulting from:
(a) reliance on any representation or warranty made or deemed made
by the Originator (or any of its officers) under or in connection with
this Agreement or any other Transaction Document to which it is a party or
on any other information delivered by the Originator pursuant hereto or
thereto that shall have been incorrect in any material respect when made
or deemed made or delivered;
(b) the failure by the Originator to comply with any term, provision
or covenant contained in this Agreement, any other Transaction Document to
which it is a party or any agreement executed in connection herewith or
therewith, any applicable law, rule or regulation with respect to any
Transferred Fleet Receivable or Fleet Service Contract therefor or other
Receivables Property, or the nonconformity of any Transferred Fleet
Receivable or the Fleet Service Contract therefor with any such applicable
law, rule or regulation;
(c) the failure to vest and maintain vested in SPV, or to Transfer
to SPV, valid and properly perfected title to and sole record and
beneficial ownership of the Fleet Receivables that constitute Transferred
Fleet Receivables, together with all Collections and in respect thereof or
other Receivables Property, free and clear of any Adverse Claim;
(d) any dispute, claim, offset or defense of any Obligor (other than
its discharge in bankruptcy) to the payment of any Fleet Receivable that
is the subject of a Transfer hereunder (including a defense based on such
Fleet Receivable or the Fleet Service Contract therefor not being a legal,
valid and binding obligation of such Obligor enforceable against it in
accordance with its terms, or any other claim resulting from the sale of
the merchandise or services giving rise to such Fleet Receivable or the
furnishing
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or failure to furnish such merchandise or services or relating to
collection activities with respect to such Fleet Receivable (if such
collection activities were performed by the Originator acting as
Servicer), except to the extent that such dispute, claim, offset or
defense results solely from any action or inaction on the part of SPV;
(e) any products liability claim or other claim arising out of or in
connection with merchandise, insurance or services that is the subject of
any Fleet Service Contract;
(f) any failure by the Originator to cause the filing of, or any
delay in filing, financing statements or other similar instruments or
documents under the UCC of any appli cable jurisdiction or any other
applicable laws with respect to any Fleet Receivable and any other
Receivables Property that is the subject of a Transfer hereunder, whether
at the time of any such Transfer or at any subsequent time;
(g) any failure by the Originator or the Servicer to perform, keep
or observe any of their respective duties or obligations hereunder, under
any other Transaction Document to which it is a party or under any Fleet
Service Contract related to a Transferred Fleet Receivable, including the
commingling of Collections with respect to Transferred Fleet Receivables
by the Originator or the Servicer at any time with the funds of any other
Person;
(h) any investigation, Litigation or proceeding related to this
Agreement or the use of the Sale Price obtained in connection with any
Sale or the ownership of Fleet Receivables or Collections or any other
Receivables Property with respect thereto or in respect of any Fleet
Receivable or Fleet Service Contract or any other Receivables Property,
except to the extent any such investigation, Litigation or proceeding
relates to a matter involving an SPV Indemnified Person for which neither
the Originator nor any of its Affiliates is at fault, as finally
determined by a court of competent jurisdiction; or
(i) any claim brought by any Person other than an SPV Indemnified
Person arising from any activity by the Originator or any of its
Affiliates in servicing, administering or collecting any Transferred Fleet
Receivables or any other Receivables Property;
provided, that the Originator shall not be liable for any indemnification to an
SPV Indemnified Person to the extent that any such Indemnified Amounts result
from (i) such SPV Indemnified Person's gross negligence or willful misconduct,
(ii) recourse for uncollectible or uncollected Transferred Fleet Receivables
(except to the extent resulting from a breach or default by Obligor under this
Agreement) or (iii) any income tax or franchise tax incurred by any SPV
Indemnified Person, except to the extent that the incurrence of any such tax
results from a breach of or default by the Originator under this Agreement or
any other Transaction Document to which it is a party.
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ARTICLE VI.
MISCELLANEOUS
Section 6.1 Notices. Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other parties, or whenever any of the parties desires to
give or serve upon any other parties any communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or
other commun ication shall be in writing and shall be deemed to have been
validly served, given or delivered (a) upon the earlier of actual receipt and
three Business Days after deposit in the United States mail, registered or
certified mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States mail as otherwise provided in this Section
6.1, (c) one Business Day after deposit with a reputable overnight courier with
all charges prepaid or (d) when delivered, if hand-delivered by messenger, all
of which shall be addressed to the party to be notified and sent to the address
or facsimile number set forth under its name on the signature page hereof or to
such other address (or facsimile number) as may be substituted by notice given
as herein provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other communication to any Person (other than SPV) designated in any written
communication provided hereunder to receive copies shall in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication. Notwithstanding the foregoing, whenever it
is provided herein that a notice is to be given to any other party hereto by a
specific time, such notice shall only be effective if actually received by such
party prior to such time, and if such notice is received after such time or on a
day other than a Business Day, such notice shall only be effective on the
immediately succeeding Business Day.
Section 6.2 No Waiver; Remedies. SPV's failure, at any time or
times, to require strict performance by the Originator of any provision of this
Agreement or the Receivables Assignments shall not waive, affect or diminish any
right of SPV thereafter to demand strict compli ance and performance herewith or
therewith. Any suspension or waiver of any breach or default hereunder shall not
suspend, waive or affect any other breach or default whether the same is prior
or subsequent thereto and whether the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of the
Originator contained in this Agreement or the Receivables Assignments, and no
breach or default by the Originator hereunder or thereunder, shall be deemed to
have been suspended or waived by SPV unless such waiver or suspension is by an
instrument in writing signed by an officer of or other duly authorized signatory
of SPV and directed to the Originator specifying such suspension or waiver.
SPV's rights and remedies under this Agreement shall be cumulative and
nonexclusive of any other rights and remedies that SPV may have under any other
agreement, including the other Transaction Documents, by operation of law or
otherwise.
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Section 6.3 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the Originator and SPV and their
respective successors and permitted assigns, except as otherwise provided
herein. The Originator may not assign, transfer, hypothecate or otherwise convey
its rights, benefits, obligations or duties hereunder without the prior express
written consent of SPV, the Issuer and the Indenture Trustee. Any such purported
assignment, transfer, hypothecation or other conveyance by the Originator
without the prior express written consent of SPV, the Issuer and the Indenture
Trustee shall be void. The Originator acknowledges that SPV may assign its
rights granted hereunder, including the benefit of any indemnities under Article
V and any Transferred Fleet Receivables and Receivables Property acquired
hereunder to the Origination Trust pursuant to the Contribution Agreement and
that SPV will transfer the Fleet Receivable SUBI Certificate (representing a
beneficial interest in Origination Trust assets consisting of rights under this
Agreement (including rights to indemnities and to Transferred Fleet Receivables
and Receivables Property)) to the Issuer pursuant to the Transfer Agreement. The
Issuer shall pledge the Fleet Receivable SUBI Certificate to the Indenture
Trustee for the benefit of the Investor Noteholders under the Indenture. The
Originator acknowledges that, upon such assignments and pledges, the Issuer or
the Indenture Trustee, as the case may be, may enforce directly, without joinder
of SPV, the rights set forth in this Agreement All such assignees, including
parties to the Indenture in the case of any assignment to such parties, shall be
third-party beneficiaries of, and shall be entitled to enforce SPV's rights and
remedies under, this Agreement to the same extent as if they were parties
hereto.
Section 6.4 Termination; Survival of Obligations. (a) This Agreement
shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the
payment in full of each series of Investor Notes and each series of Preferred
Membership Interests.
(b) Except as otherwise expressly provided herein or in any other
Transaction Document, no termination or cancellation (regardless of cause or
procedure) of any commitment made by SPV under this Agreement shall in any way
affect or impair the obligations, duties and liabilities of the Originator or
the rights of SPV relating to any unpaid portion of any and all recourse and
indemnity obligations of the Originator to SPV, including those set forth in
Sections 4.2(j), 4.4, 5.1 and 6.14, due or not due, liquidated, contingent or
unliquidated or any transaction or event occurring prior to such termination, or
any transaction or event, the performance of which is required after the
Termination Date. Except as otherwise expressly provided herein or in any other
Transaction Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Originator, and all rights of SPV
hereunder, all as contained in the Transaction Documents, shall not terminate or
expire, but rather shall survive any such termination or cancellation and shall
continue in full force and effect until the Termination Date; provided, that the
rights and remedies pursuant to Sections 4.2(j), 4.4, the indemnification and
payment provisions of Article V, and the provisions of Sections 4.3(h), 6.3, and
6.13 shall be continuing and shall survive any termination of this Agreement.
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Section 6.5 Complete Agreement, Modification of Agreement. This
Agreement and the other Transaction Documents constitute the complete agreement
between the parties with respect to the subject matter hereof and thereof,
supersede all prior agreements and understandings relating to the subject matter
hereof and thereof, and may not be modified, altered or amended except as set
forth in Section 6.6.
Section 6.6 Amendments and Waivers. (a) This Agreement may be
amended from time to time by a written amendment duly executed and delivered by
the Originator and SPV, but without the consent of any other Person, to correct
any inconsistency or cure any ambiguity or errors in this Agreement only in a
manner that would have no adverse effect on any Investor Noteholder or any
Preferred Member.
(b) This Agreement may be amended from time to time by a written
amendment duly executed and delivered by the Originator and SPV, with the
consent of the Indenture Trustee so long as any Series of Investor Notes is
outstanding.
(c) Prior to the execution of any such amendment or consent, the
Originator shall furnish at least five (5) Business Days' prior written
notification of the substance of such amendment or consent to each Rating Agency
with respect to each Series of Investor Notes and each series of Preferred
Membership Interests. No later than ten (10) Business Days after the execution
of such amendment or consent, the Originator shall furnish a copy of such
amendment or consent to each Rating Agency with respect to each Series of
Investor Notes and each series of Preferred Membership Interests and the
Indenture Trustee.
Section 6.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT AND EACH RECEIVABLES ASSIGNMENT AND THE OBLIGATIONS
ARISING HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(b) EACH PARTY HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THEM
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED DOCUMENT; PROVIDED, THAT EACH PARTY HERETO ACKNOWLEDGES
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF THE BOROUGH OF MANHATTAN IN NEW YORK CITY; PROVIDED FURTHER, THAT
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE SPV FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE TRANSFERRED FLEET RECEIVABLES OR ANY OTHER SECURITY FOR THE OBLIGATIONS
OF THE ORIGINA-
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TOR ARISING HEREUNDER, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
SPV. EACH PARTY HERETO SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH PARTY HERETO HEREBY
WAIVES ANY OBJECTION THAT SUCH PARTY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. EACH PARTY HERETO HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS SET FORTH BENEATH ITS
NAME ON THE SIGNATURE PAGES HEREOF AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH PARTY'S ACTUAL RECEIPT THEREOF OR THREE DAYS
AFTER DEPOSIT IN THE UNITED STATES MAIL, PROPER POSTAGE PREPAID. NOTHING IN THIS
SECTION SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW.
(c) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 6.8 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.
Section 6.9 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such a 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 only to
the extent of such prohibition or invalidity without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
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<PAGE>
Section 6.10 Section Titles. The section titles and table of
contents contained in this Agreement are provided for ease of reference only and
shall be without substantive meaning or content of any kind whatsoever and are
not a part of the agreement between the parties hereto.
Section 6.11 No Setoff. The Originator's obligations under this
Agreement shall not be affected by any right of setoff, counterclaim,
recoupment, defense or other right the Originator might have against SPV, the
Issuer or the Indenture Trustee, all of which rights are hereby expressly waived
by the Originator.
Section 6.12 Further Assurances. (a) The Originator shall, at its
sole cost and expense, promptly and duly execute and deliver any and all further
instruments and documents and take such further actions that may be necessary or
desirable or that SPV or the Indenture Trustee may request to carry out more
effectively the provisions and purposes of this Agreement or any other
Transaction Document or to obtain the full benefits of this Agreement and of the
rights and powers herein granted, including (i) securing all consents and
approvals necessary or appropriate for the assignment to or for the benefit of
SPV of any Transferred Fleet Receivable and the Receivables Property, (ii)
perfecting, protecting, preserving, continuing and maintaining fully the
purchase by, and the assignments, security interests and other Liens granted or
purported to be granted to, SPV under this Agreement (including the filing any
financing or continuation statements under the UCC with respect to the ownership
interests or Liens granted hereunder or under any other Transaction Document)
and (iii) enabling SPV, the Issuer or the Indenture Trustee to exercise or
enforce its rights under this Agreement or any of the other Transaction
Documents. The Originator hereby authorizes SPV, the Issuer or the Indenture
Trustee to file any such financing or continuation statements without the
signature of the Originator to the extent permitted by applicable law. A carbon,
photographic or other reproduction of this Agreement or of any notice or
financing statement covering the Transferred Fleet Receivables or any part
thereof and the Receivables Property shall be sufficient as a notice or
financing statement where permitted by law. If any amount payable under or in
connection with any of the Transferred Fleet Receivables or Receivables Property
is or shall become evidenced by any instrument, such instrument, other than
checks and notes received in the ordinary course of business, shall be duly
endorsed in a manner satisfactory to SPV immediately upon the Originator's
receipt thereof and promptly delivered to or at the direction of SPV.
(b) If the Originator fails to perform any agreement or obligation
under this Section 6.12, SPV, the Issuer or the Indenture Trustee may (but shall
not be required to) itself perform, or cause performance of, such agreement or
obligation, and the reasonable expenses of SPV, the Issuer or the Indenture
Trustee incurred in connection therewith shall be payable by such Originator
upon demand of SPV, the Issuer or the Indenture Trustee.
Section 6.13 Fees, Expenses and Taxes. In addition to its
indemnification obligations pursuant to Article V, the Originator agrees to pay
all costs and expenses, if any (including attorneys' fees and expenses but
excluding any costs of enforcement or collection of the Transferred Fleet
Receivables), in connection with the enforcement of, or any actual or claimed
breach of, this Agreement. The Originator shall pay all filing fees, stamp taxes
and other similar
-20-
<PAGE>
taxes and expenses, if any, which may be incurred on account of or arise out of
this Agreement and the documents and transactions entered into pursuant to this
Agreement.
-21-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Receivables
Purchase Agreement to be executed by their respective duly authorized
representatives, as of the date first above written.
PHH VEHICLE MANAGEMENT SERVICES LLC
By
--------------------------------------
Name:
Title:
Address: 900 Old Country Road
Garden City, NY 11530
Attention: General Counsel
Facsimile: (516) 222-3751
RAVEN FUNDING LLC
By
--------------------------------------
Name:
Title:
Address: 900 Old Country Road
Garden City, NY 11530
Attention: General Counsel
Facsimile: (516) 222-3751
FORM OF RECEIVABLES ASSIGNMENT
THIS RECEIVABLES ASSIGNMENT (the "Receivables Assignment") is
entered into as of __________, ____, by and between PHH Vehicle Management
Services LLC ("VMS") and Raven Funding LLC ("SPV").
1. We refer to that certain Receivables Purchase Agreement (as the
same may from time to time be amended, restated, supplemented or otherwise
modified, the "Transfer Agreement") dated as of June 30, 1999 between VMS and
SPV. All of the terms, covenants and conditions of the Transfer Agreement are
hereby made a part of this Receivables Assignment and are deemed incorporated
herein in full. Unless otherwise defined herein, capitalized terms or matters of
construction defined or established in the Transfer Agreement shall be applied
herein as defined or established therein.
-22-
<PAGE>
2. [For good and valuable consideration, the receipt of which is
hereby acknowledged, VMS hereby sells, assigns, transfers and conveys to SPV,
without recourse, except as provided in the Transfer Agreement, all of VMS's
right, title and interest in, to and under all Fleet Receivables identified on
Schedule I hereto as "Sold Receivables" and the Receivables Property with
respect thereto.]
[For good and valuable consideration, the receipt of which is
hereby acknowledged, VMS hereby assigns, transfers and conveys to SPV as a
capital contribution, without recourse, except as provided in the Transfer
Agreement, all of VMS's right, title and interest in, to and under all Fleet
Receivables identified on Schedule I hereto as "Contributed Receivables" and the
Receivables Property with respect thereto.]
3. The Fleet Receivables being transferred by this Receivables
Assignment consist of [$______ in face amount of Sold Fleet Receivables for a
purchase price of $______] [$______ in face amount of Contributed Fleet
Receivables].
4. Subject to the terms and conditions of the Transfer Agreement,
VMS hereby covenants and agrees to sell or contribute, as applicable, execute
and deliver, or cause to be signed, sold or contributed, executed and delivered,
and to do or make, or cause to be done or made, upon request of SPV and at VMS's
expense, any and all agreements, instruments, papers, deeds, acts or things,
supplemental, confirmatory or otherwise, as may be reasonably required by SPV
for the purpose of or in connection with acquiring or more effectively vesting
in SPV or evidencing the vesting in SPV of the property, rights, title and
interests of VMS sold or contributed hereunder or intended to be sold or
contributed hereunder.
5. Wherever possible, each provision of this Receivables Assignment
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Receivables Assignment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Receivables Assignment.
6. THIS RECEIVABLES ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
7. The foregoing [sale,] assignment, transfer and conveyance does
not constitute and is not intended to result in any assumption by SPV of any
obligation of the undersigned to any other Person in connection with the
Transferred Fleet Receivables and Receivables Property described above or any
agreement or instrument relating to any of them.
8. The SPV and VMS intend that the transactions contemplated by this
assignment shall be treated as a [sale,] assignment, transfer and conveyance by
VMS of the Transferred Fleet Receivables and Receivables Property described
above and not a lending transaction. If this Assignment does not constitute a
valid [sale,] assignment, transfer and conveyance of all right, title and
interest of, in, to and under the Transferred Fleet Receivables
-23-
<PAGE>
and Receivables Property described above despite the intent of the parties
hereto, VMS hereby grants a first priority "security interest" (as defined in
the UCC as in effect in the State of New York) in the Transferred Fleet
Receivables and Receivables Property and all proceeds thereof to the SPV and the
parties agree that this Assignment shall constitute a security agreement under
the UCC in effect in New York.
9. This Assignment is made pursuant to and based upon the
representations, warranties and agreements on the part of the undersigned
contained in the Transfer Agreement and is to be governed by the Transfer
Agreement.
IN WITNESS WHEREOF, the parties have caused this Receivables
Assignment to be executed by their respective officers thereunto duly
authorized, as of the day and year first above written.
PHH VEHICLE MANAGEMENT SERVICES LLC
By
--------------------------------------
Name:
Title:
RAVEN FUNDING LLC
By
--------------------------------------
Name:
Title:
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<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS AND INTERPRETATION..........................................1
Section 1.1 Definitions...............................................1
Section 1.2 Rules of Construction.....................................1
ARTICLE II.
TRANSFERS OF FLEET RECEIVABLES..........................................1
Section 2.1 Agreement to Transfer.....................................1
Section 2.2 Grant of Security Interest................................2
ARTICLE III.
CONDITIONS PRECEDENT....................................................3
Section 3.1 Conditions to Initial Transfer............................3
Section 3.2 Conditions to all Transfers...............................3
ARTICLE IV.
REPRESENTATIONS, WARRANTIES AND COVENANTS...............................4
Section 4.1 Representations and Warranties of the Originator..........4
Section 4.2 Affirmative Covenants of the Originator...................7
Section 4.3 Negative Covenants of the Originator.....................12
Section 4.4 Breach of Representations, Warranties or Covenants.......13
ARTICLE V.
INDEMNIFICATION........................................................14
Section 5.1 Indemnification..........................................14
ARTICLE VI.
MISCELLANEOUS..........................................................15
Section 6.1 Notices..................................................15
Section 6.2 No Waiver; Remedies......................................16
Section 6.3 Successors and Assigns...................................16
(i)
<PAGE>
Page
----
Section 6.4 Termination; Survival of Obligations.....................17
Section 6.5 Complete Agreement, Modification of Agreement............17
Section 6.6 Amendments and Waivers...................................17
Section 6.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL...............................................18
Section 6.8 Counterparts.............................................19
Section 6.9 Severability.............................................19
Section 6.10 Section Titles...........................................19
Section 6.11 No Setoff................................................19
Section 6.12 Further Assurances.......................................19
Section 6.13 Fees, Expenses and Taxes.................................20
(ii)
<PAGE>
INDEX OF APPENDICES
Exhibit 2.1(a) Form of Receivables Assignment
Schedule 4.1(b) Executive Offices; Collateral Locations; Names of Originator
(i)
<PAGE>
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT (this "Agreement"), dated as of June 30,
1999, between Raven Funding LLC ("Assignor"), the D.L. Peterson Trust (the
"Origination Trust"), a business trust organized under the laws of the State of
Delaware ("Assignee").
W I T N E S S E T H:
WHEREAS, the Assignor is the sole owner of the UTI, an undivided
beneficial interest in the Assignee;
WHEREAS, the parties hereto desire to effect the contribution and
assignment by Assignor to Assignee of all of the right, title and interest of
Assignor to and under all the leases set forth on Schedule A (the "Leases");
WHEREAS, the parties hereto desire to effect the contribution and
assignment by Assignor to Assignee of all of the right, title and interest of
Assignor to and under all the vehicles set forth on Schedule B (the "Vehicles");
and
WHEREAS, the parties hereto desire to effect the contribution and
assignment by Assignor to Assignee of all of the right, title and interest of
Assignor to and under all the Fleet Receivables and the Receivables Property
transferred to the Assignee pursuant to the Receivables Purchase Agreement,
dated as of June 30, 1999 (as amended from time to time, the "Receivables
Purchase Agreement"), between the Assignor and PHH Vehicle Management Services
LLC ("VMS").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. Definitions. Capitalized terms used in the above recitals and in
this Agreement, and not defined in this Agreement, shall have the respective
meanings assigned to them in the Definitions List attached to the Base
Indenture, dated as of the date hereof, between the Issuer and The Chase
Manhattan Bank, as indenture trustee, as the same may be amended, supplemented
or otherwise modified from time to time, exclusive of Indenture Supplements
creating a new Series of Investor Notes (the "Base Indenture"). "Receivables
Property" shall have the meaning set forth in Annex X to the Receivables
Purchase Agreement.
2. Contribution and Assignment. Assignor does hereby contribute,
sell, warrant, pledge, convey, assign, transfer and set over unto Assignee all
of its present and future right, title and interest in, to and under the rights,
interests, powers, privileges and other benefits, in each case whether now owned
or existing or hereafter acquired or arising and wherever the same may be
located in all of the following (all of which rights, being hereby assigned and
pledged, or intended so to be, are hereinafter collectively referred to as the
"Assigned Assets"):
<PAGE>
(a) all Vehicles, together with: (i) all substitutions,
renewals or replacements of the Vehicles or any part included therein, (ii) all
proceeds, rents, income, revenues and profits to the Assignor therefor, (iii)
all security interests in such Vehicles, (iv) all logs, books, records and other
written materials pertaining to the Vehicles or any part included therein and
all warranties of any kind relating to the Vehicles;
(b) all the right, title, interest, claims and demands now
held or hereafter acquired by the Assignor as lessor, in, to and under the
Leases, together with all rights, powers, privileges, options, licenses and
other benefits of the Assignor, as lessor, under each thereof, whether arising
under the Leases, by law or in equity, including, without limitation:
(i) all rights, if any, to leases of Vehicles;
(ii) the immediate and continuing right to receive and
collect all payments, insurance and disposition proceeds, condemnation
awards and other payments, tenders and security of any kind now or
hereafter payable or receivable by, or for the benefit or account of, the
Assignor, as lessor, under the Leases;
(iii) the right to (1) give or receive any instrument,
notice or other communication, (2) exercise any election or option or
accept any surrender of the Vehicle or any part thereof or grant any
waiver, consent or other approval, and (3) enter into any amendment,
supplement or other modification or agreement relating to the Leases;
(iv) the right to take such action and exercise such
rights and remedies upon the occurrence of a default under a Lease,
including the commencement, conduct and consummation of legal,
administrative or other proceedings, as shall be permitted by the Leases,
or by any other law or in equity, and to do any and all other things
whatsoever which the Assignor is or may be entitled to do under the
Leases;
it being the intent and purpose hereof that the contribution, assignment and
transfer to the Assignee of said rights, powers, privileges, options, licenses
and other benefits shall be effective and operative immediately and shall
continue in full force and effect;
(c) all the right, title, interest, claims and demands now
held or hereafter acquired by the Assignor, in, to and under the Fleet
Receivables and the Receivables Property, together with all rights, powers,
privileges, options, licenses and other benefits of the Assignor, under each
thereof, whether arising under the Fleet Receivables, by law or in equity,
including, without limitation:
(i) all rights, if any, to the Fleet Receivables;
(ii) the immediate and continuing right to receive and
collect all payments, insurance and disposition proceeds, condemnation
awards and other payments, tenders and security of any kind now or
hereafter payable or receivable by, or for the benefit or account of, the
Assignor;
-2-
<PAGE>
(iii) the right to (1) give or receive any instrument,
notice or other communication, (2) exercise any election or option or
grant any waiver, consent or other approval, and (3) enter into any
amendment, supplement or other modification or agreement relating to the
Fleet Receivables;
(iv) the right to take such action and exercise such
rights and remedies upon the occurrence of a default under the Fleet
Receivables and the Receivables Property, including the commencement,
conduct and consummation of legal, administrative or other proceedings, as
shall be permitted by the Fleet Receivables and the Receivables Property,
or by any other law or in equity, and to do any and all other things
whatsoever which the Assignor is or may be entitled to do under the Fleet
Receivables and the Receivables Property;
it being the intent and purpose hereof that the contribution, assignment and
transfer to the Assignee of said rights, powers, privileges, options, licenses
and other benefits shall be effective and operative immediately and shall
continue in full force and effect;
(d) each certificate of title or other evidence of ownership
of a Vehicle issued by any applicable department, agency or official responsible
for accepting applications for, and maintaining records regarding, certificates
of title in the respective jurisdiction in which such Vehicle is registered;
(e) the Receivables Purchase Agreement;
(f) the Asset Sale Agreement;
(g) any insurance policy and rights thereunder or proceeds
therefrom, including without limitation, any policy of comprehensive collision,
public liability, physical damage or personal liability insurance to the extent
that any such policy applies to any Lease or Vehicle; and
(h) all proceeds (as such term is defined in the Uniform
Commercial Code of the State of New York, or any other applicable Uniform
Commercial Code, each as in effect from time to time) of the foregoing, and in
any event shall include, without limitation (i) "cash proceeds," (ii) "non-cash
proceeds," (iii) all amounts payable as proceeds of insurance, as an award or
otherwise in connection with any confiscation, condemnation, requisition or
other taking of any Assigned Assets, and (iv) all amounts payable to the
Assignor by any manufacturer, supplier or vendor of any of the Vehicles or any
component thereof pursuant to any warranty or indemnity covering any Vehicle, in
each case whether now owned or existing or hereafter acquired or arising, or
acquired or arising before or after the commencement of any bankruptcy
proceeding by or against the Assignor; and (v) all monies and securities
deposited or required to be deposited with the Assignor pursuant to any term of
the Assigned Assets or required to be held by the Assignor hereunder or
thereunder.
3. Assumption. In consideration of the contribution and assignment
set forth in Section 2 above, the Assignee hereby accepts the contribution and
assignment of the Assigned
-3-
<PAGE>
Assets and assumes and undertakes and agrees to perform and discharge all of the
duties and obligations of Assignor with respect to the Leases whenever and
wherever accrued.
4. Release of Assignor. As of the date hereof, Assignor shall be
relieved of all its liabilities under the Leases.
5. Payments. Assignor hereby covenants and agrees to pay over to
Assignee, if and when received following the date hereof, any amounts (including
any sums payable as interest in respect thereof) paid on account of the Assigned
Assets to or for the benefit of Assignor; and Assignee hereby covenants and
agrees to pay over to Assignor, if and when received following the date hereof,
any amounts (including any sums payable as interest in respect thereof) paid to
or for the benefit of Assignee that are not attributable to the Assigned Assets
and to which Assignor is otherwise entitled.
6. Representation by Assignor. As of the Initial Closing Date,
Assignor hereby represents and warrants to Assignee that none of the Assigned
Assets transferred by Assignor on such date has been contributed, sold,
transferred, assigned or pledged by Assignor to any Person other than Assignee.
Immediately prior to the transfer and assignment contemplated herein, Assignor
had good title to such Assigned Assets free and clear of all Liens and,
immediately upon the transfer thereof hereunder, Assignee will have good title
to such Assigned Assets, free and clear of all Liens, and the transfer of such
Assigned Assets by Assignor to the Assignee has been perfected under the UCC.
7. Indemnities of Assignor. Assignor shall defend, indemnify, and
hold harmless Assignee, to the extent that the Assignee does not acquire
perfected first priority ownership of the Assigned Assets, from and against the
failure to vest perfected first priority ownership of the Assigned Assets.
8. Protection, Right, Title and Interest. (a) Assignor shall take
such necessary actions and precautions and actions to preserve, maintain, and
protect the interest of Assignee in the Assigned Assets and proceeds thereof.
(b) Assignor shall, at its own expense, on or prior to the Initial
Closing Date, indicate in its computer files created in connection with the
Assigned Assets for such Initial Closing Date that such Assigned Assets have
been transferred, assigned and conveyed to the Trust pursuant to this Agreement.
(c) Assignor shall execute and file such financing statements, and
cause to be executed and filed such continuation and other statements, all in
such manner and in such places as may be required by law fully to perfect and
preserve the transfer, assignment and conveyance hereunder to the Issuer of the
Assigned Assets and in the proceeds thereof. Assignor shall deliver (or cause to
be delivered) to the Issuer file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(d) Assignor shall not change its name, identity or limited
liability company structure in any manner that would, could or might make any
financing statement or continuation
-4-
<PAGE>
statement filed by Assignor in accordance with this Agreement seriously
misleading within the meaning of Section 9-402(7) of the UCC, unless it shall
have given the Issuer and the Indenture Trustee at least 30 days prior written
notice thereof and shall file such financing statement or amendments as may be
necessary to continue the perfection of the Trust's interest in all Assigned
Assets sold, transferred, conveyed and assigned hereunder.
(e) Assignor shall give the Trust, the Issuer and the Indenture
Trustee at least 30 days prior written notice of any relocation of its principal
executive office if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement. Assignor
shall at all times maintain its principal executive office within the United
States of America.
9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
10. Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute a single agreement. It
shall not be necessary that any counterpart be signed by both parties so long as
each party shall sign at least one counterpart.
11. Further Assurances. Each party agrees that from time to time
after the date hereof, it shall execute and deliver or cause to be executed and
delivered such instruments, documents and papers, and take all such further
action as may be reasonably required in order to consummate fully the purposes
of this Agreement and to implement the transactions contemplated hereby.
12. Amendment. (a) This Agreement may be amended form time to time
by a written amendment duly executed and delivered by Assignor and Assignee, but
without the consent of any other Person, to correct any inconsistency or cure
any ambiguity or errors in this Agreement only in a manner that would have no
adverse effect on any Investor Noteholder or any Preferred Member.
(b) This Agreement may be amended from time to time by a written
amendment duly executed and delivered by Assignor and Assignee, with the consent
of the Issuer and of the Indenture Trustee so long as any Series of Investor
Notes is outstanding.
(c) Prior to the execution of any such amendment or consent,
Assignee shall furnish at least five (5) Business Days prior written
notification of the substance of such amendment or consent to each Rating Agency
with respect to each Series of Investor Notes and each series of Preferred
Membership Interests. No later than ten (10) Business Days after the execution
of such amendment or consent, Assignor shall furnish a copy of such amendment or
consent to each Rating Agency with respect to each Series of Investor Notes and
each Series of Preferred Membership Interests and the Indenture Trustee.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
RAVEN FUNDING LLC, as Assignor
By:
-------------------------------------
Name:
Title:
D.L. PETERSON TRUST, as ASSIGNEE
By: Wilmington Trust Company, not in
its individual capacity but solely
as Delaware Trustee and SUBI Trustee
By: PHH VEHICLE MANAGEMENT SERVICES
LLC, as UTI Trustee
By:
-------------------------------------
Name:
Title:
-6-
<PAGE>
TRANSFER AGREEMENT
BETWEEN
RAVEN FUNDING LLC,
AS TRANSFEROR
AND
GREYHOUND FUNDING, LLC,
AS TRANSFEREE
DATED AS OF JUNE 30, 1999
<PAGE>
TRANSFER AGREEMENT
This Transfer Agreement (the "Agreement") is made as of June 30,
1999, between GREYHOUND FUNDING, LLC, a Delaware limited liability company (the
"Issuer"), and RAVEN FUNDING LLC, a Delaware limited liability company ("SPV").
R E C I T A L S :
SPV owns all of the Common Membership Interests in the Issuer.
On the terms and subject to the conditions set forth herein, SPV
desires to transfer the Initial Transferred Assets to the Issuer on the Initial
Closing Date, in the form of a contribution to the capital of the Issuer.
Following the Initial Closing Date, on the terms and subject to the
conditions set forth herein, SPV desires from time to time to transfer to the
Issuer any interest that the SPV acquires in Additional Transferred Assets and,
in consideration for such transfer, the Issuer is willing to make a payment to
SPV on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the other good
and valuable consideration and the mutual terms and covenants herein contained,
the parties hereto agree as follows:
Capitalized terms used in the above recitals and in this Agreement, and not
defined in this Agreement, shall have the respective meanings assigned to them
in the Definitions List attached to the Base Indenture, dated as of the date
hereof, between the Issuer and The Chase Manhattan Bank, as indenture trustee,
as the same may be amended, supplemented or otherwise modified from time to
time, exclusive of Indenture Supplements creating a new Series of Investor Notes
(the "Base Indenture").
(a) Unless otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto or thereto. Additionally, the following terms
shall have the following meanings for all purposes of this Agreement:
"Additional Transferred Assets" means, in respect of a Lease SUBI
Allocation Event, the following assets:
<PAGE>
(a) the beneficial interest in the Additional Units allocated
to the Lease SUBI Portfolio on such date and any Unit Leases, Unit
Vehicles and Related Rights associated therewith;
(b) the Origination Trust Documents, as such agreements are
applicable to the Additional Units referred to in clause (a) and any
Unit Leases, Unit Vehicles and Related Rights associated therewith;
(c) all payments and distributions under the foregoing of
whatever kind or character and whether in cash or other property, at
any time made or distributable to SPV thereunder or in respect
thereof, whether due or to become due, including, without
limitation, the immediate and continuing right of SPV to receive and
collect all amounts payable to the holder of the Lease SUBI
Certificate and all of SPV's rights, remedies, powers, interests and
privileges under the foregoing (whether arising pursuant to the
terms thereof or otherwise available to SPV), including, without
limitation, the right to enforce the foregoing, to give or withhold
any and all consents, requests, notices, directions, approvals or
waivers thereunder and all amounts due and to become due thereunder,
whether payable as indemnities or damages for breach thereof; and
(d) any proceeds and products of the foregoing.
"Initial Transferred Assets" means the following assets:
(a) the Lease SUBI, the Lease SUBI Certificate and the beneficial
interest in the Initial Units allocated to the Lease SUBI Portfolio on the
Initial Closing Date and any Unit Leases, Unit Vehicles and Related Rights
associated therewith;
(b) the Fleet Receivable SUBI Certificate and the beneficial
interest in the Fleet Receivables and the Origination Trust's rights under
the Receivables Purchase Agreement from time to time allocated to the
Fleet Receivable SUBI and represented by the Fleet Receivable SUBI
Certificate;
(c) the Origination Trust Documents, as such agreements are
applicable to the Initial Units and the Fleet Receivable SUBI Certificate
and the other Origination Trust Assets referred to in clauses (a) and (b);
(d) the Series 1999-1 Lease Rate Cap, dated the Initial Closing
Date, between SPV and an Eligible Counterparty;
(e) all payments and distributions under the foregoing of whatever
kind or character and whether in cash or other property, at any time made
or distributable to SPV thereunder or in respect thereof, whether due or
to become due, including, without limitation, the immediate and continuing
right of SPV to receive and collect all amounts payable to the holder of
the Lease SUBI Certificate and the Fleet Receivable SUBI
-2-
<PAGE>
Certificate and all of SPV's rights, remedies, powers, interests and
privileges under the foregoing (whether arising pursuant to the terms
thereof or otherwise available to SPV), including, without limitation, the
right to enforce the foregoing, to give or withhold any and all consents,
requests, notices, directions, approvals or waivers thereunder and all
amounts due and to become due thereunder, whether payable as indemnities
or damages for breach thereof; and
(f) any proceeds and products of the foregoing.
"Lease SUBI Allocation Event" means that Additional Units have been
allocated to the Lease SUBI Portfolio pursuant to the Lease SUBI
Supplement.
"Existing Notes" means the collective reference to the promissory
note of PHH Vehicle Management Services, LLC, dated June 10, 1999, in the
principal amount of $72,799,409.54 payable to the order of The Chase
Manhattan Bank, the promissory note of TRAC Funding, Inc., dated June 10,
1999, in the principal amount of $382,682,411.75 payable to the order of
The Chase Manhattan Bank and the promissory note of TRAC Funding II, Inc.,
dated June 10, 1999, in the principal amount of $458,678,286.94 payable to
the order of The Chase Manhattan Bank.
"Potential Transfer Termination Event" means any occurrence or event
which, with the giving of notice, the passage of time or both, would
constitute a Transfer Termination Event.
"Series 1999-1 Indenture Supplement" means the Series 1999-1
Indenture Supplement to the Base Indenture, dated as of the Initial
Closing Date, among the Issuer, the Administrator, The Chase Manhattan
Bank, as Funding Agent, APA Bank and Indenture Trustee, and Park Avenue
Receivables Corporation, as Initial Purchaser.
"Transfer Termination Event" is defined in Article X.
"Transferred Assets" means the Initial Transferred Assets together
with any Additional Transferred Assets.
"Trust Assets" is defined in the Origination Trust Agreement.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto, accounting terms not defined in Section 1.1, and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP. To the extent that the
definitions of accounting terms are inconsistent with the meanings of such terms
under GAAP, the definitions contained herein shall control.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular
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provision of this Agreement, and Section, subsection, Schedule and Exhibit
references are to Sections, subsections, Schedules and Exhibits to this
Agreement, unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
On the Initial Closing Date, subject to the terms and conditions set forth
herein, SPV shall assign, transfer, set over and otherwise convey to the Issuer,
as a contribution to the capital of the Issuer, all the right, title and
interest of SPV in and to the Initial Transferred Assets, by executing and
delivering to the Issuer an assignment, substantially in the form of Exhibit A
(the "Initial Assignment"). In connection with the Initial Assignment, effective
with the transfer of the Initial Transferred Assets to the Issuer hereunder, the
Issuer hereby assumes all of the obligations under the Existing Notes.
SECTION 2.2 Subsequent Transfers. On each date following the Initial
Closing Date when a Lease SUBI Allocation Event occurs, subject to the
satisfaction of the terms and conditions set forth herein, SPV shall sell,
assign, transfer, set over and otherwise convey to the Issuer all of SPV's
right, title and interest in, to and under the Additional Transferred Assets, by
executing and delivering to the Issuer an assignment, substantially in the form
of Exhibit B (an "Additional Assignment").
The consummation of each transfer contemplated by Section 2.2 shall take place
on the related date of such transfer (the "Additional Closing Date" and,
together with the Initial Closing Date, the "Transferred Asset Closing Dates").
In consideration of the transfer of Additional Transferred Assets to
the Issuer on each Additional Closing Date and subject to the terms and
conditions set forth herein, the Issuer shall pay to SPV an amount (the
"Transferred Asset Payment") equal to the amount available therefor on such
Additional Closing Date under the Indenture.
SECTION 2.4 Security Interest in the Transferred Assets. The parties
to this Agreement intend that the transactions contemplated by Sections 2.1 and
2.2 shall be, and shall be treated as, absolute assignments, transfers and
conveyances by SPV of the Transferred Assets and not as a lending transaction.
If this Agreement does not constitute a valid assignment, transfer and
conveyance of all right, title and interest of SPV in, to and under the
Transferred Assets despite the intent of the parties hereto, SPV hereby grants a
first priority "security interest" (as defined in the UCC as in effect in the
State of New York) in the Transferred Assets and all proceeds thereof to the
Issuer and the parties agree that this Agreement shall constitute a security
agreement under the UCC in effect in New York.
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The foregoing assignments, transfers and conveyances pursuant to
this Article II do not constitute and are not intended to result in the creation
of any obligation of the Issuer other than the Issuer's obligations to SPV under
this Agreement and do not constitute and are not intended to result in the
assumption by the Issuer of any obligation of SPV or any other Person in
connection with the Transferred Assets or any agreement or instrument relating
thereto, including any obligation to any Obligor under any Lease Agreement or
Fleet Service Contract.
As of each Transferred Asset Closing Date, SPV hereby represents and warrants to
the Issuer that none of the Transferred Assets transferred by SPV on such date
has been sold, transferred, assigned or pledged by SPV to any Person other than
the Issuer. Immediately prior to the transfer and assignment contemplated
herein, SPV had good title to such Transferred Assets free and clear of all
Liens and, immediately upon the transfer thereof hereunder, the Issuer will have
good title to such Transferred Assets, free and clear of all Liens, and the
transfer of such Transferred Assets by SPV to the Issuer has been perfected
under the UCC.
SPV hereby represents and warrants to the Issuer as of the date hereof and as of
each Transferred Asset Closing Date, that:
(a) Existence and Power.
SPV (a) is a special purpose limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware,
(b) is duly qualified to do business as a foreign limited liability company and
in good standing under the laws of each jurisdiction where the character of its
property, the nature of its business or the performance of its obligations make
such qualification necessary, and (c) has all powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted and for purposes of the transactions contemplated by
this Agreement and the other Transaction Documents.
(b) Governmental Authorization.
The execution, delivery and performance by SPV of this Agreement and
the other Transaction Documents to which it is a party (a) is within SPV's
power, has been duly authorized by all necessary action, (b) requires no action
by or in respect of, or filing with, any governmental body, agency or official
which has not been obtained and (c) does not contravene, or constitute a default
under, any Requirement of Law or any provision of its certificate of formation
or the limited liability company agreement of the SPV or result in the creation
or imposition of any Lien on any of the properties of the SPV, except for Liens
created by this Agreement. This Agreement and each of the other Transaction
Documents to which SPV is a party has been executed and delivered by a duly
authorized officer of SPV.
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(c) Binding Effect.
This Agreement and each other Transaction Document to which SPV is a
party is a legal, valid and binding obligation of SPV enforceable against SPV in
accordance with its terms (except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally or by general equitable
principles, whether considered in a proceeding at law or in equity and by an
implied covenant of good faith and fair dealing).
(d) Litigation.
There is no action, suit or proceeding pending against or, to the
knowledge of SPV, threatened against or affecting SPV before any court or
arbitrator or any Governmental Authority that could materially adversely affect
the financial position, results of operations, business, properties,
performance, prospects or condition (financial or otherwise) of SPV or which in
any manner draws into question the validity or enforceability of this Agreement
or any other Transaction Document to which SPV is a party or may be bound or the
ability of SPV to perform its obligations hereunder or thereunder.
(e) No ERISA Plan.
SPV has not established and does not maintain or contribute to any
Pension Plan that is covered by Title IV of ERISA and will not do so prior to
the termination of this Agreement.
(f) Tax Filings and Expenses.
SPV has filed all federal, state and local tax returns and all other
tax returns which, to the knowledge of SPV, are required to be filed (whether
informational returns or not), and has paid all taxes due, if any, pursuant to
said returns or pursuant to any assessment received by SPV, except such taxes,
if any, as are being contested in good faith and for which adequate reserves
have been set aside on its books. SPV has paid all fees and expenses required to
be paid by it in connection with the conduct of its business, the maintenance of
its existence and its qualification as a foreign limited liability company
authorized to do business in each State in which it is required to so qualify.
(g) Investment Company Act.
SPV is not, and is not controlled by, an "investment company" within
the meaning of, and is not required to register as an "investment company"
under, the Investment Company Act of 1940.
(h) Margin Stock.
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SPV is not engaged in the business of extending credit for the
purpose of purchasing or carrying any margin stock.
(i) No Consent.
No consent, action by or in respect of, approval or other
authorization of, or registration, declaration or filing with, any Governmental
Authority or other Person is required for the valid execution and delivery of
this Agreement or for the performance of any of SPV's obligations hereunder or
thereunder or under any other Transaction Document other than such consents,
approvals, authorizations, registrations, declarations or filings as shall have
been obtained by the SPV prior to the Initial Closing Date.
(j) Solvency.
Both before and after giving effect to the transactions contemplated
by this Agreement and the other Transaction Documents, SPV is solvent within the
meaning of the Bankruptcy Code and SPV 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 Insolvency Event has occurred with respect to SPV.
(k) Security Interests.
(i) Each of the SUBI Certificates has been duly registered in the
name of the Issuer and all other action necessary (including the filing of UCC-1
financing statements) to protect and perfect the Issuer's ownership interest in
the Transferred Assets now in existence and hereafter acquired or created has
been duly and effectively taken.
(ii) No security agreement, financing statement, equivalent security
or lien instrument or continuation statement listing SPV as debtor covering all
or any part of the Transferred Assets is on file or of record in any
jurisdiction, except such as may have been filed, recorded or made by SPV in
favor of the Issuer in connection with this Agreement.
(iii) All action necessary to perfect the Issuer's ownership
interest in the Transferred Assets has been duly taken.
(iv) Except for a change made pursuant to Section 7.3(c), SPV's
principal place of business and chief executive office shall be at: 900 Old
Country Road, Garden City, New York 11530 and the place where its records
concerning the Transferred Assets are kept is at: c/o Wilmington Trust Company,
as Custodian, 1100 North Market Street, Wilmington, DE 19890. SPV does not
transact, and has not transacted, business under any other name.
(v) All authorizations in this Agreement for the Issuer to endorse
checks, instruments and securities and to execute financing statements,
continuation statements, security agreements, and other instruments with respect
to the Transferred Assets are powers coupled with an interest and are
irrevocable.
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(l) Binding Effect of Certain Agreements.
Each of the Origination Trust Documents is in full force and effect
and there are no outstanding events of default or termination events thereunder
nor have events occurred which, with the giving of notice, the passage of time
or both, would constitute such an event of default or termination event.
(m) Non-Existence of Other Agreements.
(i) SPV is not a party to any contract or agreement of any kind or
nature and SPV is not subject to any obligations or liabilities of any kind or
nature in favor of any third party, including, without limitation, Contingent
Obligations.
(ii) SPV has not engaged in any activities since its formation
(other than those incidental to its formation and other appropriate actions
including the execution of the Transaction Documents to which it is a party and
the performance of the activities referred to in or contemplated by such
agreements).
(n) Compliance with Contractual Obligations and Laws.
SPV is not (i) in violation of its limited liability company
agreement, (ii) in violation of any Requirement of Law to which it or its
property or assets may be subject or (iii) in violation of any Contractual
Obligation with respect to SPV.
(o) Other Representations.
All representations and warranties of SPV made in each Transaction
Document to which it is a party are true and correct and are repeated herein as
though fully set forth herein.
This Agreement shall become effective upon the satisfaction of the following
conditions:
(a) Agreement. The Issuer and the SPV shall have duly executed and
delivered this Agreement.
(b) Indenture Supplement. The Effective Date under the Series 1999-1
Indenture Supplement, dated as of the date hereof, to the Base Indenture
shall have occurred.
(c) Certificate of Formation. The Issuer shall have received a true
and complete copy of the certificate of formation of SPV, certified as a
true and correct copy
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thereof by the Secretary of State of the State of Delaware, and a true and
complete copy of the limited liability company agreement of SPV, certified
as a true and correct copy thereof by the Secretary or an Assistant
Secretary (or equivalent thereof) of SPV.
(d) Resolutions. The Issuer shall have received copies of duly
adopted resolutions of the Managers of SPV as in effect on the Effective
Date and in form and substance reasonably satisfactory to the Issuer
authorizing the execution, delivery and performance of this Agreement, the
documents to be delivered by SPV hereunder and the transactions
contemplated hereby and thereby, certified by the Secretary or an
Assistant Secretary (or equivalent thereof) of SPV.
(e) Incumbency Certificate. The Issuer shall have received a
certificate as to the incumbency and signature of the officers of SPV
authorized to sign this Agreement, on behalf of SPV, together with
evidence of the incumbency of such Secretary or Assistant Secretary,
certified by the Secretary or Assistant Secretary of SPV.
(f) Assignment. SPV shall have executed and delivered to the Issuer
the Initial Assignment.
(g) Representations and Warranties. The Issuer shall have received a
certificate of an Authorized Officer of SPV to the effect that all
representations and warranties of SPV contained in Sections 3.1 and 3.2,
or in any certificate delivered in connection with this Agreement, are
true and correct and with the same force and effect as though such
representations and warranties had been made as of such date (other than
those representations and warranties made as of an earlier date specified
therein, in which case such representations and warranties are true and
correct as of such earlier date).
The obligation of the Issuer to make a Transferred Asset Payment on any
Additional Closing Date and of SPV to transfer the related Additional
Transferred Assets to the Issuer hereunder on any Additional Closing Date is
subject to the satisfaction of the following conditions:
(a) all representations and warranties of SPV contained in this
Agreement and in the other Transaction Documents shall be true and correct
in all material respects with the same force and effect as though such
representations and warranties had been made on and as of such day (other
than those representations and warranties made as of an earlier date
specified therein, in which case such representations and warranties are
true and correct as of such earlier date);
(b) SPV shall have executed and delivered to the Issuer an
Additional Assignment conveying such Additional Transferred Assets to the
Issuer; and
(c) no Transfer Termination Event shall have occurred and be
continuing.
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If any one of the following events shall occur and be continuing:
(i) an Insolvency Event shall occur with respect to SPV, the
Origination Trust, ARAC or VMS;
(ii) failure on the part of SPV to observe or perform in any
material respect any covenants or agreements of SPV set forth herein,
which failure continues unremedied for a period of 30 days after there
shall have been given, by registered or certified mail, to SPV by the
Issuer or the Indenture Trustee, written notice specifying such default
and requiring it to be remedied;
(iii) any representation or warranty made by SPV in this Agreement
shall prove to have been incorrect in any material respect when made,
which continues to be incorrect in any material respect for a period of 30
days after there shall have been given, by registered or certified mail,
to the SPV by the Indenture Trustee or the Issuer, written notice thereof;
(iv) the Issuer shall for any reason cease to have a valid and
perfected first priority ownership interest in the Transferred Assets or
any of VMS, SPV or any Affiliate of either thereof shall so assert;
(v) there shall have been filed against ARAC, VMS, the Origination
Trust or SPV (i) a notice of federal tax Lien from the
Internal Revenue Service, (ii) a notice of Lien from the PBGC
under Section 412(n) of the Internal Revenue Code or Section
302(f) of ERISA for a failure to make a required installment
or other payment to a plan to which either of such sections
applies or (iii) a notice of any other Lien the existence of
which could reasonably be expected to have a material adverse
effect on the business, operations or financial condition of
such Person, and, in each case, 40 days shall have elapsed
without such notice having been effectively withdrawn or such
Lien having been released or discharged;
(vi) one or more judgments or decrees shall be entered against SPV
involving in the aggregate a liability (not paid or fully covered by
insurance) of $100,000 or more and such judgments or decrees shall not
have been vacated, discharged, stayed or bonded pending appeal within 30
days from the entry thereof;
(vii) the Transfer Agreement or any other Transaction Document shall
cease, for any reason, to be in full force and effect (other than in
accordance with its terms);
(viii) an Amortization Event with respect to each Series of Investor
Notes Outstanding shall occur and be continuing; or
(ix) a Receivable Purchase Termination Event shall occur and be
continuing;
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then, in the case of any event described in clause (i) above, a "Transfer
Termination Event" will be deemed to have occurred without notice or other
action by any Person and, in the case of any of the other events described
above, the Issuer may declare, by delivering written notice thereof to SPV, that
a "Transfer Termination Event" has occurred. If a Transfer Termination Event has
occurred, no Additional Transferred Assets shall be transferred to the Issuer
hereunder.
SPV will keep in full effect its existence, rights and franchises as
a limited liability company under the laws of the State of Delaware and will
obtain and preserve its qualification to do business in each jurisdiction in
which the failure to so qualify would have a material adverse effect on the
business and operations of SPV or which qualification shall be necessary to
protect the validity and enforceability of this Agreement and any instrument or
agreement included in the Transferred Assets.
SPV will comply in all respects with all Requirements of Law and all
applicable laws, ordinances, rules, regulations, and requirements of
Governmental Authorities (including, without limitation, ERISA and the rules and
regulations thereunder) except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings and where such noncompliance
would not materially and adversely affect the condition, financial or otherwise,
operations, performance, properties or prospects of SPV or its ability to carry
out the transactions contemplated in this Agreement and each other Transaction
Document; provided, however, such noncompliance will not result in a Lien (other
than a Permitted Lien) on any asset of SPV.
SPV will keep proper books of record and account in which full, true
and correct entries shall be made of all dealings and transactions in relation
to the Transferred Assets and its business activities in accordance with GAAP;
and will permit the Issuer and the Indenture Trustee to visit and inspect any of
its properties, to examine and make abstracts from any of its books and records
and to discuss its affairs, finances and accounts with its officers, directors,
employees and independent public accountants, all at such reasonable times upon
reasonable notice and as often as may reasonably be requested.
(a) SPV will not take any action and will use its best efforts not
to permit any action to be taken by others that would release any Person from
any of such Person's covenants or obligations under any instrument or agreement
included in the Transferred Assets or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
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validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Agreement, any other Transaction Document or such
other instrument or agreement.
(b) Promptly upon becoming aware of any default under any
Transaction Document, SPV shall give the Issuer, the Indenture Trustee and the
Rating Agencies notice thereof.
(c) SPV will punctually perform and observe all of its obligations
and agreements contained in this Agreement, the other Transaction Documents and
in the instruments and agreements included in the Transferred Assets, including
but not limited to preparing (or causing to be prepared) and filing (or causing
to be filed) all UCC financing statements and continuation statements required
to be filed by the terms of this Agreement in accordance with and within the
time periods provided for herein.
(d) Without derogating from the absolute nature of the assignment
granted to the Issuer under this Agreement or the rights of the Issuer
hereunder, SPV agrees that, unless such action is specifically permitted
hereunder or under the other Transaction Documents, it will not, without the
prior written consent of the Issuer (or its assignees or pledgees), amend,
modify, waive, supplement, terminate or surrender, or agree to any amendment,
modification, supplement, termination, waiver or surrender of, the terms of any
of the Transferred Assets, including any of the Transaction Documents included
in the Transferred Assets, or waive timely performance or observance by the
Origination Trust, VMS or the Servicer under the Origination Trust Documents.
Promptly upon becoming aware of any Potential Termination Event, SPV
shall give the Issuer, the Indenture Trustee and the Rating Agencies notice
thereof, together with an Officer's Certificate, setting forth the details
thereof and any action with respect thereto taken or contemplated to be taken by
SPV.
Promptly upon becoming aware thereof, SPV shall give the Issuer, the
Indenture Trustee and the Rating Agencies written notice of the commencement or
existence of any proceeding by or before any Governmental Authority against or
affecting the Issuer which is reasonably likely to have a material adverse
effect on the business, condition (financial or otherwise), results of
operations, properties or performance of SPV or the ability of SPV to perform
its obligations under this Agreement or under any other Transaction Document to
which it is a party.
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SPV will promptly furnish to the Issuer, the Indenture Trustee and
the Rating Agencies such other information as, and in such form as, the Issuer,
the Indenture Trustee or the Rating Agencies may reasonably request in
connection with the transactions contemplated hereby.
On or before March 31 of each calendar year, commencing with March
31, 2000, SPV shall furnish to the Issuer and the Indenture Trustee an Opinion
of Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-recording and refiling of
this Agreement, the Assignments and any other requisite documents and with
respect to the execution and filing of any financing statements and continuation
statements as are necessary to maintain the Issuer's perfected ownership
interest in the Transferred Assets assigned by this Agreement and the
Assignments and reciting the details of such action or stating that in the
opinion of such counsel no such action is necessary to maintain the perfection
of such ownership interest. Such Opinion of Counsel shall also describe the
recording, filing, re-recording and refiling of this Agreement and the
Assignment and any other requisite documents and the execution and filing of any
financing statements and continuation statements that will, in the opinion of
such counsel, be required to maintain the perfection of the Issuer's ownership
interest in the Transferred Assets until March 31 in the following calendar
year.
Except for the conveyances hereby, SPV will not sell, pledge, assign
or transfer Transferred Assets to any other Person, or grant, create, incur,
assume or suffer to exist any Lien thereon (except Permitted Liens) and SPV
shall defend the right, title and interest of the Issuer in, to and under all
Transferred Assets against all claims of third parties (other than Permitted
Liens) claiming through or under SPV.
SPV will not create, assume, incur, suffer to exist or otherwise
become or remain liable in respect of any Indebtedness.
SPV will not merge or consolidate with or into any other Person.
SPV will not acquire, by long-term or operating lease or otherwise,
any assets except in accordance with the terms of the Transaction Documents.
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SPV will not declare or pay any distributions on any of its limited
liability company interests or make any purchase, redemption or other
acquisition of, any of its limited liability company interests other than in
accordance with the Delaware Limited Liability Company Act, as amended.
SPV will not amend its limited liability company agreement unless,
prior to such amendment, each Rating Agency confirms that after such amendment
the Rating Agency Condition with respect to each Series of Investor Notes
Outstanding and each series of Preferred Membership Interests will be met.
SPV will not make, incur, or suffer to exist any loan, advance,
extension of credit or other investment in any Person other than in accordance
with the Transaction Documents.
SPV will not enter into or be a party to any agreement or instrument
other than any Transaction Document or documents and agreements incidental
thereto.
SPV will not engage in any business or enterprise or enter into any
transaction other than those contemplated by the Transaction Documents and other
activities related to or incidental to any of the foregoing.
SPV will do all things necessary to continue to be readily
distinguishable from VMS, ARAC and the Affiliates of each of the foregoing and
maintain its existence separate and apart from that of VMS, ARAC and the
Affiliates of each of the foregoing, including, without limitation:
(1) practicing and adhering to organizational formalities, such as
maintaining appropriate books and records;
(2) observing all organizational formalities in connection with all
dealings between itself and VMS, ARAC and the Affiliates of each of the
foregoing or any other unaffiliated entity;
(3) observing all procedures required by its certificate of
formation and its limited liability company agreement and the laws of the
State of Delaware;
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(4) acting solely in its name and through its duly authorized
officers or agents in the conduct of its businesses;
(5) managing its business and affairs by or under the direction of
its managers;
(6) ensuring that its Authorized Officers duly authorize all of its
actions;
(7) ensuring the receipt of proper authorization, when necessary, in
accordance with the terms of its limited liability company agreement for
its actions;
(8) owning or leasing (including through shared arrangements with
Affiliates) all office furniture and equipment necessary to operate its
business;
(9) maintaining at least one manager who is an Independent Manager;
(10) not (A) having or incurring any indebtedness to VMS, ARAC or
any Affiliates of VMS or ARAC; (B) guaranteeing or otherwise becoming
liable for any obligations of VMS, ARAC or any Affiliates of VMS or ARAC;
(C) having obligations guaranteed by VMS, ARAC or any Affiliates of VMS or
ARAC; (D) holding itself out as responsible for debts of VMS, ARAC or any
Affiliates of VMS or ARAC or for decisions or actions with respect to the
affairs of VMS, ARAC or any Affiliates of VMS or ARAC; (E) operating or
purporting to operate as an integrated, single economic unit with respect
to VMS or ARAC or any Affiliates of VMS or ARAC or any other unaffiliated
entity; (F) seeking to obtain credit or incur any obligation to any third
party based upon the assets of VMS or ARAC or any Affiliates of VMS or
ARAC or any other unaffiliated entity; (G) induce any such third party to
reasonably rely on the creditworthiness of VMS or ARAC or any Affiliates
of VMS or ARAC or any other unaffiliated entity; and (H) being directly or
indirectly named as a direct or contingent beneficiary or loss payee on
any insurance policy of VMS, ARAC or any Affiliates of VMS or ARAC other
than as required by the Transaction Documents with respect to insurance on
the Leased Vehicles;
(11) other than as provided in the Transaction Documents,
maintaining its deposit and other bank accounts and all of its assets
separate from those of any other Person;
(12) maintaining its financial records separate and apart from those
of any other Person;
(13) not suggesting in any way, within its financial statements,
that its assets are available to pay the claims of creditors of VMS, ARAC,
any Affiliates of VMS or ARAC or any other affiliated or unaffiliated
entity;
(14) compensating all its employees, officers, consultants and
agents for services provided to it by such Persons out of its own funds or
reimbursing any of its Affiliates in respect of amounts paid by such
Affiliates for such services;
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(15) maintaining office space separate and apart from that of VMS or
ARAC or any Affiliates of VMS or ARAC (even if such office space is
subleased from or is on or near premises occupied by VMS, ARAC or any
Affiliates of VMS or ARAC) and a telephone number separate and apart from
that of VMS or ARAC or any Affiliates of VMS or ARAC;
(16) conducting all oral and written communications, including,
without limitation, letters, invoices, purchase orders, contracts,
statements, and applications solely in its own name;
(17) having separate stationery from VMS, ARAC, any Affiliates of
VMS or ARAC or any other unaffiliated entity;
(18) accounting for and managing all of its liabilities separately
from those of VMS, ARAC or any Affiliates of VMS or ARAC;
(19) allocating, on an arm's length basis, all shared corporate
operating services, leases and expenses, including, without limitation,
those associated with the services of shared consultants and agents and
shared computer and other office equipment and software; and otherwise
maintaining an arm's-length relationship with each of VMS, ARAC, any
Affiliates of VMS or ARAC or any other unaffiliated entity;
(20) refraining from filing or otherwise initiating or supporting
the filing of a motion in any bankruptcy or other insolvency proceeding
involving VMS, ARAC or any Affiliate of VMS or ARAC to substantively
consolidate VMS, ARAC or any Affiliate of VMS or ARAC with SPV;
(21) remaining solvent; and
(22) conducting all of its business (whether written or oral) solely
in its own name so as not to mislead others as to the identity of each of
the Issuer, SPV, VMS, ARAC and any Affiliates of VMS or ARAC.
SPV will not establish or maintain or contribute to any Pension Plan
that is covered by Title IV of ERISA.
Section 6.20 Minimum Net Worth.
SPV will maintain a minimum net worth equal to at least 4% of the
Aggregate Lease Balance.
Section 6.21 Issuance of Additional Securities.
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<PAGE>
SPV will not issue its membership interests to any Person other than
to VMS.
Section 6.22 Origination Trust Beneficial Interests.
(a) Until the Commitment Amount (as defined in the Series 1999-1
Indenture Supplement) is reduced to $700,000,000 or less, SPV will not direct
VMS, as the UTI Trustee, to issue any additional special units of beneficial
interest in the Origination Trust (other than the UTI and the SUBIs) without the
consent of the Issuer.
(b) Until the Commitment Amount is reduced to $700,000,000 or less,
SPV will not sell, pledge, assign or transfer the UTI to any other Person, or
grant, create, incur, assume or suffer to exist any Lien thereon (except
Permitted Liens) without the consent of the Issuer.
On or prior to the Initial Closing Date, SPV shall record and file, at its own
expense, a UCC-1 financing statement in each jurisdiction in which it is
required by applicable law, executed by SPV as debtor, naming the Issuer as
secured party, naming as collateral the Transferred Assets to be assigned and
conveyed hereunder from time to time, meeting the requirements of the laws of
each such jurisdiction and in such manner as is necessary to perfect under the
UCC the transfer, assignment and conveyance to Issuer of the Transferred Assets
(to the extent such transfer, assignment and conveyance may be perfected under
the UCC). SPV shall deliver a file-stamped copy, or other evidence satisfactory
to the Issuer of such filing, to the Issuer on or prior to the Initial Closing
Date.
SPV shall, at its own expense, on or prior to each Transferred Asset Closing
Date, indicate in its computer files created in connection with the Transferred
Assets for such Transferred Asset Date that such Transferred Assets have been
transferred, assigned and conveyed to the Issuer pursuant to this Agreement.
(a) SPV shall execute and file such financing statements, and cause
to be executed and filed such continuation and other statements, all in such
manner and in such places as may be required by law fully to perfect and
preserve the transfer, assignment and conveyance hereunder to the Issuer of the
Transferred Assets and in the proceeds thereof SPV shall deliver (or cause to be
delivered) to the Issuer file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) SPV shall not change its name, identity or corporate structure
in any manner that would, could or might make any financing statement or
continuation statement filed by SPV in accordance with Section 7.1 or 7.3(a)
seriously misleading within the meaning of
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<PAGE>
Section 9-402(7) of the UCC, unless it shall have given the Issuer and the
Indenture Trustee at least 60 days prior written notice thereof and shall file
such financing statements or amendments as may be necessary to continue the
perfection of the Issuer's interest in all Transferred Assets sold, transferred,
conveyed and assigned hereunder.
(c) SPV shall give the Issuer and the Indenture Trustee at least 60
days prior written notice of any relocation of its principal executive office
if, as a result of such relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement. SPV shall at all times
maintain its principal executive office within the United States of America.
SPV hereby covenants and agrees with the Issuer that in the event of (i) a
breach of any of SPV's representations and warranties contained in Section 3.1
with respect to any Transferred Asset or (ii) a breach by SPV of Section 6.9
hereof with respect to any Transferred Asset, in each case which breach has a
material adverse effect on the Issuer's interest in such Transferred Asset, SPV
will repurchase such Transferred Asset from the Issuer as of the last day of the
Monthly Period during which SPV discovered or received notice of such breach, by
delivery to the Issuer for deposit in the Collection Account an amount equal to
(a) in the case of a repurchase of a Master Lease Agreement, the aggregate Lease
Balance of all Leases under such Master Lease Agreement as of such day plus, in
the case of a Closed-End Lease, the aggregate Net Book Value of the Leased
Vehicles subject to such Master Lease Agreement as of such day, (b) in the case
of a repurchase of a Consumer Lease, the Lease Balance of such Consumer Lease as
of such day plus, in the case of a Closed-End Lease, the Net Book Value of the
Leased Vehicle subject to such Consumer Lease as of such day, (c) in the case of
a Lease, the Lease Balance of such Lease as of such day plus, in the case of a
Closed-End Lease, the Net Book Value of the Leased Vehicle subject to such Lease
as of such day or (d) in the case of a Fleet Receivable, the Receivable Amount
thereof as of the first day of the next succeeding Monthly Period (the
"Repurchase Payment") for such Transferred Asset. It is understood and agreed
that the obligation of SPV to repurchase any Transferred Asset as to which a
breach has occurred and is continuing shall, if such obligation is fulfilled,
constitute the sole remedy against SPV for such breach available to the Issuer.
Simultaneously with any Repurchase Payment with respect to a Transferred Asset,
such Transferred Asset shall immediately and automatically be sold, assigned,
transferred and conveyed by the Issuer to SPV without any further action by the
Issuer or any other Person and SPV shall cause the UTI Trustee to reallocate
such Transferred Asset from the Lease SUBI Portfolio.
(a) This Agreement may be amended from time to time by a written amendment duly
executed and delivered by SPV and the Issuer, but without the consent of any
other Person, to correct any inconsistency or cure any ambiguity or errors in
this Agreement only in a manner that would have no adverse effect on any
Investor Noteholder or any Preferred Member.
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(b) This Agreement may be amended from time to time by a written amendment
duly executed and delivered by SPV and the Issuer, with the consent of the
Indenture Trustee so long as any Series of Investor Notes is outstanding.
(c) Prior to the execution of any such amendment or consent, SPV shall
furnish at least five (5) Business Days prior written notification of the
substance of such amendment or consent to each Rating Agency with respect to
each Series of Investor Notes and each series of Preferred Membership Interests.
No later than ten (10) Business Days after the execution of such amendment or
consent, SPV shall furnish a copy of such amendment or consent to each Rating
Agency with respect to each Series of Investor Notes and each Series of
Preferred Membership Interests and the Indenture Trustee.
The representations, warranties and covenants of SPV and of the Issuer set forth
in this Agreement shall remain in full force and effect and shall survive each
Transferred Asset Closing Date under Article II hereof and any related transfer
under the other Transaction Documents.
Except where telephonic instructions or notices are authorized herein to be
given, all notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered
by hand or by overnight courier, or, in the case of telecopy notice, when
received, addressed as follows or to such address or other address as may be
hereafter notified by the respective parties hereto:
SPV: Raven Funding LLC
c/o Global Securitization Services, LLC
25 West 43rd Street, Suite 704
New York, NY 10036
Attention: President
Telecopier No.: (212) 302-8767
The Issuer: Greyhound Funding, LLC
c/o Global Securitization Services, LLC
25 West 43rd Street, Suite 704
New York, NY 10036
Attention: President
Telecopier No.: (212) 302-8767
in each case,
with a copy to: PHH Vehicle Management Services, LLC
900 Old Country Road
Garden City, New York 11530
Telecopier: (516) 222-3751
Attention: General Counsel
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<PAGE>
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
No failure or delay on the part of any party in exercising any power, right or
remedy under this Agreement or any Assignment shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right or remedy
preclude any other or further exercise thereof or the exercise of any other
power, right or remedy.
The various headings in this Agreement are for purposes of reference only and
shall not affect the meaning or interpretation of any provision of this
Agreement.
This Agreement may be executed in two or more counterparts, and by different
parties on separate counterparts, each of which shall be an original, but all of
which together shall constitute one and the same instrument.
If any one or more of the covenants, agreements, provisions or terms of this
Agreement shall for any reason whatsoever be held invalid, then such covenants,
agreements, provisions or terms shall be deemed enforceable to the fullest
extent permitted, and if not so permitted, shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
SPV acknowledges that the Issuer will, pursuant to the Indenture, assign its
rights hereunder and with respect to the Transferred Assets to the Indenture
Trustee and SPV hereby consents to such assignment. Except as provided in the
foregoing sentence or as expressly permitted herein, no party may assign its
rights hereunder without the other party's prior written consent and the prior
written consent of the Indenture Trustee. The party granting any such consent
shall give notice thereof to the Rating Agencies.
SPV and the Issuer agree to do and perform, from time to time, any and all acts
and to execute any and all further instruments required or reasonably requested
by the other more fully to effect the purposes of this Agreement, including the
execution of any financing statements or continuation statements relating to any
Transferred Assets purchased hereunder for filing under the provisions of the
UCC of any applicable jurisdiction.
Except as specifically set forth herein, this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as otherwise expressly provided in this
Agreement, no other Person shall have any right or obligation hereunder.
Except as specifically stated otherwise herein, this Agreement, the Initial
Assignment, the Additional Assignments and the other Transaction Documents set
forth the entire understanding
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of the parties relating to the subject matter hereof, and all prior
understandings, written or oral, are superseded by this Agreement.
Each of the parties to this Agreement acknowledges that the Issuer has appointed
the Administrator to act as its agent to the extent set forth in the Transaction
Documents. Unless otherwise instructed by the Issuer, copies of all notices,
requests, demands and other documents to be delivered to the Issuer pursuant to
the terms hereof shall be delivered to the Administrator. Unless otherwise
instructed by the Issuer, all notices, requests, demands and other documents to
be executed or delivered, and any action to be taken, by the Issuer pursuant to
the terms hereof may be executed, delivered and/or taken by the Administrator
pursuant to the Administration Agreement.
(a) Each of the parties hereto, by entering into this Agreement, covenants and
agrees that it will not at any time institute against, or join any other Person
in instituting against, SPV any bankruptcy, reorganization, arrangement,
insolvency, or liquidation or other similar proceedings under any U.S. Federal
or state bankruptcy or similar law. Each of the parties hereto, by entering into
this Agreement, covenants and agrees that it will not at any time institute
against, or join any other Person in instituting against, the Issuer any
bankruptcy, reorganization, arrangement, insolvency, or liquidation or other
similar proceedings under any U.S. Federal or state bankruptcy or similar law.
(b) Each of the parties hereto, by entering into this Agreement, hereby
covenants and agrees that, prior to the date which is one year and one day after
payment in full of all obligations under each Securitization, it will not
institute against, or join any other Person in instituting against, the
Origination Trust, SPV, any other Special Purpose Entity, or any general partner
or single member of any Special Purpose Entity that is a partnership or limited
liability company, respectively, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding or other proceedings under any federal or
state bankruptcy or similar law.
The Issuer represents, warrants and covenants that (a) each of the Lease
SUBI and the Fleet Receivable SUBI is a separate series of the Origination Trust
as provided in Section 3806(b)(2) of Chapter 38 of Title 12 of the Delaware
Code, 12 Del.C. ss. 3801 et seq., (b)(i) the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to the
Lease SUBI, the Lease SUBI Portfolio or the Fleet Receivable SUBI shall be
enforceable against the Lease SUBI Portfolio or the Fleet Receivable SUBI only,
as applicable, and not against any other SUBI Portfolio (used in this Section as
defined in the Origination Trust Agreement) or the UTI Portfolio and (ii) the
debts, liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to any other SUBI (used in this Section as
defined in the Origination Trust Agreement), any other SUBI Portfolio, the UTI
or the UTI Portfolio shall be enforceable against such other SUBI Portfolio or
the UTI Portfolio only, as applicable, and not against any other SUBI Assets,
(c) except to the extent required by law, UTI Assets or SUBI Assets with respect
to any SUBI (other than the Lease SUBI and the Fleet Receivable SUBI) shall not
be subject to the claims, debts, liabilities, expenses or obligations
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<PAGE>
arising from or with respect to the Lease SUBI or Fleet Receivable SUBI,
respectively, in respect of such claim, (d)(i) no creditor or holder of a claim
relating to the Lease SUBI, the Fleet Receivable SUBI or the Lease Receivable
SUBI Portfolio shall be entitled to maintain any action against or recover any
assets allocated to the UTI or the UTI Portfolio or any other SUBI or the assets
allocated thereto, and (ii) no creditor or holder of a claim relating to the
UTI, the UTI Portfolio or any SUBI other than the Lease SUBI or the Fleet
Receivable SUBI or any SUBI Assets other than the Lease SUBI Portfolio or the
Fleet Receivables shall be entitled to maintain any action against or recover
any assets allocated to the Lease SUBI or the Fleet Receivable SUBI, and (e) any
purchaser, assignee or pledgee of an interest in the Lease SUBI, the Lease SUBI
Certificate, the Fleet Receivable SUBI, the Lease SUBI Certificate, the Fleet
Receivable SUBI Certificate, any other SUBI, any other SUBI Certificate (used in
this Section as defined in the Origination Trust Agreement), the UTI or the UTI
Certificate must, prior to or contemporaneously with the grant of any such
assignment, pledge or security interest, (i) give to the Origination Trust a
non-petition covenant substantially similar to that set forth in Section 6.9 of
the Origination Trust Agreement, and (ii) execute an agreement for the benefit
of each holder, assignee or pledgee from time to time of the UTI or UTI
Certificate and any other SUBI or SUBI Certificate to release all claims to the
assets of the Origination Trust allocated to the UTI and each other SUBI
Portfolio and in the event that such release is not given effect, to fully
subordinate all claims it may be deemed to have against the assets of the
Origination Trust allocated to the UTI Portfolio and each other SUBI Portfolio
IN WITNESS WHEREOF, the parties hereby have executed this Agreement as of
the date and year first above written.
GREYHOUND FUNDING, LLC
By:
Name:
Title:
RAVEN FUNDING LLC
By:
Name:
Title:
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Exhibit 4.49
GREYHOUND FUNDING LLC,
as Issuer
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
------------------------------
BASE INDENTURE
Dated as of June 30, 1999
------------------------------
Asset Backed Notes
(Each Issuable in Series)
<PAGE>
TABLE OF CONTENTS
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Section Page
<S> <C>
</TABLE>
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BASE INDENTURE, dated as of June 30, 1999, between GREYHOUND FUNDING
LLC, a special purpose limited liability company established under the laws of
Delaware, as issuer (the "Issuer"), and THE CHASE MANHATTAN BANK, a New York
banking corporation, as trustee (in such capacity, the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, the Issuer has duly authorized the execution and delivery
of this Indenture to provide for the issuance from time to time of one or more
series of Notes from time to time, issuable as provided in this Indenture;
WHEREAS, all things necessary to make this Indenture a legal, valid
and binding agreement of the Issuer, in accordance with its terms, have been
done, and the Issuer proposes to do all the things necessary to make the
Investor Notes, when executed by the Issuer and authenticated and delivered by
the Indenture Trustee hereunder and duly issued by the Issuer, the legal, valid
and binding obligations of the Issuer as hereinafter provided;
NOW, THEREFORE, for and in consideration of the premises and the
receipt of the Investor Notes by the Investor Noteholders, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Investor
Noteholders as follows:
Certain capitalized terms used herein (including the preamble and
the recitals hereto) shall have the meanings assigned to such terms in the
Definitions List attached hereto as Schedule 1 (the "Definitions List"), as such
Definitions List may be amended or modified from time to time in accordance with
the provisions hereof.
Unless otherwise specified, references in this Indenture and in each
other Transaction Document to any Article or Section are references to such
Article or Section of this Indenture or such other Transaction Document, as the
case may be and, unless otherwise specified, references in any Article, Section
or definition to any clause are references to such clause of such Article,
Section or definition.
Where the character or amount of any asset or liability or item of
income or expense is required to be determined, or any accounting computation is
required to be made, for the purpose of this Indenture, such determination or
calculation shall be made, to the extent applicable and except as otherwise
specified in this Indenture, in accordance with GAAP. When
<PAGE>
used herein, the term "financial statement" shall include the notes and
schedules thereto. All accounting determinations and computations hereunder or
under any other Transaction Documents shall be made without duplication.
In this Indenture, unless the context otherwise requires:
(i) the singular includes the plural and vice versa;
(ii) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Indenture, and reference to any Person in a particular
capacity only refers to such Person in such capacity;
(iii) reference to any gender includes the other gender;
(iv) reference to any Requirement of Law means such
Requirement of Law as amended, modified, codified or reenacted, in whole
or in part, and in effect from time to time;
(v) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding
such term; and
(vi) with respect to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding".
Each Series of Investor Notes and any Class thereof may be issued in
bearer form (the "Bearer Notes") with attached interest coupons and a special
coupon (collectively, the "Coupons") or in fully registered form (the
"Registered Notes"), and, in each case, substantially in the form specified in
the applicable Indenture Supplement, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted
hereby or by the related Indenture Supplement and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined to be appropriate by the Authorized
Officers executing such Investor Notes, as evidenced by their execution of the
Investor Notes. All Investor Notes of any Series shall, except as specified in
the related Indenture Supplement, be equally and ratably entitled as provided
herein to the benefits hereof without preference, priority or distinction on
account of the actual time or times of authentication and delivery, all in
accordance with the terms and provisions of this Indenture and the applicable
Indenture Supplement. The aggregate principal amount of Investor Notes which
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may be authenticated and delivered under this Indenture is unlimited. The
Investor Notes shall be issued in the denominations set forth in the related
Indenture Supplement.
(a) The Investor Notes may be issued in one or more Series. Each
Series of Investor Notes shall be created by an Indenture Supplement.
(b) Investor Notes of a new Series may from time to time be executed
by the Issuer and delivered to the Indenture Trustee for authentication and
thereupon the same shall be authenticated and delivered by the Indenture Trustee
upon the receipt of an Issuer Request at least three (3) Business Days (or such
shorter time as is acceptable to the Indenture Trustee) in advance of the
related Series Closing Date and upon delivery by the Issuer to the Indenture
Trustee, and receipt by the Indenture Trustee, of the following:
(i) an Issuer Order authorizing and directing the authentication and
delivery of the Investor Notes of such new Series by the Indenture Trustee
and specifying the designation of such new Series, the Initial Invested
Amount (or the method for calculating such Initial Invested Amount) and
the Note Rate (or the method for allocating interest payments or other
cash flows to such Series), if any, with respect to such Series;
(ii) an Indenture Supplement satisfying the criteria set forth in
Section 2.2(c) executed by the Issuer and specifying the Principal Terms
of such Series;
(iii) a Tax Opinion;
(iv) written confirmation from each Rating Agency that the Rating
Agency Condition shall have been satisfied with respect to such issuance;
(v) an Officer's Certificate of the Issuer, that on the Series
Closing Date after giving effect to the issuance of such new Series, (i)
neither an Amortization Event nor a Potential Amortization Event with
respect to any Series of Investor Notes nor an Asset Deficiency is
continuing or will occur, (ii) the issuance of the new Series of Investor
Notes will not result in any breach of any of the terms, conditions or
provisions of or constitute a default under any indenture, mortgage, deed
of trust or other agreement or instrument to which the Issuer is a party
or by which it or its property is bound or any order of any court or
administrative agency entered in any suit, action or other judicial or
administrative proceeding to which the Issuer is a party or by which it or
its property may be bound or to which it or its property may be subject
and (iii) all conditions precedent provided in this Base Indenture and the
related Indenture Supplement with respect to the authentication and
delivery of the new Series of Investor Notes have been complied with; and
(vi) such other documents, instruments, certifications, agreements
or other items as the Indenture Trustee may reasonably require.
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<PAGE>
(c) In conjunction with the issuance of a new Series of Investor
Notes, the parties hereto shall execute an Indenture Supplement, which shall
specify the relevant terms with respect to any newly issued Series of Investor
Notes, which may include without limitation:
(i) its name or designation;
(ii) an Initial Invested Amount or the method of calculating the
Initial Invested Amount;
(iii) the Note Rate (or formula for the determination thereof);
(iv) the Series Closing Date;
(v) each Rating Agency rating such Series;
(vi) the name of the Clearing Agency or Foreign Clearing Agency, if
any;
(vii) the interest payment date or dates and the date or dates from
which interest shall accrue;
(viii) the method of allocating Collections with respect to such
Series;
(ix) the method by which the principal amount of Investor Notes of
such Series shall amortize or accrete;
(x) the names of any Series Accounts to be used by such Series and
the terms governing the operation of any such accounts and use of moneys
therein;
(xi) the Series Servicing Fee and the Series Servicing Fee
Percentage;
(xii) the terms on which the Investor Notes of such Series may be
redeemed, repurchased or remarketed to other investors;
(xiii) any deposit into any Series Account;
(xiv) the number of Classes of such Series, and if more than one
Class, the rights and priorities of each such Class;
(xv) the priority of any Series with respect to any other Series;
(xvi) the Lease Rate Caps required to be maintained with respect to
such Series; and
(xvii) any other relevant terms of such Series (including whether or
not such Series will be pledged as collateral for an issuance of any other
securities, including commercial paper) (all such terms, the "Principal
Terms" of such Series).
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<PAGE>
The terms of such Indenture Supplement may modify or amend the terms of this
Indenture solely as applied to such new Series. If on the date of the issuance
of such Series there is issued and outstanding one or more Series of Investor
Notes and no Series of Investor Notes is currently rated by a Rating Agency,
then as a condition to such issuance a nationally recognized investment banking
firm or commercial bank shall also deliver to the Indenture Trustee a
certificate of an officer thereof stating, in substance, that, to the best of
such officer's knowledge and belief, the issuance of such new Series of Investor
Notes will not have a material adverse effect on the timing or distribution of
payments to such other Series of Investor Notes then issued and outstanding.
(d) The Issuer may direct the Indenture Trustee to deposit all or a
portion of the net proceeds from the issuance of any new Series of Investor
Notes into a Series Account for another Series of Investor Notes and may specify
that the proceeds from the sale of such new Series of Investor Notes may be used
to reduce the Invested Amount of another Series of Investor Notes.
(a) The Investor Notes shall, upon issue pursuant to Section 2.2, be
executed on behalf of the Issuer by an Authorized Officer and delivered by the
Issuer to the Indenture Trustee for authentication and redelivery as provided
herein. If an Authorized Officer whose signature is on an Investor Note no
longer holds that office at the time the Investor Note is authenticated, the
Investor Note shall nevertheless be valid.
(b) At any time and from time to time after the execution and
delivery of this Indenture, the Issuer may deliver Investor Notes of any
particular Series executed by the Issuer to the Indenture Trustee for
authentication, together with one or more Issuer Orders for the authentication
and delivery of such Investor Notes, and the Indenture Trustee, in accordance
with such Issuer Order and this Indenture, shall authenticate and deliver such
Investor Notes. If specified in the related Indenture Supplement for any Series
of Investor Notes, the Indenture Trustee shall authenticate and deliver outside
the United States the Global Note that is issued upon original issuance thereof,
upon receipt of an Issuer Order, to the Depository against payment of the
purchase price therefor. If specified in the related Indenture Supplement for
any Series of Investor Notes, the Indenture Trustee shall authenticate
Book-Entry Notes that are issued upon original issuance thereof, upon receipt of
an Issuer Order, to a Clearing Agency, a Foreign Clearing Agency or its nominee
as provided in Section 2.10 against payment of the purchase price thereof.
(c) No Investor Note shall be entitled to any benefit under this
Indenture or be valid for any purpose unless there appears on such Investor Note
a certificate of authentication substantially in the form provided for herein,
duly executed by the Indenture Trustee by the manual signature of a Responsible
Officer (and the Luxembourg agent (the "Luxembourg Agent"), if such Investor
Notes are listed on the Luxembourg Stock Exchange). Such signatures on such
certificate shall be conclusive evidence, and the only evidence, that the
Investor Note has been duly authenticated under this Indenture. The Indenture
Trustee may appoint an
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<PAGE>
authenticating agent acceptable to the Issuer to authenticate Investor Notes.
Unless limited by the term of such appointment, an authenticating agent may
authenticate Investor Notes whenever the Indenture Trustee may do so. Each
reference in this Indenture to authentication by the Indenture Trustee includes
authentication by such agent. The Indenture Trustee's certificate of
authentication shall be in substantially the following form:
This is one of the Investor Notes of a series issued under the
within mentioned Indenture.
THE CHASE MANHATTAN BANK, as
Indenture Trustee
By:
Authorized Signatory
(d) Each Investor Note shall be dated and issued as of the date of
its authentication by the Indenture Trustee, except Bearer Notes which shall be
dated the applicable Series Closing Date as provided in the related Indenture
Supplement..
(e) Notwithstanding the foregoing, if any Investor Note shall have
been authenticated and delivered hereunder but never issued and sold by the
Issuer, and the Issuer shall deliver such Investor Note to the Indenture Trustee
for cancellation, together with a written statement (which need not comply with
Section 13.2 and need not be accompanied by an Opinion of Counsel) stating that
such Investor Note has never been issued and sold by the Issuer, for all
purposes of this Indenture such Investor Note shall be deemed never to have been
authenticated and delivered hereunder and shall not be entitled to the benefits
of this Indenture.
(a) The Issuer shall cause to be kept at the office or agency to be
maintained by a transfer agent and registrar (the "Transfer Agent and
Registrar"), a register (the "Note Register") in which, subject to such
reasonable regulations as it may prescribe, the Transfer Agent and Registrar
shall provide for the registration of the Investor Notes of each Series (unless
otherwise provided in the related Indenture Supplement) and of transfers and
exchanges of the Investor Notes as herein provided. Chase is hereby initially
appointed Transfer Agent and Registrar for the purposes of registering the
Investor Notes and transfers and exchanges of the Investor Notes as herein
provided. If any form of Investor Note is issued as a Global Note, the Indenture
Trustee may, or if and so long as any Series of Investor Notes is listed on the
Luxembourg Stock Exchange and such exchange shall so require, the Indenture
Trustee shall appoint a co-transfer agent and co-registrar in Luxembourg or
another European city. Any reference in this Indenture to the Transfer Agent and
Registrar shall include any co-transfer agent and co-registrar unless the
context otherwise requires. Chase shall be permitted to resign as Transfer Agent
and Registrar upon 30 days' written notice to the Indenture Trustee; provided,
however, that such resig-nation shall not be effective and Chase shall contin-ue
to perform its
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duties as Transfer Agent and Registrar until the Indenture Trustee has appointed
a succes-sor Transfer Agent and Registrar with the consent of the Issuer.
If a Person other than the Indenture Trustee is appointed by the
Issuer as the Transfer Agent and Registrar, the Issuer will give the Indenture
Trustee prompt written notice of the appointment of such Transfer Agent and
Registrar and of the location, and any change in the location, of the Transfer
Agent and Register, and the Indenture Trustee shall have the right to inspect
the Transfer Agent and Register at all reasonable times and to obtain copies
thereof.
An institution succeeding to the corporate agency business of the
Transfer Agent and Registrar shall continue to be the Transfer Agent and
Registrar without the execution or filing of any paper or any further act on the
part of the Indenture Trustee or such Transfer Agent and Registrar.
The Transfer Agent and Registrar shall maintain in The City of New
York (and, if so specified in the related Indenture Supplement for any Series of
Notes, any other city designated in such Indenture Supplement) an office or
offices or agency or agencies where Investor Notes may be surrendered for
registration of transfer or exchange. The Transfer Agent and Registrar initially
designates its corporate trust office located at 450 West 33rd Street, New York,
New York 10001-2697 as its office for such purposes. The Transfer Agent and
Registrar shall give prompt written notice to the Indenture Trustee, the Issuer
and to the Investor Noteholders of any change in the location of such office or
agency.
Upon surrender for registration of transfer of any Investor Note at
the office or agency of the Transfer Agent and Registrar, if the requirements of
Section 2.4(b) and Section 8-401(a) of the UCC are met, the Issuer shall execute
and after the Issuer has executed, the Indenture Trustee shall authenticate and
(if the Transfer Agent and Registrar is different than the Indenture Trustee,
then the Transfer Agent and Registrar shall) deliver to the Investor Noteholder,
in the name of the designated transferee or transferees, one or more new
Investor Notes, in any authorized denominations, of the same Class and a like
aggregate principal amount; provided, however that the provisions of this
paragraph shall not apply to Bearer Notes.
At the option of any Holder of Registered Notes, Registered Notes
may be exchanged for other Registered Notes of the same Series in authorized
denominations of like aggregate principal amount, upon surrender of the
Registered Notes to be exchanged at any office or agency of the Transfer Agent
and Registrar maintained for such purpose. At the option of any holder of Bearer
Notes, subject to applicable laws and regulations (including without limitation,
the Bearer Rules), Bearer Notes may be exchanged for other Bearer Notes or
Registered Notes of the same Series in authorized denominations of like
aggregate principal amount, in the manner specified in the Indenture Supplement
for such Series, upon surrender of the Bearer Notes to be exchanged at an office
or agency of the Transfer Agent and Registrar located outside the United States.
Each Bearer Note surrendered pursuant to this Section 2.4 shall have attached
thereto (or be accompanied by) all unmatured Coupons, provided that any Bearer
Note so surrendered after the close of business on the Record Date preceding the
relevant Payment Date need not have attached the Coupons relating to such
Payment Date.
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<PAGE>
Whenever any Investor Notes of any Series are so surrendered for
exchange, if the requirements of Section 8-401(a) of the UCC are met, the Issuer
shall execute and after the Issuer has executed, the Indenture Trustee shall
authenticate and (if the Transfer Agent and Registrar is different than the
Indenture Trustee, then the Transfer Agent and Registrar shall) deliver to the
Investor Noteholder, the Investor Notes which the Investor Noteholder making the
exchange is entitled to receive.
All Investor Notes issued upon any registration of transfer or
exchange of the Investor Notes shall be the valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Investor Notes surrendered upon such registration of transfer
or exchange.
Every Investor Note presented or surrendered for registration of
transfer or exchange shall be (i) duly endorsed by, or be accompanied by a
written instrument of transfer in form satisfactory to the Indenture Trustee
duly executed by, the Holder thereof or such Holder's attorney duly authorized
in writing, with such signature guaranteed by a commercial bank or trust company
located, or having a correspondent located, in The City of New York or the city
in which the Corporate Trust Office is located, or by a member firm of a
national securities exchange, and (ii) accompanied by such other documents as
the Indenture Trustee may require.
The preceding provisions of this Section 2.4 notwithstanding, the
Indenture Trustee or the Transfer Agent and Registrar, as the case may be, shall
not be required to register the transfer of or exchange any Investor Note of any
Series for a period of 15 days preceding the due date for any payment in full of
the Investor Notes of such Series.
Unless otherwise provided in the related Indenture Supplement, no
service charge shall be made for any registration of transfer or exchange of
Investor Notes, but the Transfer Agent and Registrar may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Investor Notes.
All Investor Notes (together with any Coupons attached to Bearer
Notes) surrendered for registration of transfer and exchange shall be canceled
by the Transfer Agent and Registrar and disposed of in a manner satisfactory to
the Indenture Trustee. The Indenture Trustee shall cancel and destroy any Global
Notes upon its exchange in full for Definitive Notes and shall deliver a
certificate of destruction to the Issuer. Such certificate shall also state that
a certificate or certificates of each Foreign Clearing Agency was received with
respect to each portion of such Global Note exchanged for Definitive Notes in
accordance with the related Indenture Supplement.
The Issuer shall execute and deliver to the Indenture Trustee or the
Transfer Agent and Registrar, as applicable, Bearer Notes and Registered Notes
in such amounts and at such times as are necessary to enable the Indenture
Trustee to fulfill its responsibilities under this Indenture and the Investor
Notes.
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<PAGE>
(b) Unless otherwise provided in the related Indenture Supplement,
registration of transfer of Registered Notes containing a legend relating to the
restrictions on transfer of such Registered Notes (which legend shall be set
forth in the Indenture Supplement relating to such Investor Notes) shall be
effected only if the conditions set forth in such related Indenture Supplement
are satisfied.
If (a) any mutilated Investor Note (together, in the case of Bearer
Notes, with all unmatured Coupons, if any, appertaining thereto) is surrendered
to the Transfer Agent and Registrar, or the Transfer Agent and Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Investor Note and (b) there is delivered to the Transfer Agent and Registrar and
the Indenture Trustee such security or indemnity as may be reasonably required
by them to save each of them harmless, then provided that the requirements of
Section 8-405 of the UCC are met, the Issuer shall execute and after the Issuer
has executed, the Indenture Trustee shall authenticate and (unless the Transfer
Agent and Registrar is different from the Indenture Trustee, in which case the
Transfer Agent and Registrar shall) deliver (in compliance with applicable law),
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Investor Note, a new Investor Note of like tenor and aggregate principal amount;
provided, however, that if any such destroyed, lost or stolen Investor Note, but
not a mutilated Investor Note, shall have become or within seven days shall be
due and payable, instead of issuing a replacement Investor Note, the Issuer may
pay such destroyed, lost or stolen Investor Note when so due or payable without
surrender thereof. If, after the delivery of such replacement Investor Note or
payment of a destroyed, lost or stolen Investor Note pursuant to the proviso to
the preceding sentence, a purchaser for value of the original Investor Note in
lieu of which such replacement Investor Note was issued presents for payment
such original Investor Note, the Issuer, the Transfer Agent and Registrar and
the Indenture Trustee shall be entitled to recover such replacement Investor
Note (or such payment) from the Person to whom it was delivered or any Person
taking such replacement Investor Note from such Person to whom such replacement
Investor Note was delivered or any assignee of such Person, except a purchaser
for value, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer, the Transfer Agent and Registrar or the Indenture Trustee in
connection therewith.
In connection with the issuance of any new Investor Note under this
Section 2.5, the Indenture Trustee or the Transfer Agent and Registrar may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Indenture Trustee and the Transfer Agent and
Registrar) connected therewith. Any duplicate Investor Note issued pursuant to
this Section 2.5 shall constitute an original contractual obligation of the
Issuer whether or not the lost, stolen or destroyed note shall be found at any
time.
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(a) The Indenture Trustee may appoint a Paying Agent with respect to
the Investor Notes. The Indenture Trustee hereby appoints Chase as the initial
Paying Agent. The Paying Agent shall have the revocable power to withdraw funds
and make distributions to Investor Noteholders from the appropriate account or
accounts maintained for the benefit of Noteholders as specified in this
Indenture or the related Indenture Supplement for any Series pursuant to Article
5. The Indenture Trustee may revoke such power and remove the Paying Agent, if
the Indenture Trustee determines in its sole discretion that the Paying Agent
shall have failed to perform its obligations under this Indenture in any
material respect or for other good cause. The Indenture Trustee shall notify the
Rating Agency of the removal of any Paying Agent. If any form of Investor Note
is issued as a Global Note, or if and so long as any Series of Investor Notes
are listed on the Luxembourg Stock Exchange and such exchange shall so require,
the Indenture Trustee shall appoint a co-paying agent in Luxembourg or another
European city. The Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Indenture Trustee. In the event that any
Paying Agent shall no longer be the Paying Agent, the Indenture Trustee shall
appoint a successor to act as Paying Agent (which shall be a bank or trust
company and may be the Indenture Trustee) with the consent of the Issuer. The
provisions of Sections 10.01, 10.02, 10.03 and 10.06 shall apply to the
Indenture Trustee also in the capacity of Paying Agent, for so long as the
Indenture Trustee shall act as Paying Agent. Any reference in this Indenture to
the Paying Agent shall include any co-paying agent unless the context requires
otherwise.
(b) The Indenture Trustee shall cause each Paying Agent (other than
itself) to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee that such Paying Agent
will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Investor Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such Persons
as herein provided;
(ii) give the Indenture Trustee notice of any default by the Issuer
of which it has actual knowledge in the making of any payment required to
be made with respect to the Investor Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of the
Investor Notes if at any time it ceases to meet the standards required to
be met by the Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Investor Notes of any
applicable withholding taxes
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<PAGE>
imposed thereon and with respect to any applicable reporting requirements
in connection therewith.
An institution succeeding to the corporate agency business of the Paying Agent
shall continue to be the Paying Agent without the execution or filing of any
paper or any further act on the part of the Indenture Trustee or such Paying
Agent.
(c) Subject to applicable laws with respect to escheat of funds, any
money held by the Indenture Trustee or any Paying Agent or a Clearing Agency or
a Foreign Clearing Agency in trust for the payment of any amount due with
respect to any Investor Note and remaining unclaimed for two years after such
amount has become due and payable shall be discharged from such trust and be
paid to the Issuer on Issuer Request; and the Holder of such Investor Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Issuer cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in New York City, and London and Luxembourg (if the
related Series of Investor Notes has been listed on the Luxembourg Stock
Exchange), if applicable, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Indenture Trustee may also adopt and employ,
at the expense of the Issuer, any other reasonable means of notification of such
repayment.
Prior to due presentation of an Investor Note for registration of
transfer, the Indenture Trustee, the Paying Agent, the Transfer Agent and
Registrar and any agent of any of them may treat the Person in whose name any
Investor Note is registered as the owner of such Investor Note for the purpose
of receiving distributions pursuant to Article 5 (as described in any Indenture
Supplement) and for all other purposes whatsoever, and neither the Indenture
Trustee, the Paying Agent, the Transfer Agent and Registrar nor any agent of any
of them shall be affected by any notice to the contrary.
In the case of a Bearer Note, the Indenture Trustee, the Paying
Agent, the Transfer Agent and Registrar and any agent of any of them may treat
the holder of a Bearer Note or Coupon as the owner of such Bearer Note or Coupon
for the purpose of receiving distributions pursuant to Article 5 and for all
other purposes whatsoever, and neither the Indenture Trustee, the Paying Agent,
the Transfer Agent and Registrar nor any agent of any of them shall be affected
by any notice to the contrary.
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<PAGE>
The Indenture Trustee will furnish or cause to be furnished by the
Transfer Agent and Registrar to the Issuer or the Paying Agent, within five
Business Days after receipt by the Indenture Trustee of a request therefor from
the Issuer or the Paying Agent, respectively, in writing, a list in such form as
the Issuer or the Paying Agent may reasonably require, of the names and
addresses of the Investor Noteholders of each Series as of the most recent
Record Date for payments to such Investor Noteholders. Unless otherwise provided
in the related Indenture Supplement, holders of Investor Notes of any Series in
a principal amount aggregating not less than 10% of the Investor Interest of
such Series (the "Applicants") may apply in writing to the Indenture Trustee,
and if such application states that the Applicants desire to communicate with
other Investor Noteholders of any Series with respect to their rights under this
Indenture or under the Investor Notes and is accompanied by a copy of the
communication which such Applicants propose to transmit, then the Indenture
Trustee, after having been adequately indemnified by such Applicants for its
costs and expenses, shall afford or shall cause the Transfer Agent and Registrar
to afford such Applicants access during normal business hours to the most recent
list of Investor Noteholders held by the Indenture Trustee and shall give the
Issuer notice that such request has been made, within five Business Days after
the receipt of such application. Such list shall be as of a date no more than 45
days prior to the date of receipt of such Applicants' request. Every Investor
Noteholder, by receiving and holding an Investor Note, agrees with the Indenture
Trustee that neither the Indenture Trustee, the Transfer Agent and Registrar,
nor any of their respective agents shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Investor
Noteholders hereunder, regardless of the source from which such information was
obtained.
The Indenture Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Investor Noteholders of each Series of Investor Notes. If the
Indenture Trustee is not the Registrar, the Issuer shall furnish to the
Indenture Trustee at least seven Business Days before each Payment Date and at
such other time as the Indenture Trustee may request in writing, a list in such
form and as of such date as the Indenture Trustee may reasonably require of the
names and addresses of Investor Noteholders of each Series of Investor Notes.
In determining whether the Investor Noteholders of the required
principal amount of Investor Notes have concurred in any direction, waiver or
consent, Investor Notes owned by the Issuer or any Affiliate of the Issuer shall
be considered as though they are not Outstanding, except that for the purpose of
determining whether the Indenture Trustee shall be protected in relying on any
such direction, waiver or consent, only Investor Notes of which the Indenture
Trustee has received written notice of such ownership shall be so disregarded.
Absent written notice to the Indenture Trustee of such ownership, the Indenture
Trustee shall not be deemed to have knowledge of the identity of the individual
beneficial owners of the Investor Notes.
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<PAGE>
Unless otherwise provided in any related Indenture Supplement, the
Investor Notes, upon original issuance, shall be issued in the form of
typewritten Notes representing the Book-Entry Notes, to be delivered to the
depository specified in such Indenture Supplement (the "Depository") which shall
be the Clearing Agency or the Foreign Clearing Agency, by or on behalf of such
Series. The Investor Notes of each Series shall, unless otherwise provided in
the related Indenture Supplement, initially be registered on the Note Register
in the name of the nominee of the Clearing Agency or the Foreign Clearing
Agency. No Beneficial Owner will receive a definitive note representing such
Beneficial Owner's interest in the related Series of Investor Notes, except as
provided in Section 2.11. Unless and until definitive, fully registered Investor
Notes of any Series ("Definitive Notes") have been issued to Beneficial Owners
pursuant to Section 2.11:
(a) the provisions of this Section 2.10 shall be in full force and
effect with respect to each such Series;
(b) the Issuer, the Paying Agent, the Transfer Agent and Registrar
and the Indenture Trustee may deal with the Clearing Agency or the Foreign
Clearing Agency and the applicable Clearing Agency Participants for all
purposes (including the payment of principal of and interest on the
Investor Notes and the giving of instructions or directions hereunder) as
the sole Holder of the Investor Notes, and shall have no obligation to the
Beneficial Owners;
(c) to the extent that the provisions of this Section 2.10 conflict
with any other provisions of this Indenture, the provisions of this
Section 2.10 shall control with respect to each such Series; and
(d) the rights of Beneficial Owners of each such Series shall be
exercised only through the Clearing Agency or the Foreign Clearing Agency
and the applicable Clearing Agency Participants and shall be limited to
those established by law and agreements between such Beneficial Owners and
the Clearing Agency or the Foreign Clearing Agency and/or the Clearing
Agency Participants, and all references in this Indenture to ac-tions by
the Not-e-holders shall refer to actions taken by the Clearing Agency or
the Foreign Clearing Agency upon in-struc-tions from the Clear-ing Agency
Partici-pants, and all refer-ences in this Indenture to dis-tribu-tions,
no-tices, reports and statements to the Note--holders shall refer to
distributions, notices, reports and statements to the Clearing Agency or
the Foreign Clearing Agency, as regis-tered holder of the Investor Notes
of such Series for distribu-tion to the Beneficial Owners in accor-dance
with the proce-dures of the Clearing Agency. Pursuant to the Depository
Agreement applicable to a Series, unless and until Definitive Notes of
such Series are issued pursuant to Section 2.11, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of principal and
interest on the Investor Notes to such Clearing Agency Participants.
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If (i) (A) the Issuer advises the Indenture Trustee in writing that
the Clearing Agency or the Foreign Clearing Agency is no longer willing or able
to discharge properly its responsibilities under the applicable Depository
Agreement, and (B) the Indenture Trustee or the Issuer is unable to locate a
qualified successor, (ii) the Issuer, at its option, advises the Indenture
Trustee in writing that it elects to terminate the book-entry system through the
Clearing Agency or the Foreign Clearing Agency with respect to any Series or
(iii) after the occurrence of an Event of Default, Beneficial Owners of a
Majority in Interest of a Series of Investor Notes advise the Indenture Trustee
and the applicable Clearing Agency or the Foreign Clearing Agency through the
applicable Clearing Agency Participants in writing that the continuation of a
book-entry system through the applicable Clearing Agency or Foreign Clearing
Agency is no longer in the best interests of such Beneficial Owners, the
Indenture Trustee shall notify all Beneficial Owners of such Series, through the
applicable Clearing Agency Participants, of the occurrence of any such event and
of the availability of Definitive Notes to Beneficial Owners of such Series
requesting the same. Upon surrender to the Indenture Trustee of the Investor
Notes of such Series by the applicable Clearing Agency or the Foreign Clearing
Agency, accompanied by registration instructions from the applicable Clearing
Agency or the applicable Foreign Clearing Agency for registration, the Issuer
shall execute and the Indenture Trustee shall authenticate and (if the Transfer
Agent and Registrar is different than the Indenture Trustee, then the Transfer
Agent and Registrar shall) deliver the Definitive Notes in accordance with the
instructions of the Clearing Agency. Neither the Issuer nor the Indenture
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes of such Series all references herein to
obligations imposed upon or to be performed by the applicable Clearing Agency or
Foreign Clearing Agency shall be deemed to be imposed upon and performed by the
Indenture Trustee, to the extent applicable with respect to such Definitive
Notes, and the Indenture Trustee shall recognize the Holders of the Definitive
Notes of such Series as Noteholders of such Series hereunder.
If specified in the related Indenture Supplement for any Series, the
Investor Notes may be initially issued in the form of a single temporary Global
Note (the "Global Note") in bearer form, without interest coupons, in the
denomination of the Initial Invested Amount and substantially in the form
attached to the related Indenture Supplement. Unless otherwise specified in the
related Indenture Supplement, the provisions of this Section 2.12 shall apply to
such Global Note. The Global Note will be authenticated by the Indenture Trustee
upon the same conditions, in substantially the same manner and with the same
effect as the Definitive Notes. The Global Note may be exchanged in the manner
described in the related Indenture Supplement for Registered or Bearer Notes in
definitive form.
(a) The principal of each Series of Investor Notes shall be payable
at the times and in the amount set forth in the related Indenture Supplement and
in accordance with Section 6.1.
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(b) Each Series of Investor Notes shall accrue interest as provided
in the related Indenture Supplement and such interest shall be payable on each
Payment Date for such Series in accordance with Section 6.1 and the related
Indenture Supplement.
(c) Except as provided in the following sentence, the Person in
whose name any Investor Note is registered at the close of business on any
Record Date with respect to a Payment Date for such Investor Note shall be
entitled to receive the principal and interest payable on such Payment Date
notwithstanding the cancellation of such Investor Note upon any registration of
transfer, exchange or substitution of such Investor Note subsequent to such
Record Date. Any interest payable at maturity shall be paid to the Person to
whom the principal of such Investor Note is payable.
(d) If the Issuer defaults in the payment of interest on the
Investor Notes of any Series, such interest, to the extent paid on any date that
is more than five (5) Business Days after the applicable due date, shall, at the
option of the Issuer, cease to be payable to the Persons who were Investor
Noteholders of such Series at the applicable Record Date and the Issuer shall
pay the defaulted interest in any lawful manner, plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Investor
Noteholders of such Series on a subsequent special record date which date shall
be at least five (5) Business Days prior to the payment date, at the rate
provided in this Indenture and in the Investor Notes of such Series. The Issuer
shall fix or cause to be fixed each such special record date and payment date,
and at least 15 days before the special record date, the Issuer (or the
Indenture Trustee, in the name of and at the expense of the Issuer) shall mail
to Investor Noteholders of such Series a notice that states the special record
date, the related payment date and the amount of such interest to be paid.
The Issuer has structured this Indenture and the Investor Notes have
been (or will be) issued with the intention that the Investor Notes will qualify
under applicable tax law as indebtedness of the Issuer and any entity acquiring
any direct or indirect interest in any Investor Note by acceptance of its
Investor Notes (or, in the case of a Beneficial Owner, by virtue of such
Beneficial Owner's acquisition of a beneficial interest therein) agrees to treat
the Investor Notes (or beneficial interests therein) for purposes of Federal,
state and local and income or franchise taxes and any other tax imposed on or
measured by income, as indebtedness of the Issuer. Each Investor Noteholder
agrees that it will cause any Beneficial Owner's acquiring an interest in an
Investor Note through it to comply with this Indenture as to treatment as
indebtedness for such tax purposes.
(a) To secure the Issuer Obligations, the Issuer hereby pledges,
assigns, conveys, delivers, transfers and sets over to the Indenture Trustee,
for the benefit of the Investor
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Noteholders, and hereby grants to the Indenture Trustee, for the benefit of the
Investor Noteholders, a security interest in, all of the Issuer's right, title
and interest in and to all of the Issuer's assets, property and interests in
property of any kind or nature whatsoever (other than as specified below)
whether now or hereafter existing, acquired or created (all of the foregoing
being referred to as the "Collateral"), including without limitation, all right,
title and interest of the Issuer in the following property and interests in
property:
(i) the SUBIs, the SUBI Certificates and any related rights,
authority, powers and privileges of the holder thereof under the related
Origination Trust Documents and all payments and distributions thereunder
of whatever kind or character and whether in cash or other property, at
any time made or distributable to the Issuer thereunder or in respect
thereof, whether due or to become due, including, without limitation, the
immediate and continuing right of the Issuer to receive and collect all
amounts payable to the holder thereof and all of the Issuer's rights,
remedies, powers, interests and privileges under the Origination Trust
Documents (whether arising pursuant to the terms thereof or otherwise
available to the Issuer), including, without limitation, the right to
enforce the Origination Trust Documents, to give or withhold any and all
consents, requests, notices, directions, approvals or waivers thereunder
and all amounts due and to become due thereunder, whether payable as
indemnities or damages for breach thereof;
(ii) a beneficial interest in the Initial Units and any Unit
Leases, Unit Vehicles and the Related Rights associated therewith, and all
Additional Units and any Unit Leases, Unit Vehicles and the Related Rights
associated therewith hereafter acquired by the Issuer, including, without
limitation, all monies due or to become due with respect thereto and all
proceeds thereof;
(iii) the Transfer Agreement, including, without limitation,
all of the Issuer's rights, remedies, powers, interests and privileges
under the Transfer Agreement (whether arising pursuant to the terms
thereof or otherwise available to the Issuer), including, without
limitation, the right to enforce the Transfer Agreement, to give or
withhold any and all consents, requests, notices, directions, approvals or
waivers thereunder and all amounts due and to become due thereunder,
whether payable as indemnities or damages for breach thereof;
(iv) the Administration Agreement, including, without
limitation, all of the Issuer's rights, remedies, powers, interests and
privileges under the Administration Agreement (whether arising pursuant to
the terms thereof or otherwise available to the Issuer), including,
without limitation, the right to enforce the Administration Agreement, to
give or withhold any and all consents, requests, notices, directions,
approvals or waivers thereunder and all amounts due and to become due
thereunder, whether payable as indemnities or damages for breach thereof;
(v) the Collection Account and the Gain on Sale Account and
all monies on deposit from time to time in the Collection Account and the
Gain on Sale
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Account and all proceeds thereof (including any Permitted Investments
purchased with monies from any account held for the benefit of the Issuer
or the Investor Noteholders and any investment earnings thereon);
(vi) each Series Account and all monies on deposit from time
to time in such Series Account and all proceeds thereof (including any
Permitted Investments purchased with monies from any account held for the
benefit of the Issuer or the Investor Noteholders and any investment
earnings thereon);
(vii) all additional property that may from time to time
hereafter (pursuant to the terms of any Indenture Supplement or otherwise)
be subjected to the grant and pledge hereof by the Issuer, including,
without limitation, any Hedging Instruments; and
(viii) all proceeds of any and all of the foregoing including,
without limitation, all present and future claims, demands, causes of
action and chooses in action in respect of any or all of the foregoing and
all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion thereof, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and
other property which at any time constitute all or part of or are included
in the proceeds of any of the foregoing.
(b) The foregoing grant is made in trust to secure the Issuer
Obligations and to secure compliance with the provisions of this Indenture and
any Indenture Supplement, all as provided in this Indenture. The Indenture
Trustee, as Indenture Trustee on behalf of the Investor Noteholders,
acknowledges such grant, accepts the trusts under this Indenture in accordance
with the provisions of this Indenture and subject to Section 10.1 and 10.2,
agrees to perform its duties required in this Indenture to the best of its
abilities to the end that the interests of the Investor Noteholders may be
adequately and effectively protected. The Collateral shall secure the Investor
Notes equally and ratably without prejudice, priority (except, with respect to
any Series of Investor Notes, as otherwise stated in the applicable Indenture
Supplement) or distinction.
Upon the occurrence of a default or breach by any Person party to a
Transaction Document, promptly following a request from the Indenture Trustee to
do so and at the Issuer's expense, the Issuer agrees to take all such lawful
action as permitted under this Indenture as the Indenture Trustee may request to
compel or secure the performance and observance by SPV, the Servicer, the
Administrator, VMS or PHH Consumer Lease or any other party to any of the
Transaction Documents of its obligations thereunder, in each case in accordance
with the applicable terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer to the extent and in the
manner directed by the Indenture Trustee,
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including, without limitation, the transmission of notices of default and the
institution of legal or administrative actions or proceedings to compel or
secure performance by each of SPV, the Servicer, the Administrator, VMS or PHH
Consumer Lease (or such other party to any Transaction Document), of their
respective obligations thereunder. If (i) the Issuer shall have failed, within
30 days of receiving the direction of the Indenture Trustee, to take
commercially reasonable action to accomplish such directions of the Indenture,
(ii) the Issuer refuses to take any such action, or (iii) the Indenture Trustee
reasonably determines that such action must be taken immediately, the Indenture
Trustee may take such previously directed action and any related action
permitted under this Indenture which the Indenture Trustee thereafter determines
is appropriate (without the need under this provision or any other provision
under the Indenture to direct the Issuer to take such action), on behalf of the
Issuer and the Investor Noteholders.
(a) The Indenture Trustee shall when required by the provisions of
this Indenture execute instruments to release property from the lien of this
Indenture, or convey the Indenture Trustee's interest in the same, in a manner
and under circumstances that are not inconsistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Indenture Trustee
as provided in this Section 3.2 shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no
Investor Notes Outstanding, release any remaining portion of the Issuer Assets
that secured the Investor Notes from the lien of this Indenture and release to
the Issuer any funds then on deposit in the Issuer Accounts. The Indenture
Trustee shall release property from the lien of this Indenture pursuant to this
Section 3.2(b) only upon receipt of an Issuer Order accompanied by an Officer's
Certificate, an Opinion of Counsel and (if this Indenture is qualified under the
TIA and the TIA so requires) Independent Certificates in accordance with TIA
ss.ss. 314(c) and 314(d)(1) meeting the applicable requirements of Section 13.1.
The Indenture Trustee shall receive at least seven days' notice when
requested by the Issuer to take any action pursuant to Section 3.2(a),
accompanied by copies of any instruments involved, and the Indenture Trustee may
also require as a condition of such action, an Opinion of Counsel, in form and
substance satisfactory to the Indenture Trustee, stating the legal effect of any
such action, outlining the steps required to complete the same, and concluding
that all such action will not materially and adversely impair the security for
the Investor Notes or the rights of the Noteholders; provided, however that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Issuer Assets. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any such
action.
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The Issuer shall indemnify and hold harmless the Indenture Trustee
and each Investor Noteholder from any present or future claim for liability for
any stamp or other similar tax and any penalties or interest with respect
thereto, that may be assessed, levied or collected by any jurisdiction in
connection with this Indenture or any Collateral. The Issuer shall pay, or
reimburse the Indenture Trustee for, any and all amounts in respect of, all
search, filing, recording and registration fees, taxes, excise taxes and other
similar imposts that may be payable or determined to be payable in respect of
the execution, delivery, performance and/or enforcement of this Indenture.
The Issuer will deliver or cause to be delivered to the Indenture
Trustee:
(i) prior to 1:00 p.m., New York City time, on each Deposit Date, a
copy of the Deposit Report (a "Deposit Report ") prepared and delivered by
the Servicer to the Issuer pursuant to the Origination Trust Servicing
Agreement, setting forth the aggregate amount of Collections deposited in
the Collection Account on such Deposit Date;
(ii) on each Determination Date, a copy of the Settlement Statement
(a "Settlement Statement") prepared and delivered by the Servicer to the
Issuer pursuant to the Origination Trust Servicing Agreement, setting
forth the information required to be set forth therein under the
Origination Trust Servicing Agreement and each Indenture Supplement and
such other information as the Indenture Trustee may reasonably request;
(iii) within ten Business Days of the last Business Day of each
fiscal quarter of the Issuer, a copy of the Quarterly Compliance
Certificate (a "Quarterly Compliance Certificate") prepared and delivered
by the Servicer pursuant to the Origination Trust Servicing Agreement,
setting forth the information required to be set forth therein under the
Origination Trust Servicing Agreement;
(iv) on or before March 31 of each year, a copy of the Annual
Servicing Report (an "Annual Servicing Report" ) prepared by the
Servicer's independent auditors in accordance with the Origination Trust
Servicing Agreement, setting forth the information required to be set
forth therein under the Origination Trust Servicing Agreement;
(v) within 45 days following the end of each fiscal quarter of the
Servicer, a copy of the certificate prepared and delivered by the Servicer
pursuant Section 8.3(b) of the Origination Trust Servicing Agreement;
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(vi) promptly upon the delivery by the Servicer to the Issuer, a
copy of any other information, reports or other materials required to be
delivered by the Servicer to the Issuer pursuant to the Origination Trust
Servicing Agreement;
(vii) from time to time such additional information regarding the
financial position, results of operations or business of the Origination
Trust or VMS as the Indenture Trustee may reasonably request to the extent
that the Servicer delivers such information to the Issuer pursuant to the
Origination Trust Servicing Agreement; and
(viii) at the time of delivery of the item described in clause (iii)
above, a certificate of an officer of the Issuer that, except as provided
in any certificate delivered in accordance with Section 8.8, no
Amortization Event, Potential Amortization Event, Termination Event,
Default or Event of Default under any of the Transaction Documents to
which it is a party has occurred or is continuing during such fiscal
quarter.
(a) If this Indenture is qualified under the TIA, the Investor
Noteholders may communicate pursuant to TIA ss.312(b) with other Investor
Noteholders with respect to their rights under this Indenture or under the
Investor Notes.
(b) If this Indenture is qualified under the TIA, the Issuer, the
Indenture Trustee and the Transfer Agent and Registrar shall have the protection
of TIA ss.312(c).
For so long as any of the Investor Notes are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, the Issuer agrees
to provide to any Investor Noteholder or Beneficial Owner and to any prospective
purchaser of Investor Notes designated by such Investor Noteholder or Beneficial
Owner upon the request of such Investor Noteholder or Beneficial Owner or
prospective purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the conditions set forth in Rule 144A(d)(4)
under the Securities Act.
(a) Unless otherwise specified in the related Indenture Supplement,
on each Settlement Date, the Issuer shall deliver to the Indenture Trustee or
the Paying Agent and the Indenture Trustee or the Paying Agent, as the case may
be, shall forward to each Investor Noteholder of each Outstanding Series the
Monthly Settlement Statement with respect to such Series, with a copy to the
Rating Agencies.
(b) As soon as available, but in any event within 90 days after the
end of each fiscal year of the Issuer, the Issuer shall deliver to the Indenture
Trustee or the Paying Agent and the Indenture Trustee or the Paying Agent, as
the case may be, shall forward to each Investor
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Noteholder of each Outstanding Series a copy of the audited financial statements
of the Issuer at the end of such year, prepared by independent certified public
accountants of nationally recognized standing.
(c) Unless otherwise specified in the related Indenture Supplement,
on or before January 31 of each calendar year, beginning with calendar year
2000, the Indenture Trustee or the Paying Agent shall furnish to each Person who
at any time during the preceding calendar year was an Investor Noteholder of a
Series of Investor Notes a statement prepared by or on behalf of the Issuer
containing the information which is required to be contained in the Monthly
Settlement Statements with respect to such Series of Investor Notes aggregated
for such calendar year or the applicable portion thereof during which such
Person was an Investor Noteholder, together with such other customary
information (consistent with the treatment of the Investor Notes as debt) as the
Issuer deems necessary or desirable to enable the Investor Noteholders to
prepare their tax returns (each such statement, an "Annual Noteholders' Tax
Statement"). Such obligations of the Issuer to prepare and the Indenture Trustee
or the Paying Agent to distribute the Annual Noteholders' Tax Statement shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Indenture Trustee or the Paying Agent
pursuant to any requirements of the Code as from time to time in effect.
If this Indenture is qualified under the TIA, within 60 days after
each March 31, beginning on March 31 in the first year after this Indenture is
qualified under the TIA, if required by TIA ss. 313(a), the Indenture Trustee
shall mail to each Investor Noteholder as required by TIA ss. 313(c) a brief
report dated as of such date that complies with TIA ss. 313(a). The Indenture
Trustee also shall comply with TIA ss. 313(b). A copy of such each report at the
time of its mailing to Investor Noteholders shall be filed by the Indenture
Trustee with the Securities and Exchange Commission and each stock exchange, if
any, on which the Investor Notes are listed. The Issuer shall notify the
Indenture Trustee if and when the Investor Notes are listed on any stock
exchange.
(a) Establishment of Collection Account. The Indenture Trustee shall
establish and maintain in the name of the Indenture Trustee, for the benefit of
the Noteholders, an Eligible Deposit Account bearing a designation clearly
indicating that the funds deposited therein are held in trust for the benefit of
the Noteholders (the "Collection Account"). If at any time the Indenture Trustee
obtains knowledge that the Collection Account is no longer an Eligible Deposit
Account, the Indenture Trustee shall, within 30 days of obtaining such
knowledge, establish a new
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Collection Account that is an Eligible Deposit Account and transfer into the new
Collection Account all cash and investments from the non-qualifying Collection
Account. Initially, the Collection Account will be established with Chase. The
Indenture Trustee shall possess all right, title and interest in all moneys,
instruments, securities and other property on deposit from time to time in the
Collection Account and the proceeds thereof for the benefit of the Noteholders.
The Collection Account shall be under the sole dominion and control of the
Indenture Trustee for the benefit of the Noteholders.
(b) Series Accounts. If so provided in the related Indenture
Supplement, the Indenture Trustee, for the benefit of the Investor Noteholders,
shall cause to be established and maintained, one or more Series Accounts and/or
administrative sub-accounts of the Collection Account to facilitate the proper
allocation of Collections in accordance with the terms of such Indenture
Supplement. Each such Series Account shall bear a designation clearly indicating
that the funds deposited therein are held for the benefit of the Investor
Noteholders of such Series. Each such Series Account will be an Eligible Deposit
Account, if so provided in the related Indenture Supplement and will have the
other features and be applied as set forth in the related Indenture Supplement.
(c) Administration of the Collection Account. The Issuer shall
instruct the institution maintaining the Collection Account in writing to invest
the funds on deposit in the Collection Account in Permitted Investments. Any
such investment shall mature and such funds shall be available for withdrawal on
or prior to the Transfer Date related to the Monthly Period in which such funds
were processed for collection, or if so specified in the related Indenture
Supplement, on the immediately succeeding Payment Date. All such Permitted
Investments will be credited to the Collection Account and any such Permitted
Investments that constitute (i) Physical Property (and that is not either a
United States Security Entitlement or a Security Entitlement) shall be delivered
to the Indenture Trustee in accordance with paragraph (a) of the definition of
"Delivery" and shall be held by the Indenture Trustee pending maturity or
disposition; (ii) United States Security Entitlements or Security Entitlements
shall be Controlled by the Indenture Trustee pending maturity or disposition;
and (iii) Uncertificated Securities (and not United States Security
Entitlements) shall be delivered to the Indenture Trustee in accordance with
paragraph (b) of the definition of "Delivery" and shall be maintained by the
Indenture Trustee pending maturity or disposition. The Indenture Trustee shall
take such action as is required to maintain the Indenture Trustee's security
interest in the Permitted Investments credited to the Collection Account. In the
absence of written investment instructions hereunder, funds on deposit in the
Collection Account shall remain uninvested. Neither the Issuer nor the Indenture
Trustee shall dispose of (or permit the disposal of) any Permitted Investments
prior to the maturity thereof to the extent such disposal would result in a loss
of principal of such Permitted Investment.
(a) Establishment of Gain on Sale Account. The Indenture Trustee
shall establish and maintain in the name of the Indenture Trustee, for the
benefit of the Noteholders, an Eligible Deposit Account bearing a designation
clearly indicating that the funds deposited therein are held in trust for the
benefit of the Noteholders (the "Gain on Sale Account"). If at any time
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the Indenture Trustee obtains knowledge that the Gain on Sale Account is no
longer an Eligible Deposit Account, the Indenture Trustee shall, within 30 days
of obtaining such knowledge, establish a new Gain on Sale Account that is an
Eligible Deposit Account and transfer into the new Gain on Sale Account all cash
and investments from the non-qualifying Gain on Sale Account. Initially, the
Gain on Sale Account will be established with Chase. The Indenture Trustee shall
possess all right, title and interest in all moneys, instruments, securities and
other property on deposit from time to time in the Gain on Sale Account and the
proceeds thereof for the benefit of the Noteholders. The Gain on Sale Account
shall be under the sole dominion and control of the Indenture Trustee for the
benefit of the Noteholders.
(b) Investment of Funds in the Gain on Sale Account. The Issuer
shall instruct the institution maintaining the Gain on Sale Account in writing
to invest the funds on deposit in the Gain on Sale Account in Permitted
Investments. Any such investment shall mature and such funds shall be available
for withdrawal on or prior to each Transfer Date. All such Permitted Investments
will be credited to the Gain on Sale Account and any such Permitted Investments
that constitute (i) Physical Property (and that is not either a United States
Security Entitlement or a Security Entitlement) shall be delivered to the
Indenture Trustee in accordance with paragraph (a) of the definition of
"Delivery" and shall be held by the Indenture Trustee pending maturity or
disposition; (ii) United States Security Entitlements or Security Entitlements
shall be Controlled by the Indenture Trustee pending maturity or disposition;
and (iii) Uncertificated Securities (and not United States Security
Entitlements) shall be delivered to the Indenture Trustee in accordance with
paragraph (b) of the definition of "Delivery" and shall be maintained by the
Indenture Trustee pending maturity or disposition. The Indenture Trustee shall
take such action as is required to maintain the Indenture Trustee's security
interest in the Permitted Investments credited to the Gain on Sale Account. In
the absence of written investment instructions hereunder, funds on deposit in
the Gain on Sale Account shall remain uninvested. Neither the Issuer nor the
Indenture Trustee shall dispose of (or permit the disposal of) any Permitted
Investments prior to the maturity thereof to the extent such disposal would
result in a loss of principal of such Permitted Investment.
(c) Earnings from Gain on Sale Account. All interest and earnings
(net of losses and investment expenses) paid on funds on deposit in the Gain on
Sale Account shall be deemed to be available and on deposit for distribution.
(d) Deposits to Gain on Sale Account. Amounts will be deposited in
the Gain on Sale Account in accordance with this Article 5, as modified by any
Indenture Supplement.
(e) Withdrawals from Gain on Sale Account. No later than 2:00 p.m.,
New York City time, on each Transfer Date, the Issuer shall direct the Indenture
Trustee in writing to withdraw from the Gain on Sale Account an amount equal to
the lesser of (x) the Monthly Residual Value Loss for the immediately preceding
Monthly Period and (y) the amount then on deposit in the Gain on Sale Account
and deposit such amount into the Collection Account for allocation in accordance
with Article 5, as modified by any Indenture Supplement. On any Transfer Date on
which the amount on deposit in the Gain on Sale Account (after giving effect to
any withdrawals therefrom pursuant to the immediately preceding sentence) is
greater than an
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amount equal to the Applicable Gain on Sale Account Percentage of the sum of the
aggregate Lease Balance of each Eligible Lease that is a Closed-End Lease
allocated to the Lease SUBI as of last day of the Monthly Period immediately
preceding such Transfer Date and the Aggregate Residual Value Amount as of such
date, the Issuer shall direct the Indenture Trustee in writing to withdraw such
excess from the Gain on Sale Account and deposit it in the Issuer General
Account.
Except as otherwise provided herein, the Indenture Trustee may
demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture. The Indenture Trustee shall apply all such money
received by it as provided in this Indenture. Except as otherwise provided in
this Indenture, if any default occurs in the making of any payment or
performance under any agreement or instrument that is part of the Issuer Assets,
the Indenture Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceeds
thereafter as provided in Article 9.
(a) Collections in General. Until this Indenture is terminated
pursuant to Section 11.1 , the Issuer shall, and the Indenture Trustee is
authorized to, cause all Collections due and to become due to the Issuer or the
Indenture Trustee, as the case may be, under or in connection with the
Collateral to be paid directly to the Indenture Trustee for deposit into the
Collection Account. The Issuer agrees that if any Collections shall be received
by the Issuer in an account other than the Collection Account, such monies,
instruments, cash and other proceeds will not be commingled by the Issuer with
any of its other funds or property, if any, but will be held separate and apart
therefrom and shall be held in trust by the Issuer for, and immediately remitted
to, the Indenture Trustee, with any necessary endorsement. All monies,
instruments, cash and other proceeds received by the Indenture Trustee pursuant
to this Indenture shall be in immediately available funds and shall be
immediately deposited in the Collection Account and shall be applied as provided
in this Article 5.
(b) Allocations for Investor Noteholders. On each Deposit Date, the
Issuer shall allocate Collections deposited into the Collection Account in
accordance with this Article 5 and shall instruct the Indenture Trustee to
withdraw the required amounts from the Collection Account and make the required
deposits in any Series Account in accordance with this Article 5, as modified by
any Indenture Supplement. The Issuer shall make such deposits or payments on the
date indicated therein in immediately available funds or as otherwise provided
in the Indenture Supplement for any Series with respect to such Series. The
Administrator, on behalf of the Issuer, has agreed to furnish to the Indenture
Trustee or the Paying Agent, as applicable, written instructions to make the
aforementioned withdrawals and payments from the Collection Account
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and any Issuer Accounts specified herein or in an Indenture Supplement. The
Indenture Trustee and the Paying Agent shall promptly follow any such written
instructions.
(c) Sharing Collections . In the manner described in the related
Indenture Supplement, to the extent that Collections that are allocated to any
Series on a Deposit Date are not needed to make payments to Investor Noteholders
of such Series or required to be deposited in a Series Account for such Series
on such Deposit Date, such Collections may, at the direction of the Issuer, be
applied to cover principal payments due to or for the benefit of Investor
Noteholders of another Series. Any such reallocation will not result in a
reduction in the Invested Amount of the Series to which such Collections were
initially allocated.
(d) Allocations After Certain Events of Default. After each
Outstanding Series of Investor Notes shall have been declared to be immediately
due and payable pursuant to Section 9.2 as a result of the occurrence of an
Event of Default defined in clause (a) or (b) of Section 9.1, to the extent that
Collections that are allocated to any Series of Investor Notes on a Settlement
Date are not needed to make payments of principal of, or interest on, the
Investor Notes of such Series, such Collections shall be applied to cover
principal payments due on the Investor Notes of all other Series then
Outstanding on a pro rata basis based on the Invested Percentages of such other
Series of Investor Notes.
[THE REMAINDER OF ARTICLE 5 IS RESERVED AND MAY BE SPECIFIED IN ANY INDENTURE
SUPPLEMENT WITH RESPECT TO ANY SERIES.]
(a) Unless otherwise specified in the applicable Indenture
Supplement, amounts payable to an Investor Noteholder hereunder shall be payable
by check mailed first-class postage prepaid to such Investor Noteholder at the
address for such Investor Noteholder appearing in the Note Register except that
with respect to Investor Notes registered in the name of a Clearing Agency or
its nominee, such amounts shall be payable by wire transfer of immediately
available funds released by the Indenture Trustee or the Paying Agent from the
applicable Series Account no later than Noon on the Payment Date (New York City
time) for credit to the account designated by such Clearing Agency or its
nominee, as applicable.
(b) Unless otherwise specified in the applicable Indenture
Supplement (i) all distributions to Investor Noteholders of all classes within a
Series of Investor Notes will have the same priority and (ii) in the event that
on any date of determination the amount available to make payments to the
Investor Noteholders of a Series is not sufficient to pay all sums required to
be paid to such Investor Noteholders on such date, then each class of Investor
Noteholders will receive its ratable share (based upon the aggregate amount due
to such class of Investor
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Noteholders) of the aggregate amount available to be distributed in respect of
the Investor Notes of such Series.
On any Payment Date occurring on or after the date on which the
Invested Amount of any Series or class of such Series is equal to or less than
the Repurchase Amount (if any) for such Series or class set forth in the
Indenture Supplement related to such Series, or at such other time otherwise
provided for in the Indenture Supplement relating to such Series, the Issuer
shall have the option to purchase all Outstanding Investor Notes of such Series,
or class of such Series, at a purchase price (determined after giving effect to
any payment of principal and interest on such Payment Date) equal to (unless
otherwise specified in the related Indenture Supplement) the Invested Amount of
such Series on such Payment Date, plus accrued and unpaid interest on the unpaid
principal balance of the Investor Notes of such Series (calculated at the
Investor Note Rate of such Series) through the day immediately prior to the date
of such purchase plus, if provided for in the related Indenture Supplement, any
premium payable at such time. The Issuer shall give the Indenture Trustee at
least 30 days' prior written notice of the date on which the Issuer intends to
exercise such option to purchase. Not later than 12:00 noon, New York City time,
on such Payment Date, an amount of the purchase price equal to the Invested
Amount of all Investor Notes of such Series on such Payment Date and the amount
of accrued and unpaid interest with respect to such Investor Notes and any
applicable premium will be deposited into the applicable Series Account for such
Series in immediately available funds. The funds deposited into such Series
Account or distributed to the Paying Agent will be passed through in full to the
Investor Noteholders on such Payment Date.
The Issuer hereby represents and warrants, for the benefit of the
Indenture Trustee and the Noteholders, as follows as of each Series Closing
Date:
The Issuer (a) is a special purpose limited liability company duly
formed, validly existing and in good standing under the laws of the State of
Delaware, (b) is duly qualified to do business as a foreign limited liability
company and in good standing under the laws of each jurisdiction where the
character of its property, the nature of its business or the performance of its
obligations make such qualification necessary, and (c) has all powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted and for purposes of the transactions
contemplated by this Indenture and the other Transaction Documents.
The execution, delivery and performance by the Issuer of this
Indenture, the related Indenture Supplement and the other Transaction Documents
to which it is a party (a) is
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within the Issuer's power, has been duly authorized by all necessary action, (b)
requires no action by or in respect of, or filing with, any governmental body,
agency or official which has not been obtained and (c) does not contravene, or
constitute a default under, any Requirement of Law or any provision of its
certificate of formation or the LLC Agreement or result in the creation or
imposition of any Lien on any of the Issuer Assets, except for Liens created by
this Indenture or the other Transaction Documents. This Indenture and each of
the other Transaction Documents to which the Issuer is a party has been executed
and delivered by a duly authorized officer of the Issuer.
This Indenture and each other Transaction Document is a legal, valid
and binding obligation of the Issuer enforceable against the Issuer in
accordance with its terms (except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally or by general equitable
principles, whether considered in a proceeding at law or in equity and by an
implied covenant of good faith and fair dealing).
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 by the Issuer to the Indenture Trustee
and the Rating Agencies pursuant to Section 4.4 have been and will be prepared
in accordance with GAAP (to the extent applicable) and do and will present
fairly the financial condition of the Issuer as of the dates thereof and the
results of its operations for the periods covered thereby, subject, in the case
of all unaudited statements, to normal year-end adjustments and lack of
footnotes and presentation items.
There is no action, suit or proceeding pending against or, to the
knowledge of the Issuer, threatened against or affecting the Issuer before any
court or arbitrator or any Governmental Authority that could materially
adversely affect the financial position, results of operations, business,
properties, performance, prospects or condition (financial or otherwise) of the
Issuer or which in any manner draws into question the validity or enforceability
of this Indenture, any Indenture Supplement or any other Transaction Document or
the ability of the Issuer to perform its obligations hereunder or thereunder.
The Issuer has not established and does not maintain or contribute
to any Pension Plan that is covered by Title IV of ERISA and will not do so, as
long as any Investor Notes are Outstanding.
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The Issuer has filed all federal, state and local tax returns and
all other tax returns which, to the knowledge of the Issuer, are required to be
filed (whether informational returns or not), and has paid all taxes due, if
any, pursuant to said returns or pursuant to any assessment received by the
Issuer, except such taxes, if any, as are being contested in good faith and for
which adequate reserves have been set aside on its books. The Issuer has paid
all fees and expenses required to be paid by it in connection with the conduct
of its business, the maintenance of its existence and its qualification as a
foreign limited liability company authorized to do business in each State in
which it is required to so qualify.
All certificates, reports, statements, documents and other
information furnished to the Indenture Trustee by or on behalf of the Issuer
pursuant to any provision of this Indenture or any Transaction Document, or in
connection with or pursuant to any amendment or modification of, or waiver
under, this Indenture or any Transaction Document, shall, at the time the same
are so furnished, be complete and correct to the extent necessary to give the
Indenture Trustee true and accurate knowledge of the subject matter thereof in
all material respects, and the furnishing of the same to the Indenture Trustee
shall constitute a representation and warranty by the Issuer made on the date
the same are furnished to the Indenture Trustee to the effect specified herein.
The Issuer is not, and is not controlled by, an "investment company"
within the meaning of, and is not required to register as an "investment
company" under, the Investment Company Act of 1940.
The proceeds of the Investor Notes will not be used to purchase or
carry any "margin stock" (as defined or used in the regulations of the Board of
Governors of the Federal Reserve System, including Regulations T, U and X
thereof). The Issuer is not engaged in the business of extending credit for the
purpose of purchasing or carrying any margin stock.
No consent, action by or in respect of, approval or other
authorization of, or registration, declaration or filing with, any Governmental
Authority or other Person is required for the valid execution and delivery of
this Indenture or any Indenture Supplement or for the performance of any of the
Issuer's obligations hereunder or thereunder or under any other Transaction
Document other than such consents, approvals, authorizations, registrations,
declarations or filings as shall have been obtained by the Issuer prior to the
Initial Closing Date or as contemplated in Section 7.13.
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Both before and after giving effect to the transactions contemplated
by this Indenture and the other Transaction Documents, the Issuer is solvent
within the meaning of the Bankruptcy Code and the Issuer 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 Insolvency Event has occurred with respect
to the Issuer.
(a) Each of the SUBI Certificates has been duly registered in the
name of the Indenture Trustee and all other action necessary (including the
filing of UCC-1 financing statements) to protect and perfect the Indenture
Trustee's security interest in the Collateral now in existence and hereafter
acquired or created has been duly and effectively taken.
(b) No security agreement, financing statement, equivalent security
or lien instrument or continuation statement listing the Issuer as debtor
covering all or any part of the Collateral is on file or of record in any
jurisdiction, except such as may have been filed, recorded or made by the Issuer
in favor of the Indenture Trustee on behalf of the Noteholders in connection
with this Indenture.
(c) This Indenture constitutes a valid and continuing Lien on the
Collateral in favor of the Indenture Trustee on behalf of the Noteholders, which
Lien will be prior to all other Liens (other than Permitted Liens), will be
enforceable as such as against creditors of and purchasers from the Issuer in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally or by general equitable
principles, whether considered in a proceeding at law or in equity and by an
implied covenant of good faith and fair dealing. All action necessary to perfect
such prior security interest has been duly taken.
(d) Except for a change made pursuant to Section 8.19, the Issuer's
principal place of business and chief executive office shall be at: 900 Old
Country Road, Garden City, New York 11530, and the place where its records
concerning the Collateral are kept is at: 103 Foulk Road, Suite 205-11,
Wilmington, Delaware 19803. The Issuer does not transact, and has not
transacted, business under any other name.
(e) All authorizations in this Indenture for the Indenture Trustee
to endorse checks, instruments and securities and to execute financing
statements, continuation statements, security agreements, and other instruments
with respect to the Collateral are powers coupled with an interest and are
irrevocable.
Each of the Origination Trust Documents and the Transfer Agreement
is in full force and effect and there are no outstanding events of default
thereunder nor have events
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occurred which, with the giving of notice, the passage of time or both, would
constitute such an event of default.
(a) Other than as permitted by Section 8.23, (i) the Issuer is not a
party to any contract or agreement of any kind or nature and (ii) the Issuer is
not subject to any obligations or liabilities of any kind or nature in favor of
any third party, including, without limitation, Contingent Obligations.
(b) The Issuer has not engaged in any activities since its formation
(other than those incidental to its formation and other appropriate actions
including the proposed purchase of the SUBI Certificates, the authorization and
the issue of the initial Series of Notes, the execution of the Transaction
Documents to which it is a party and the performance of the activities referred
to in or contemplated by such agreements).
The Issuer is not (i) in violation of the LLC Agreement, (ii) in
violation of any Requirement of Law to which it or its property or assets may be
subject or (iii) in violation of any Contractual Obligation with respect to the
Issuer.
All representations and warranties of the Issuer made in each
Transaction Document to which it is a party are true and correct and are
repeated herein as though fully set forth herein.
The Issuer shall pay the principal of (and premium, if any) and
interest on the Investor Notes pursuant to the provisions of this Indenture and
any applicable Indenture Supplement. Principal and interest shall be considered
paid on the date due if the Paying Agent holds on that date money designated for
and sufficient to pay all principal and interest then due.
The Issuer will maintain in The City of New York, an office or
agency where Investor Notes may be surrendered for registration of transfer or
exchange. The Issuer hereby initially appoints the Transfer Agent and Registrar
to serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the Indenture Trustee of the location, and of any change in
the location, of any such office or agency. If at any time the Issuer shall fail
to
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maintain any such office or agency or shall fail to furnish the Indenture
Trustee with the address thereof, such surrenders, notices and demands may be
made or served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee as its agent to receive all such surrenders, notices and
demands.
The Issuer may also from time to time designate one or more other
offices or agencies where the Investor Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations.
The Issuer will give prompt written notice to the Indenture Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
The Issuer hereby designates the Corporate Trust Office of the
Indenture Trustee as one such office or agency of the Issuer.
The Issuer will pay and discharge, at or before maturity, all of its
respective material obligations and liabilities, including, without limitation,
tax liabilities and other governmental claims, except where the same may be
contested in good faith by appropriate proceedings, and will maintain, in
accordance with GAAP, reserves as appropriate for the accrual of any of the
same.
The Issuer will keep in full effect its existence, rights and
franchises as a limited liability company under the laws of the State of
Delaware and will obtain and preserve its qualification to do business in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on the business and operations of the Issuer or which qualification shall
be necessary to protect the validity and enforceability of this Indenture, the
Investor Notes and any instrument or agreement included in the Issuer Assets.
The Issuer will comply in all respects with all Requirements of Law
and all applicable laws, ordinances, rules, regulations, and requirements of
Governmental Authorities (including, without limitation, ERISA and the rules and
regulations thereunder) except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings and where such noncompliance
would not materially and adversely affect the condition, financial or otherwise,
operations, performance, properties or prospects of the Issuer or its ability to
carry out the transactions contemplated in this Indenture and each other
Transaction Document; provided, however, such noncompliance will not result in a
Lien (other than a Permitted Lien) on any Issuer Asset.
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The Issuer will keep proper books of record and account in which
full, true and correct entries shall be made of all dealings and transactions in
relation to the Issuer Assets and its business activities in accordance with
GAAP; and will permit the Indenture Trustee to visit and inspect any of its
properties, to examine and make abstracts from any of its books and records and
to discuss its affairs, finances and accounts with its officers, directors,
employees and independent public accountants, all at such reasonable times upon
reasonable notice and as often as may reasonably be requested.
(a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's covenants or obligations under any instrument
or agreement included in the Issuer Assets or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, any other Transaction Document or such
other instrument or agreement.
(b) Promptly upon becoming aware of any default under any
Transaction Document, the Issuer shall give the Indenture Trustee and the Rating
Agencies notice thereof.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other Transaction
Documents and in the instruments and agreements included in the Issuer Assets,
including but not limited to preparing (or causing to be prepared) and filing
(or causing to be filed) all UCC financing statements and continuation
statements required to be filed by the terms of this Indenture and the Transfer
Agreement in accordance with and within the time periods provided for herein and
therein.
(d) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees that, unless such action is
specifically permitted hereunder or under the other Transaction Documents, it
will not, without the prior written consent of the Indenture Trustee or the
Holders of a Majority in Interest of each Series of Outstanding Notes, amend,
modify, waive, supplement, terminate or surrender, or agree to any amendment,
modification, supplement, termination, waiver or surrender of, the terms of any
of the Issuer Assets, including any of the Transaction Documents, or waive
timely performance or observance by SPV under the Transfer Agreement or the
Origination Trust, VMS or the Servicer under the Origination Trust Documents.
Upon the occurrence of a Servicer Termination Event, the Issuer will not,
without the prior written consent of the Indenture Trustee or the Holders of a
Majority in Interest of each Series of Outstanding Notes, terminate the Servicer
and appoint a successor Servicer in accordance with the Servicing Agreement and
will terminate the Servicer and appoint a successor Servicer in accordance with
the Servicing Agreement if so directed by the Indenture Trustee or the Holders
of a Majority in Interest of each Series of Outstanding Notes.
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(e) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer. Initially, the
Issuer has contracted with the Administrator to assist the Issuer in performing
its duties under this Indenture.
Promptly upon becoming aware of any Potential Amortization Event,
Amortization Event, Potential Termination Event, Termination Event, Servicer
Termination Event, Event of Default or Default under any of the Transaction
Documents, the Issuer shall give the Indenture Trustee and the Rating Agencies
written notice thereof, together with an Officer's Certificate, setting forth
the details thereof and any action with respect thereto taken or contemplated to
be taken by the Issuer.
Promptly upon becoming aware thereof, the Issuer shall give the
Indenture Trustee and the Rating Agencies written notice of the commencement or
existence of any proceeding by or before any Governmental Authority against or
affecting the Issuer which is reasonably likely to have a material adverse
effect on the business, condition (financial or otherwise), results of
operations, properties or performance of the Issuer or the ability of the Issuer
to perform its obligations under this Indenture or under any other Transaction
Document to which it is a party.
The Issuer will promptly furnish to the Indenture Trustee and the
Rating Agencies such other information as, and in such form as, the Indenture
Trustee or the Rating Agencies may reasonably request in connection with the
transactions contemplated hereby.
The Issuer will from time to time prepare (or shall cause to be
prepared), execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to:
(a) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(b) perfect, publish notice of or protect the validity of the lien
and security interest created by this Indenture;
(c) enforce the rights of the Indenture Trustee and the Noteholders
in any of the Issuer Assets; or
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(d) preserve and defend title to the Issuer Assets and the rights of
the Indenture Trustee and the Noteholders in such Issuer Assets against
the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be filed by the Indenture Trustee pursuant to this
Section.
On or before March 31 of each calendar year, commencing with March
31, 2000, the Issuer shall furnish to the Indenture Trustee an Opinion of
Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-recording and refiling of
this Indenture, any indentures supplemental hereto and any other requisite
documents and with respect to the execution and filing of any financing
statements and continuation statements as are necessary to maintain the
perfection of the lien and security interest created by this Indenture and
reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain the perfection of such lien and
security interest. Such Opinion of Counsel shall also describe the recording,
filing, re-recording and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and the execution and filing of any
financing statements and continuation statements that will, in the opinion of
such counsel, be required to maintain the perfection of the lien and security
interest of this Indenture until March 31 in the following calendar year.
The Issuer will not create, incur, assume or permit to exist any
Lien upon any of the Issuer Assets (including the Collateral), other than
Permitted Liens.
The Issuer will not create, assume, incur, suffer to exist or
otherwise become or remain liable in respect of any Indebtedness other than (i)
Indebtedness hereunder and (ii) Indebtedness permitted under any other
Transaction Document.
The Issuer will not merge or consolidate with or into any other
Person.
The Issuer will not sell, lease, transfer, liquidate or otherwise
dispose of any Issuer Assets, except as contemplated by the Transaction
Documents unless directed to do so by the Indenture Trustee.
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The Issuer will not acquire, by long-term or operating lease or
otherwise, any assets except in accordance with the terms of the Transaction
Documents.
The Issuer will not declare any dividends on any of the Membership
Interests or make any purchase, redemption or other acquisition of, any of the
Membership Interests, other than as provided in the Transaction Documents. The
Issuer will not redeem any Preferred Membership Interests if any such redemption
would result in the occurrence of an Amortization Event with respect to any
Series of Investor Notes Outstanding.
The Issuer will neither (a) change the location of its chief
executive office or principal place of business (within the meaning of the
applicable UCC) without sixty (60) days' prior written notice to the Indenture
Trustee nor (b) change its name without prior written notice to the Indenture
Trustee sufficient to allow the Indenture Trustee to execute all filings
prepared by the Issuer (including filings of financing statements on form UCC-1)
and recordings necessary to maintain the perfection of the interest of the
Indenture Trustee on behalf of the Noteholders in the Collateral pursuant to
this Indenture. In the event that the Issuer desires to so change its office or
change its name, the Issuer will make any required filings and prior to actually
changing its office or its name the Issuer will deliver to the Indenture Trustee
(i) an Officer's Certificate and (except with respect to a change of the
location of the Issuer's chief executive office or principal place of business
to a new location in the same county) an Opinion of Counsel confirming that all
required filings have been made to continue the perfected interest of the
Indenture Trustee on behalf of the Noteholders in the Collateral in respect of
the new office or new name of the Issuer and (ii) copies of all such required
filings with the filing information duly noted thereon by the office in which
such filings were made.
The Issuer will not amend the LLC Agreement unless, prior to such
amendment, each Rating Agency confirms that after such amendment the Rating
Agency Condition will be met.
The Issuer will not make, incur, or suffer to exist any loan,
advance, extension of credit or other investment in any Person other than in
accordance with the Transaction Documents and, in addition, without limiting the
generality of the foregoing, the Issuer will not cause the Indenture Trustee to
make any Permitted Investments on the Issuer's behalf that would
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have the effect of causing the Issuer to be an "investment company" within the
meaning of the Investment Company Act.
The Issuer will not enter into or be a party to any agreement or
instrument other than any Transaction Document or documents and agreements
incidental thereto.
The Issuer will not engage in any business or enterprise or enter
into any transaction other than acquiring the SUBI Certificates pursuant to the
Transfer Agreement, funding such acquisitions through the issuance and sale of
the Investor Notes, issuing the Membership Interests pursuant to the LLC
Agreement, incurring and paying ordinary course operating expenses and other
activities related to or incidental to any of the foregoing.
The Issuer will do all things necessary to continue to be readily
distinguishable from VMS, ARAC and the Affiliates of each of the foregoing and
maintain its existence separate and apart from that of VMS, ARAC and the
Affiliates of each of the foregoing including, without limitation:
(i) practicing and adhering to organizational formalities, such as
maintaining appropriate books and records;
(ii) observing all organizational formalities in connection with all
dealings between itself and VMS, ARAC and the Affiliates of each of the
foregoing or any other unaffiliated entity;
(iii) observing all procedures required by its certificate of
formation and the LLC Agreement and the laws of the State of Delaware;
(iv) acting solely in its name and through its duly authorized
officers or agents in the conduct of its businesses;
(v) managing its business and affairs by or under the direction of
the Managers;
(vi) ensuring that its Authorized Officers duly authorize all of its
actions;
(vii) ensuring the receipt of proper authorization, when necessary,
in accordance with the terms of the LLC Agreement for its actions;
(viii) owning or leasing (including through shared arrangements with
Affiliates) all office furniture and equipment necessary to operate its
business;
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(ix) maintaining at least one Manager who is an Independent Manager;
(x) not (A) having or incurring any indebtedness to VMS, ARAC or any
Affiliates of VMS or ARAC; (B) guaranteeing or otherwise becoming liable
for any obligations of VMS, ARAC or any Affiliates of VMS or ARAC; (C)
having obligations guaranteed by VMS, ARAC or any Affiliates of VMS or
ARAC; (D) holding itself out as responsible for debts of VMS, ARAC or any
Affiliates of VMS or ARAC or for decisions or actions with respect to the
affairs of VMS, ARAC or any Affiliates of VMS or ARAC; (E) operating or
purporting to operate as an integrated, single economic unit with respect
to VMS or ARAC or any Affiliates of VMS or ARAC or any other unaffiliated
entity; (F) seeking to obtain credit or incur any obligation to any third
party based upon the assets of VMS or ARAC or any Affiliates of VMS or
ARAC or any other unaffiliated entity; (G) induce any such third party to
reasonably rely on the creditworthiness of VMS or ARAC or any Affiliates
of VMS or ARAC or any other unaffiliated entity; and (H) being directly or
indirectly named as a direct or contingent beneficiary or loss payee on
any insurance policy of VMS, ARAC or any Affiliates of VMS or ARAC other
than as required by the Transaction Documents with respect to insurance on
the Leased Vehicles;
(xi) other than as provided in the Transaction Documents,
maintaining its deposit and other bank accounts and all of its assets
separate from those of any other Person;
(xii) maintaining its financial records separate and apart from
those of any other Person;
(xiii) not suggesting in any way, within its financial statements,
that its assets are available to pay the claims of creditors of VMS, ARAC,
any Affiliates of VMS or ARAC or any other affiliated or unaffiliated
entity;
(xiv) compensating all its employees, officers, consultants and
agents for services provided to it by such Persons out of its own funds or
reimbursing any of its Affiliates in respect of amounts paid by such
Affiliates for such services;
(xv) maintaining office space separate and apart from that of VMS or
ARAC or any Affiliates of VMS or ARAC (even if such office space is
subleased from or is on or near premises occupied by VMS, ARAC or any
Affiliates of VMS or ARAC) and a telephone number separate and apart from
that of VMS or ARAC or any Affiliates of VMS or ARAC;
(xvi) conducting all oral and written communications, including,
without limitation, letters, invoices, purchase orders, contracts,
statements, and applications solely in its own name;
(xvii) having separate stationery from VMS, ARAC, any Affiliates of
VMS or ARAC or any other unaffiliated entity;
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(xviii) accounting for and managing all of its liabilities
separately from those of VMS, ARAC or any Affiliates of VMS or ARAC;
(xix) allocating, on an arm's length basis, all shared corporate
operating services, leases and expenses, including, without limitation,
those associated with the services of shared consultants and agents and
shared computer and other office equipment and software; and otherwise
maintaining an arm's-length relationship with each of VMS, ARAC, any
Affiliates of VMS or ARAC or any other unaffiliated entity;
(xx) refraining from filing or otherwise initiating or supporting
the filing of a motion in any bankruptcy or other insolvency proceeding
involving VMS, ARAC or any Affiliate of VMS or ARAC to substantively
consolidate VMS, ARAC or any Affiliate of VMS or ARAC with the Issuer;
(xxi) remaining solvent; and
(xxii) conducting all of its business (whether written or oral)
solely in its own name so as not to mislead others as to the identity of
each of the Issuer, SPV, VMS, ARAC and any Affiliates of VMS or ARAC.
The Issuer shall use the net proceeds of each Series of Investor
Notes in accordance with the provisions of the related Indenture Supplement.
The Issuer will not establish or maintain or contribute to any
Pension Plan that is covered by Title IV of ERISA.
"Event of Default", wherever used herein, with respect to any Series
of Investor Notes, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default in the payment of any interest on any Investor Note of
any Series when the same becomes due and payable, and such default shall
continue for a period of five Business Days;
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(b) default in the payment of the principal of any Investor Note of
any Series on the Series Termination Date with respect to such Series;
(c) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with) which default
materially and adversely affects the rights of the Investor Noteholders of
such Series, and which default shall continue or not be cured for a period
of 30 days (or for such longer period, not in excess of 60 days, as may be
reasonably necessary to remedy such default; provided that such default is
capable of remedy within 60 days or less and the Issuer delivers an
Officer's Certificate to the Indenture Trustee to the effect that the
Issuer has commenced, or will promptly commence and diligently pursue, all
reasonable efforts to remedy such default) after there shall have been
given, by registered or certified mail, to the Issuer by the Indenture
Trustee or to the Issuer and the Indenture Trustee by Investor Noteholders
of such Series holding Investor Notes evidencing at least 25% of the
Invested Amount of each Class of Investor Notes of such Series, a written
notice specifying such default and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder;
(d) the Issuer at any time receives a final determination that it
will be treated as an association taxable as a corporation for federal
income tax purposes;
(e) the Securities and Exchange Commission or other regulatory body
having jurisdiction reaches a final determination that the Issuer is an
"investment company" within the meaning of the Investment Company Act; or
(f) an Insolvency Event shall have occurred with respect to the
Issuer.
If an Event of Default referred to in clause (f) of Section 9.2 has
occurred, the unpaid principal amount of all Series of Investor Notes, together
with interest accrued but unpaid thereon, and all other amounts due to the
Investor Noteholders under this Indenture, shall immediately and without further
act become due and payable. If an Event of Default referred to in clause (a),
(b), (d) or (e) of Section 9.1 has occurred, then the Indenture Trustee or the
Holders of a Majority in Interest of each Series of Outstanding Investor Notes
may declare all of the Investor Notes to be immediately due and payable, by a
notice in writing to the Issuer (and to the Indenture Trustee if given by the
Investor Noteholders), and upon any such declaration the unpaid principal amount
of the Investor Notes, together with accrued and unpaid interest thereon through
the date of acceleration, shall become immediately due and payable. If an Event
of Default referred to in clause (c) of Section 9.1 shall occur and be
continuing with respect to any Series of Investor Notes, then and in every such
case the Indenture Trustee or Holders of a Majority in Interest of such Series
of Investor Notes may declare all the Investor Notes of such Series to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee if given by the Investor Noteholders), and upon any such
declaration the unpaid
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principal amount of such Investor Notes, together with accrued and unpaid
interest thereon through the date of acceleration, shall become immediately due
and payable.
At any time after such declaration of acceleration of maturity has
been made with respect to the Investor Notes (or a particular Series of Investor
Notes) and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article 9, provided,
the Holders of a Majority in Interest of each Series of Outstanding Investor
Notes (or, in the case of the acceleration of a particular Series of Investor
Notes, the Holders of a Majority in Interest of the Investor Notes of such
Series), by written notice to the Issuer and the Indenture Trustee, may rescind
and annul such declaration and its consequences; provided, that, no such
rescission shall affect any subsequent default or impair any right consequent
thereto.
(a) The Issuer covenants that if (i) default is made in the payment
of any interest on any Investor Note when the same becomes due and payable, and
such default continues for a period of five Business Days or (ii) default is
made in the payment of the principal of any Investor Note when the same becomes
due and payable, by acceleration or at stated maturity, the Issuer will, upon
demand of the Indenture Trustee, pay to it, for the benefit of the Holders of
such Investor Notes, the whole amount then due and payable on such Investor
Notes for principal and interest, with interest upon the overdue principal, and,
to the extent payment at such rate of interest shall be legally enforceable,
upon overdue installments of interest, at the Note Rate borne by the Investor
Notes, and in addition thereto such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee and
its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may institute a proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Issuer or other obligor upon such Investor Notes
and collect in the manner provided by law out of the property of the Issuer or
other obligor upon such Investor Notes, wherever situated, the moneys adjudged
or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, as more particularly provided in Section 9.4, in its discretion,
proceed to protect and enforce its rights and the rights of the Investor
Noteholders, by such appropriate proceedings as the Indenture Trustee shall deem
most effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Indenture Trustee by this Indenture or by
law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Investor Notes or any Person having or claiming an
ownership interest in the Issuer Assets,
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proceedings under the Bankruptcy Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of the Issuer or its
property or such other obligor or Person, or in the case of any other comparable
judicial proceedings relative to the Issuer or other obligor upon the Investor
Notes, or to the creditors or property of the Issuer or such other obligor, the
Indenture Trustee, irrespective of whether the principal of any Investor Notes
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Indenture Trustee shall have made any
demand pursuant to the provisions of this Section, shall be entitled and
empowered, by intervention in such proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Investor Notes
and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee (including
any claim for reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities incurred,
and all advances made, by the Indenture Trustee and each predecessor
Indenture Trustee, except as a result of negligence, bad faith or willful
misconduct) and of the Investor Noteholders allowed in such proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of the Investor Notes in any election of a trustee,
a standby trustee or person performing similar functions in any such
proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Investor Noteholders and of the Indenture
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee or the Holders of the Investor Notes allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Investor Noteholders to
make payments to the Indenture Trustee, and, in the event that the Indenture
Trustee shall consent to the making of payments directly to such Investor
Noteholders, to pay to the Indenture Trustee such amounts as shall be sufficient
to cover reasonable compensation to the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents, attorneys and counsel, and all
other expenses and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee except as a result of negligence
or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Investor
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Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Investor Notes or the rights of any Holder thereof or to authorize
the Indenture Trustee to vote in respect of the claim of any Investor Noteholder
in any such proceeding except, as aforesaid, to vote for the election of a
trustee in bankruptcy or similar person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Investor Notes, may be enforced by the Indenture
Trustee without the possession of any of the Investor Notes or the production
thereof in any trial or other proceedings relative thereto, and any such action
or proceedings instituted by the Indenture Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to
the payment of the expenses, disbursements and compensation of the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents and
attorneys, shall be for the ratable benefit of the Holders of the Investor
Notes.
(g) In any proceedings brought by the Indenture Trustee (and also
any proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Investor Notes, and it shall not be
necessary to make any Investor Noteholder a party to any such proceedings.
(a) If an Event of Default shall have occurred and be continuing
with respect to any Series of Outstanding Investor Notes and such Series of
Investor Notes has been accelerated under Section 9.4, the Indenture Trustee may
institute proceedings to enforce the obligations of the Issuer hereunder in its
own name and as trustee of an express trust for the collection of all amounts
then payable on the Investor Notes of such Series or under this Indenture with
respect thereto, whether by declaration or otherwise, enforce any judgment
obtained, and collect from the Issuer and any other obligor upon such Investor
Notes moneys adjudged due.
(b) If an Event of Default shall have occurred and be continuing
with respect to all Series of Outstanding Investor Notes and all Series of
Outstanding Investor Notes have been accelerated under Section 9.2, the
Indenture Trustee (subject to Section 9.5) may do one or more of the following:
(i) institute proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Issuer Assets;
(ii) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee and the Holders of the Investor Notes;
and
(iii) in the case of an Event of Default referred to in clause (a)
or (b) of Section 9.1, sell the Issuer Assets or any portion thereof or
rights or interest therein, at one or more public or private sales called
and conducted in any manner permitted by law;
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provided that the Indenture Trustee may not sell or otherwise liquidate the
Issuer Assets following an Event of Default referred to in clause (a) or (b) of
Section 9.1, unless (A) the Holders of Investor Notes representing 100% of the
Aggregate Invested Amount consent thereto, (B) the proceeds of such sale or
liquidation distributable to the Investor Noteholders are sufficient to
discharge in full all amounts then due and unpaid upon the Investor Notes for
principal and interest, or (C) (1) the Indenture Trustee determines that the
Issuer Assets will not continue to provide sufficient funds for the payment of
principal of and interest on the Investor Notes as they would have become due if
the Investor Notes had not been declared due and payable and (2) the Indenture
Trustee obtains the consent of a Majority in Interest of the Holders of each
Series of Outstanding Investor Notes. In determining such sufficiency or
insufficiency with respect to clause (B) and (C), the Indenture Trustee may, but
need not, obtain and rely upon an opinion of an Independent investment banking
or accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Issuer Assets for such purpose.
(c) If the Indenture Trustee collects any money or property pursuant
to this Article 9, such money or property shall be held by the Indenture Trustee
as additional collateral hereunder and the Indenture Trustee shall pay out such
money or property in the following order:
FIRST: to the Indenture Trustee for amounts due under Section 10.6;
and
SECOND: to the Collection Account for distribution in accordance
with the provisions of Article 5.
If the Investor Notes of each Series Outstanding have been declared
to be due and payable under Section 9.2 following an Event of Default and such
declaration and its consequences have not been rescinded and annulled, the
Indenture Trustee may, but need not, elect to maintain possession of the Issuer
Assets. It is the desire of the parties hereto and the Investor Noteholders that
there be at all times sufficient funds for the payment of principal of and
interest on the Investor Notes, and the Indenture Trustee shall take such desire
into account when determining whether to maintain possession of the Issuer
Assets. In determining whether to maintain possession of the Issuer Assets, the
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the Issuer
Assets for such purpose. Nothing contained in this Section 9.5 shall be
construed to require the Indenture Trustee to preserve the Issuer Assets
securing the Issuer Obligations if prohibited by applicable law or if the
Indenture Trustee is authorized, directed or permitted to liquidate the Issuer
Assets pursuant to Section 9.4(b).
(a) Promptly following a request from the Indenture Trustee to do so
and at the Administrator's expense, the Issuer agrees to take all such lawful
action as the Indenture Trustee
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may request to compel or secure the performance and observance by SPV, the
Origination Trust and the Servicer, as applicable, of each of their respective
obligations to the Issuer under or in connection with the Transfer Agreement and
the Origination Trust Documents, respectively, in accordance with their
respective terms, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the
Transaction Documents to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of SPV,
the Origination Trust or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by SPV,
the Origination Trust or the Servicer of each of their respective obligations
thereunder.
(b) If an Event of Default has occurred and is continuing with
respect to any Series of Outstanding Investor Notes, the Indenture Trustee may,
and, at the direction (which direction shall be in writing) of the Holders of a
Majority in Interest of such Series of Outstanding Investor Notes (or, if an
Event of Default with respect to more than one Series of Investor Notes has
occurred, a Majority in Interest of each Series of Investor Notes with respect
to which an Event of Default shall have occurred) shall exercise all rights,
remedies, powers, privileges and claims of the Issuer against SPV, the
Origination Trust or the Servicer under or in connection with the Transfer
Agreement and the Origination Trust Documents, including the right or power to
take any action to compel or secure performance or observance by SPV, the
Origination Trust or the Servicer of each of their respective obligations to the
Issuer thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Transfer Agreement and the Origination Trust
Documents, and any right of the Issuer to take such action shall be suspended;
provided that, if an Event of Default has occurred and is continuing with
respect to less than all Series of Outstanding Investor Notes, the Indenture
Trustee may not take any action hereunder that is detrimental to the rights of
the Holders of the Investor Notes with respect to which no Event of Default
shall have occurred.
No Holder of any Investor Note shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(b) Holders of each Series of Outstanding Investor Notes holding
Investor Notes evidencing at least 25% of each Class of Investor Notes of
such Series have made written request to the Indenture Trustee to
institute such proceeding in respect of such Event of Default in its own
name as the Indenture Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture Trustee
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred in complying with such request;
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(d) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
proceedings; and
(e) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Holders of
a Majority in Interest of each Series of Outstanding Investor Notes;
it being understood and intended that no one or more Holders of the Investor
Notes shall have any right in any manner whatever by virtue of, or by availing
of, any provision of this Indenture to affect, disturb or prejudice the rights
of any other Holders of the Investor Notes or to obtain or to seek to obtain
priority or preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of
Investor Notes, each representing less than a Majority in Interest of each
Series of Outstanding Investor Notes, the Indenture Trustee shall act at the
direction of the group of Holders of Investor Notes with the greater amount of
Investor Notes, however, should the Indenture Trustee receive conflicting or
inconsistent requests on indemnity from two or more groups of Holders with an
equal amount of Investor Notes the Indenture Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
Notwithstanding any other provisions in this Indenture, the Holder of any
Investor Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Investor Note
on or after the respective due dates thereof expressed in such Investor Note or
in this Indenture and to institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Holder.
If the Indenture Trustee or any Investor Noteholder has instituted
any Proceeding to enforce any right or remedy under this Indenture and such
Proceeding has been discontinued or abandoned for any reason or has been
determined adversely to the Indenture Trustee or to such Investor Noteholder,
then and in every such case the Issuer, the Indenture Trustee and the Investor
Noteholders shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Indenture Trustee and the Investor Noteholders
shall continue as though no such Proceeding had been instituted.
No right or remedy herein conferred upon or reserved to the
Indenture Trustee or to the Investor Noteholders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every
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other right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
No delay or omission of the Indenture Trustee or any Holder of any
Investor Note to exercise any right or remedy accruing upon any Default or Event
of Default shall impair any such right or remedy or constitute a waiver of any
such Default or Event of Default or an acquiescence therein. Every right and
remedy given by this Article 9 or by law to the Indenture Trustee or to the
Investor Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the Indenture Trustee or by the Investor Noteholders, as
the case may be.
The Holders of a Majority in Interest of each Series of Outstanding
Investor Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee with
respect to the Investor Notes or exercising any trust or power conferred on the
Indenture Trustee; provided that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) if an Event of Default is with respect to less than all Series
of Outstanding Investor Notes, then the Indenture Trustee's rights and
remedies shall be limited to the rights and remedies pertaining only to
those Series of Investor Notes with respect to which such Event of Default
has occurred and the Indenture Trustee shall exercise such rights and
remedies at the direction of the Holders of a Majority in Interest of all
such Series of Investor Notes;
(c) subject to the express terms of Section 9.4, any direction to
the Indenture Trustee to sell or liquidate the Issuer Assets shall be by
the Holders of Investor Notes representing not less than 100% of the
Aggregate Invested Amount;
(d) if the conditions set forth in Section 9.5 have been satisfied
and the Indenture Trustee elects to retain the Issuer Assets pursuant to
such Section, then any direction to the Indenture Trustee by Holders of
Investor Notes representing less than 100% of the Aggregate Invested
Amount to sell or liquidate the Issuer Assets shall be of no force and
effect;
(e) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction; and
(f) such direction shall be in writing;
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provided, further, that, subject to Section 10.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Investor Noteholders not
consenting to such action.
Prior to the declaration of the acceleration of the maturity of the
Investor Notes of any Series as provided in Section 9.2, the Holders of the
Investor Notes of not less than a Majority in Interest of such Series of
Outstanding Investor Notes may, on behalf of all such Holders, waive any past
Default or Event of Default and its consequences except a Default (a) in payment
of principal of or interest on any of the Investor Notes or (b) in respect of a
covenant or provision hereof which cannot be modified or amended without the
consent of the Holder of each Investor Note. In the case of any such waiver, the
Issuer, the Indenture Trustee and the Holders of the Investor Notes of such
Outstanding Series shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto. The Issuer shall give prompt written notice of any waiver to the Rating
Agencies.
All parties to this Indenture agree, and each Holder of any Investor Note by
such Holder's acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Indenture Trustee for
any action taken, suffered or omitted by it as the Indenture Trustee, the filing
by any party litigant in such Proceeding of an undertaking to pay the costs of
such Proceeding, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in such
Proceeding, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section shall
not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit
instituted by any Investor Noteholder or group of Investor Noteholders, in each
case holding in the aggregate more than 10% of the Invested Amount of any Series
of Investor Notes, or (c) any suit instituted by any Investor Noteholder for the
enforcement of the payment of principal of or interest on any Investor Note on
or after the respective due dates expressed in such Investor Note and in this
Indenture.
The Issuer covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead or in any manner whatsoever, claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
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lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
The Indenture Trustee's right to seek and recover judgment on the
Investor Notes or under this Indenture shall not be affected by the seeking,
obtaining or application of any other relief under or with respect to this
Indenture. Neither the lien of this Indenture nor any rights or remedies of the
Indenture Trustee or the Investor Noteholders shall be impaired by the recovery
of any judgment by the Indenture Trustee against the Issuer or by the levy of
any execution under such judgment upon any portion of the Issuer Assets or upon
any of the assets of the Issuer.
(a) If an Amortization Event or Event of Default has occurred and is
continuing, the Indenture Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
(b) The Indenture Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Indenture Trustee which are specifically required
to be furnished pursuant to any provision of this Indenture or any of the other
Transaction Documents, shall examine them to determine whether they
substantially conform to the requirements of this Indenture or such other
Transaction Document, as the case may be; provided, however, that the Indenture
Trustee shall not be responsible for the content of any resolution, certificate,
statement, opinion, report, document, order or other instrument furnished by the
Servicer, the Administrator or the Issuer hereunder.
(c) Subject to subsection 10.1(a), no provision of this Indenture
shall be construed to relieve the Indenture Trustee from liability for its own
negligent action, its own negligent failure to act or its own bad faith or
wilful misconduct; provided, however, that:
(i) the Indenture Trustee shall not be liable for an error of
judgment made in good faith by a Responsible Officer of the Indenture
Trustee, unless it shall be proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts nor shall the Indenture
Trustee be liable with respect to any action it takes or omits to take in
good faith in accordance with this Indenture or in accordance with a
direction received by it pursuant to Section 9.12;
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(ii) the Indenture Trustee shall not be charged with knowledge of
any Event of Default unless a Responsible Officer of the Indenture Trustee
obtains actual knowledge thereof or receives written notice thereof;
(iii) the Indenture Trustee shall not be charged with knowledge of
any failure by any Person to comply with its obligations under the
Transaction Documents unless a Responsible Officer of the Indenture
Trustee obtains actual knowledge of such failure or receives written
notice thereof;
(iv) prior to the occurrence of an Amortization Event or an Event of
Default, and after the curing of all such Amortization Events or Events of
Default which may have occurred, the duties and obligations of the
Indenture Trustee shall be determined solely by the express provisions of
this Indenture, the Indenture Trustee shall be obligated to perform only
such duties and obligations as are specifically set forth in this
Indenture and no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee;
(v) anything in this Indenture to the contrary notwithstanding, in
no event shall the Indenture Trustee be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not
limited to lost profits), even if the Indenture Trustee has been advised
of the likelihood of such loss or damage and regardless of the form of
action; and
(vi) subject to the other provisions of this Indenture and without
limiting the generality of this Section 10.01, the Indenture Trustee shall
have no duty (A) to record, file, or deposit this Indenture, the
Transaction Documents or any agreement referred to herein or therein or
any financing statement or continuation statement evidencing a security
interest, or to maintain any such recording or filing or depositing or to
rerecord, refile, or redeposit any thereof, (B) to insure the Issuer
Assets and (C) to pay or discharge any tax, assessment, or other
governmental charge or any lien or encumbrance of any kind owing with
respect to assessed or levied against, any part of the Collateral other
than from funds available in the Collection Account.
(d) The Indenture Trustee shall not be required to expend or risk
its own funds or otherwise incur financial liability in the performance of any
of its duties hereunder, or in the exercise of any of its rights or powers, if
there is reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it, and none of the provisions contained in this Indenture shall in any event
require the Indenture Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of any Person under any of the
Transaction Documents.
(e) Except for actions expressly authorized by this Indenture, the
Indenture Trustee shall take no action reasonably likely to impair the security
interests created hereunder in any of the Issuer Assets now existing or
hereafter created or to impair the value of any of the Issuer Assets now
existing or hereafter created.
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(f) In the event that the Paying Agent or the Transfer Agent and
Registrar shall fail to perform any obligation, duty or agreement in the manner
or on the day required to be performed by the Paying Agent or the Transfer Agent
and Registrar, as the case may be, under this Indenture, the Indenture Trustee
shall be obligated promptly to perform such obligation, duty or agreement in the
manner so required.
Except as otherwise provided by Section 10.1:
(a) The Indenture Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting based upon any document
believed by it to be genuine and to have been signed by or presented by
the proper person.
(b) The Indenture Trustee may consult with counsel of its selection
and the written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection from liability in respect
of any action taken, suffered or omitted by it hereunder in good faith and
in reliance thereon.
(c) The Indenture Trustee may act through agents, custodians and
nominees and shall not be liable for any misconduct or negligence on the
part of, or for the supervision of, any such agent, custodian or nominee
so long as such agent, custodian or nominee is appointed with due care.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers conferred upon it by the Indenture; provided,
that the Indenture Trustee's conduct does not constitute wilful
misconduct, negligence or bad faith.
(e) Prior to the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, the Indenture
Trustee shall be under no obligation to institute, conduct or defend any
litigation hereunder or in relation hereto and shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond, or other paper or document, unless
requested in writing to do so by Holders of the Investor Notes evidencing
not less than 25% of the Invested Amount of any Series of Investor Notes;
provided, however, that if the payment within a reasonable time to the
Indenture Trustee of the costs, expenses, or liabilities likely to be
incurred by it in instituting, conducting or defending any litigation
hereunder or in relation hereto or in the making of such investigation
shall be, in the opinion of the Indenture Trustee, not reasonably assured
to the Indenture Trustee by the security afforded to it by the terms of
this Indenture, the Indenture Trustee may require reasonable indemnity
against such cost, expense, or liability or payment of such expenses as a
condition precedent to so proceeding. The reasonable expense of every such
examination shall be paid by the Issuer
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or by the Administrator at the direction of the Issuer or, if paid by the
Indenture Trustee, shall be reimbursed by the Issuer or by the
Administrator at the direction of the Issuer upon demand.
(f) The Indenture Trustee shall not be liable for any losses or
liquidation penalties in connection with Permitted Investments, unless
such losses or liquidation penalties were incurred through the Indenture
Trustee's own willful misconduct, negligence or bad faith.
(g) The Indenture Trustee shall not be liable for the acts or
omissions of any successor to the Indenture Trustee so long as such acts
or omissions were not the result of the negligence, bad faith or willful
misconduct of Chase.
(h) The right of the Indenture Trustee to perform any discretionary
act enumerated in this Indenture shall not be construed as a duty, and the
Indenture Trustee shall not be answerable for other than its negligence or
wilful misconduct in the performance of such act.
(i) The Indenture Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust created hereby or the
powers granted hereunder.
The Indenture Trustee assumes no responsibility for the correctness
of the recitals contained herein and in the Investor Notes (other than the
certificate of authentication on the Investor Notes). Except as set forth in
Section 10.11, the Indenture Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Investor Notes (other than the
certificate of authentication on the Investor Notes) or of any of the Issuer
Assets. The Indenture Trustee shall not be accountable for the use or
application by the Issuer of any of the Investor Notes or of the proceeds of
such Investor Notes, or for the use or application of any funds paid to the
Issuer in respect of the Issuer Assets.
The Indenture Trustee in its individual or any other capacity may
become the owner or pledgee of Investor Notes with the same rights as it would
have if it were not the Indenture Trustee.
If a Default or an Event of Default or a Potential Amortization
Event or an Amortization Event occurs and is continuing and if it is either
actually known or written notice of the existence thereof has been delivered to
a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall mail
to each Noteholder notice thereof within 45 days after such knowledge or notice
occurs. Except in the case of a Default in accordance with the provisions of
Section 313(c) of the TIA in payment of principal of or interest on any Investor
Note (including
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payments pursuant to the mandatory redemption provisions of such Investor Note),
the Indenture Trustee may withhold the notice if and so long as a committee of
its Responsible Officers in good faith determines that withholding the notice is
in the interest of the Investor Noteholders.
The Issuer shall cause the Administrator pursuant to the
Administration Agreement to pay to the Indenture Trustee from time to time
reasonable compensation for its services. The Indenture Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Issuer shall cause the Administrator pursuant to the Administration
Agreement to reimburse the Indenture Trustee for all reasonable out-of-pocket
expenses incurred or made by it, including costs of collection, in addition to
the compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Indenture Trustee's
agents, counsel, accountants and experts. The Issuer shall cause the
Administrator pursuant to the Administration Agreement to indemnify the
Indenture Trustee against any and all loss, liability or expense (including the
reasonable fees of counsel) incurred by it in connection with the administration
of this trust and the performance of its duties hereunder. The Indenture Trustee
shall notify the Issuer and the Administrator promptly of any claim for which it
may seek indemnity; provided, however, a failure by the Indenture Trustee to
promptly notify the Issuer and the Administrator of a claim for which it may
seek indemnity shall not relieve the Administrator from its obligation to
indemnify the Indenture Trustee.
The Administrator's payment obligations to the Indenture Trustee
pursuant to this Section 10.06 shall survive the resignation or termination of
the Indenture Trustee and the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in Section
8.1(f) with respect to the Issuer, the expenses are intended to constitute
expenses of administration under the Bankruptcy Code or any other applicable
federal or state bankruptcy, insolvency or similar law.
The Indenture Trustee hereunder shall at all times be a corporation
organized and doing business under the laws of the United States or any state
thereof authorized under such laws to exercise corporate trust powers, having a
long-term unsecured debt rating of at least "Baa3" by Moody's and "BBB-" by
Standard & Poor's having, in the case of an entity that is subject to risk-based
capital adequacy requirements, risk-based capital of at least $50,000,000 or, in
the case of an entity that is not subject to risk-based capital adequacy
requirements, having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authority, and shall
satisfy the requirements for a trustee set forth in paragraph (a)(4)(i) of Rule
3a-7 under the Investment Company Act. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 10.7, the risk-based capital or the combined capital and surplus of such
corporation, as the case may be, shall be deemed to be its risk-based capital or
combined capital and surplus as set forth in the most recent report of condition
so published.
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If this Indenture is qualified under the TIA, the Indenture Trustee
shall at all times satisfy the requirements of TIA ss.310(a) and the Indenture
Trustee shall comply with TIA ss.310(b), including the optional provision
permitted by the second sentence of TIA ss.310(b)(9); provided that there shall
be excluded from the operation of TIA ss.310(b)(1) any indenture or indentures
under which other securities of the Issuer are outstanding if the requirements
for such exclusion set forth in the TIA ss.310(b)(1) are met.
If at any time the Indenture Trustee ceases to be eligible in
accordance with the provisions of this Section 10.7, the Indenture Trustee shall
resign immediately in the manner and with the effect specified in Section 10.8.
(a) The Indenture Trustee may give notice of its intent to resign at
any time by so notifying the Issuer. The Holders of a Majority in Interest of
each Series of Outstanding Investor Notes may remove the Indenture Trustee by so
notifying the Indenture Trustee and may appoint a successor Indenture Trustee.
The Issuer shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 10.7;
(ii) the Indenture Trustee is adjudged bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
(b) If the Indenture Trustee gives notice of its intent to resign or is
removed or if a vacancy exists in the office of the Indenture Trustee for any
reason (the Indenture Trustee in such event being referred to herein as the
retiring Indenture Trustee), the Issuer shall promptly appoint a successor
Indenture Trustee.
(c) A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee and to the Issuer and
thereupon the resignation or removal of the Indenture Trustee shall become
effective, and the successor Indenture Trustee, without any further act, deed or
conveyance shall have all the rights, powers and duties of the Indenture Trustee
under this Indenture. The successor Indenture Trustee shall mail a notice of its
succession to Noteholders. The retiring Indenture Trustee shall promptly
transfer all property held by it as the Indenture Trustee to the successor
Indenture Trustee.
(d) If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee gives notice of its intent to resign or is
removed, the retiring Indenture Trustee, the Issuer or the Holders of a Majority
in Interest of each Series of Outstanding Investor
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Notes may petition any court of competent jurisdiction for the appointment of a
successor Indenture Trustee.
(e) If the Indenture Trustee fails to comply with Section 10.7, any
Investor Noteholder may petition any court of competent jurisdiction for the
removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee.
(f) Any resignation or removal of the Indenture Trustee and appointment of
a successor Indenture Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to Section 10.8(c) and payment of all fees and
expenses owed to the outgoing Indenture Trustee.
(g) Notwithstanding the resignation or removal of the Indenture Trustee
pursuant to this Section, the Issuer's and the Administrator's obligations under
Section 10.6 shall continue for the benefit of the retiring Indenture Trustee.
The Indenture Trustee shall not be liable for the acts or omissions of any
successor Indenture Trustee.
If the Indenture Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee corporation without any further act shall be the successor Indenture
Trustee. The Indenture Trustee shall provide the Issuer and the Rating Agencies
written notice of any such transaction.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Investor Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor Indenture Trustee, and deliver such
Investor Notes so authenticated; and in case at that time any of the Investor
Notes shall not have been authenticated, any successor Indenture Trustee may
authenticate such Investor Notes either in the name of any predecessor Indenture
Trustee hereunder or in the name of the successor Indenture Trustee; and in all
such cases such certificate of authentication shall have the same full force as
is provided anywhere in the Investor Notes or in this Indenture with respect to
the certificate of authentication of the Indenture Trustee.
(a) Notwithstanding any other provisions of this Indenture or any
Indenture Supplement, at any time, for the purpose of meeting any legal
requirements of any jurisdiction in which any part of the Collateral may at the
time be located, the Indenture Trustee shall have the power and may execute and
deliver all instruments to appoint one or more persons to act as a co-Indenture
Trustee or co-Indenture Trustees, or separate Indenture Trustee or separate
Indenture Trustees, of all or any part of the Collateral, and to vest in such
Person or Persons, in such capacity and for the benefit of the Noteholders, such
title to the Collateral, or any part thereof,
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and, subject to the other provisions of this Section 10.10, such powers, duties,
obligations, rights and trusts as the Indenture Trustee may consider necessary
or desirable. No co-Indenture Trustee or separate Indenture Trustee hereunder
shall be required to meet the terms of eligibility as a successor Indenture
Trustee under Section 10.7 and no notice to Investor Noteholders of the
appointment of any co-Indenture Trustee or separate Indenture Trustee shall be
required under Section 10.8. No co-Indenture Trustee shall be appointed without
the consent of the Issuer unless such appointment is required as a matter of
state law or to enable the Indenture Trustee to perform its functions hereunder.
(b) Every separate Indenture Trustee and co-Indenture Trustee shall, to
the extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) The Investor Notes of each Series shall be
authenticated and delivered solely by the Indenture Trustee or an
authenticating agent appointed by the Indenture Trustee;
(ii) All rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be conferred
or imposed upon and exercised or performed by the Indenture Trustee
and such separate Indenture Trustee or co-Indenture Trustee jointly
(it being understood that such separate Indenture Trustee or
co-Indenture Trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent that
under any law of any jurisdiction in which any particular act or
acts are to be performed, the Indenture Trustee shall be incompetent
or unqualified to perform, such act or acts, in which event such
rights, powers, duties and obligations (including the holding of
title to the Assets or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate Indenture
Trustee or co-Indenture Trustee, but solely at the direction of the
Indenture Trustee;
(iii) No Indenture Trustee hereunder shall be personally
liable by reason of any act or omission of any other Indenture
Trustee hereunder;
(iv) The Indenture Trustee may at any time accept the
resignation of or remove any separate Indenture Trustee or
co-Indenture Trustee; and
(v) The Indenture Trustee shall remain primarily liable
for the actions of any co-Indenture Trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate Indenture
Trustees and co-Indenture Trustees, as effectively as if given to each of them.
Every instrument appointing any separate Indenture Trustee or co-Indenture
Trustee shall refer to this Indenture and the conditions of this Article 9. Each
separate Indenture Trustee and co-Indenture Trustee, upon its acceptance of the
trusts conferred, shall be vested with the estates or property specified in its
instrument of
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appointment, either jointly with the Indenture Trustee or separately, as may be
provided therein, subject to all the provisions of this Indenture and any
Indenture Supplement, specifically including every provision of this Indenture
or any Indenture Supplement relating to the conduct of, affecting the liability
of, or affording protection to, the Indenture Trustee. Every such instrument
shall be filed with the Indenture Trustee and a copy thereof given to the
Issuer.
(d) Any separate Indenture Trustee or co-Indenture Trustee may at any time
constitute the Indenture Trustee, its agent or attorney-in-fact with full power
and authority, to the extent not prohibited by law, to do any lawful act under
or in respect to this Indenture or any Indenture Supplement on its behalf and in
its name. If any separate Indenture Trustee or co-Indenture Trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Indenture Trustee, to the extent permitted by law, without the appointment of a
new or successor Indenture Trustee.
(e) In connection with the appointment of a co-Indenture Trustee, the
Indenture Trustee may, at any time, at the Indenture Trustee's sole cost and
expense, without notice to the Investor Noteholders, delegate its duties under
this Base Indenture and any Indenture Supplement to any Person who agrees to
conduct such duties in accordance with the terms hereof; provided, however, that
no such delegation shall relieve the Indenture Trustee of its obligations and
responsibilities hereunder with respect to any such delegated duties.
The Indenture Trustee represents and warrants to the Issuer and the
Noteholders that:
(i) The Indenture Trustee is a banking corporation
organized, existing and in good standing under the laws of the State
of New York;
(ii) The Indenture Trustee has full power, authority and
right to execute, deliver and perform this Indenture and any
Indenture Supplement issued concurrently with this Indenture and to
authenticate the Investor Notes, and has taken all necessary action
to authorize the execution, delivery and performance by it of this
Indenture and any Indenture Supplement issued concurrently with this
Indenture and to authenticate the Investor Notes;
(iii) This Indenture has been duly executed and
delivered by the Indenture Trustee; and
(iv) The Indenture Trustee meets the requirements of
eligibility as an Indenture Trustee hereunder set forth in Section
10.7.
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If this Indenture is qualified under the TIA, the Indenture Trustee shall
comply with TIA ss.311(a), excluding any creditor relationship listed in TIA
ss.311(b) and an Indenture Trustee who has resigned or been removed shall be
subject to TIA ss.311(a) to the extent indicated therein.
(a) This Indenture shall cease to be of further effect (except that the
Issuer's obligations under Section 10.6 and the Indenture Trustee's and Paying
Agent's obligations under Section 11.3 shall survive) when all Outstanding
Investor Notes theretofore authenticated and issued have been delivered (other
than destroyed, lost or stolen Investor Notes which have been replaced or paid)
to the Indenture Trustee for cancellation and the Issuer has paid all sums
payable hereunder.
(b) In addition, except as may be provided to the contrary in any
Indenture Supplement, the Issuer may terminate all of its obligations under this
Indenture if:
(i) The Issuer irrevocably deposits in trust with the
Indenture Trustee or at the option of the Indenture Trustee, with an
Indenture Trustee reasonably satisfactory to the Indenture Trustee
and the Issuer under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Indenture Trustee, money or
U.S. Government Obligations in an amount sufficient, in the opinion
of a nationally recognized firm of independent certified public
accountants expressed in a written certification thereof delivered
to the Indenture Trustee, to pay, when due, principal and interest
on the Investor Notes to maturity or redemption, as the case may be,
and to pay all other sums payable by it hereunder; provided,
however, that (1) the Indenture Trustee of the irrevocable trust
shall have been irrevocably instructed to pay such money or the
proceeds of such U.S. Government Obligations to the Indenture
Trustee and (2) the Indenture Trustee shall have been irrevocably
instructed to apply such money or the proceeds of such U.S.
Government Obligations to the payment of said principal and interest
with respect to the Investor Notes;
(ii) The Issuer delivers to the Indenture Trustee an
Officer's Certificate stating that all conditions precedent to
satisfaction and discharge of this Indenture have been complied
with, and an Opinion of Counsel to the same effect; and
(iii) the Rating Agency Condition is satisfied with
respect to each Series of Outstanding Investor Notes.
Then, this Indenture shall cease to be of further effect (except as provided in
this Section 11.1), and the Indenture Trustee, on demand of the Issuer, shall
execute proper instruments acknowledging confirmation of and discharge under
this Indenture.
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(c) After such irrevocable deposit made pursuant to Section 11.1(b) and
satisfaction of the other conditions set forth herein, the Indenture Trustee
upon request shall acknowledge in writing the discharge of the Issuer's
obligations under this Indenture except for those surviving obligations
specified above.
In order to have money available on a payment date to pay principal or
interest on the Investor Notes, the U.S. Government Obligations shall be payable
as to principal or interest at least one Business Day before such payment date
in such amounts as will provide the necessary money. U.S. Government Obligations
shall not be callable at the issuer's option.
The Indenture Trustee or a trustee satisfactory to the Indenture Trustee
and the Issuer shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 11.1. The Indenture Trustee shall apply
the deposited money and the money from U.S. Government Obligations through the
Paying Agent in accordance with this Indenture to the payment of principal and
interest on the Investor Notes.
The provisions of this Section 11.2 shall survive the expiration or
earlier termination of this Indenture.
The Indenture Trustee and the Paying Agent shall promptly pay to the
Issuer upon written request any excess money or, pursuant to Section 2.4 ,
return any Investor Notes held by them at any time.
The provisions of this Section 11.3 shall survive the expiration or
earlier termination of this Indenture.
Without the consent of any Investor Noteholder, the Issuer and the
Indenture Trustee, at any time and from time to time, may enter into one or more
Indenture Supplements hereto, in form satisfactory to the Indenture Trustee, for
any of the following purposes, provided that the Rating Agency Condition is met:
(a) to create a new Series of Investor Notes;
(b) to add to the covenants of the Issuer for the benefit of any
Investor Noteholders (and if such covenants are to be for the benefit of
less than all Series of
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Investor Notes, stating that such covenants are expressly being included
solely for the benefit of such Series) or to surrender any right or power
herein conferred upon the Issuer (provided, however, that the Issuer will
not pursuant to this Section 12.1(b) surrender any right or power it has
under the Transaction Documents);
(c) to mortgage, pledge, convey, assign and transfer to the
Indenture Trustee any property or assets as security for the Investor
Notes and to specify the terms and conditions upon which such property or
assets are to be held and dealt with by the Indenture Trustee and to set
forth such other provisions in respect thereof as may be required by the
Indenture or as may, consistent with the provisions of the Indenture, be
deemed appropriate by the Issuer and the Indenture Trustee, or to correct
or amplify the description of any such property or assets at any time so
mortgaged, pledged, conveyed and transferred to the Indenture Trustee on
behalf of the Noteholders;
(d) to cure any ambiguity, defect, or inconsistency or to correct or
supplement any provision contained herein or in any Indenture Supplement
or in any Investor Notes issued hereunder;
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor Indenture Trustee with respect to the Investor
Notes of one or more Series and to add to or change any of the provisions
of the Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Indenture Trustee;
(f) to correct or Indenture Supplement any provision herein which
may be inconsistent with any other provision herein or to make any other
provisions with respect to matters or questions arising under this
Indenture; or
(g) if this Indenture is required to be qualified under the TIA, to
modify, eliminate or add to the provisions of this Indenture to such
extent as shall be necessary to effect the qualification of this Indenture
under the TIA or under any similar federal statute hereafter enacted and
to add to this Indenture such other provisions as may be expressly
required by the TIA;
provided, however, that, as evidenced by an Opinion of Counsel delivered to the
Indenture Trustee (at the Issuer's expense), such action shall not adversely
affect in any material respect the interests of any Investor Noteholder. Upon
the request of the Issuer, the Indenture Trustee shall join with the Issuer in
the execution of any Indenture Supplement authorized or permitted by the terms
of this Indenture and shall make any further appropriate agreements and
stipulations which may be therein contained, but the Indenture Trustee shall not
be obligated to enter into such Indenture Supplement which affects its own
rights, duties or immunities under this Indenture or otherwise.
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Except as provided in Section 12.1, the provisions of this Indenture and
any Indenture Supplement (unless otherwise provided in such Indenture
Supplement) and each other Transaction Document to which the Issuer is a party
may from time to time be amended, modified or waived, if such amendment,
modification or waiver is in writing and consented to in writing by the Issuer,
the Indenture Trustee and the Holders of a Majority in Interest of each Series
of Outstanding Investor Notes; provided that, if such amendment, modification or
waiver of or to this Indenture, the Indenture Supplement with respect to a
Series of Investor Notes or any Transaction Document does not affect the
Noteholders of a particular Series of Investor Notes (as substantiated by an
Opinion of Counsel to such effect), then the consent of the Investor Noteholders
of such Series shall not be required to such amendment, modification or waiver;
provided further, that no consent of Investor Noteholders shall be required to
any amendment, modification or waiver of or to any Transaction Document if such
amendment, modification or waiver does not adversely affect in any material
respect the Noteholders of any Series of Investor Notes (as substantiated by an
Opinion of Counsel to such effect) and provided further that the Rating Agency
Condition is satisfied with respect to each affected Series of Investor Notes.
Notwithstanding the foregoing:
(i) any modification of this Section 11.2, any
requirement hereunder that any particular action be taken by
Investor Noteholders holding the relevant percentage in principal
amount of the Investor Notes or any change in the definition of the
terms "Adjusted Aggregate Unit Balance" or "Asset Deficiency",
"Invested Amount", "Invested Percentage" or any defined term used
for the purpose of any such definitions shall require the consent of
each affected Investor Noteholder; and
(ii) any amendment, waiver or other modification that
would (a) extend the due date for, or reduce the amount of any
scheduled repayment or prepayment of principal of or interest on any
Investor Note (or reduce the principal amount of or rate of interest
on any Investor Note) shall require the consent of each affected
Investor Noteholder; (b) approve the assignment or transfer by the
Issuer of any of its rights or obligations hereunder or under any
other Transaction Document to which it is a party except pursuant to
the express terms hereof or thereof shall require the consent of
each Investor Noteholder; (c) release any obligor under any
Transaction Document to which it is a party except pursuant to the
express terms of such Transaction Document shall require the consent
of each Investor Noteholder; provided, however, that the Liens on
Vehicles may be released as provided in Section 3.5; (d) affect
adversely the interests, rights or obligations of any Investor
Noteholder individually in comparison to any other Investor
Noteholder shall require the consent of such Investor Noteholder; or
(e) amend or otherwise modify any Amortization Event shall require
the consent of each affected Investor Noteholder.
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Each amendment or other modification to this Indenture or the Investor
Notes shall be set forth in an Indenture Supplement. The initial effectiveness
of each Indenture Supplement shall be subject to the satisfaction of the Rating
Agency Condition. In addition to the manner provided in Sections 12.1 and 12.2,
each Indenture Supplement may be amended as provided in such Indenture
Supplement.
Until an amendment or waiver becomes effective, a consent to it by an
Investor Noteholder of an Investor Note is a continuing consent by the Investor
Noteholder and every subsequent Investor Noteholder of an Investor Note or
portion of an Investor Note that evidences the same debt as the consenting
Investor Noteholder's Investor Note, even if notation of the consent is not made
on any Investor Note. However, any such Investor Noteholder or subsequent
Investor Noteholder may revoke the consent as to his Investor Note or portion of
an Investor Note if the Indenture Trustee receives written notice of revocation
before the date the amendment or waiver becomes effective. An amendment or
waiver becomes effective in accordance with its terms and thereafter binds every
Investor Noteholder. The Issuer may fix a record date for determining which
Investor Noteholders must consent to such amendment or waiver.
The Indenture Trustee may place an appropriate notation about an amendment
or waiver on any Investor Note thereafter authenticated. The Issuer in exchange
for all Investor Notes may issue and the Indenture Trustee shall authenticate
new Investor Notes that reflect the amendment or waiver. Failure to make the
appropriate notation or issue a new Investor Note shall not affect the validity
and effect of-such amendment or waiver.
The Indenture Trustee shall sign any Indenture Supplement authorized
pursuant to this Article 12 if the Indenture Supplement does not adversely
affect the rights, duties, liabilities or immunities of the Indenture Trustee.
If it does, the Indenture Trustee may, but need not, sign it. In signing such
Indenture Supplement, the Indenture Trustee shall be entitled to receive, if
requested, an indemnity reasonably satisfactory to it and to receive and,
subject to Section 10.1, shall be fully protected in relying upon, an Officer's
Certificate and an Opinion of Counsel as conclusive evidence that such Indenture
Supplement is authorized or permitted by this Indenture and that it will be
valid and binding upon the Issuer in accordance with its terms
If this Indenture is qualified under the TIA, every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article 12
shall comply in all respects with the TIA.
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(a) Upon any application or request by the Issuer to the Indenture Trustee
to take any action under any provision of this Indenture, the Issuer shall
furnish to the Indenture Trustee (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, and (iii) if this Indenture is qualified under the TIA and the
TIA so requires, an Independent Certificate from a firm of certified public
accountants or other experts meeting the applicable requirements of this Section
13.1, except that, in the case of any such application or request as to which
the furnishing of such documents is specifically required by any provision of
this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether such
covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
(b) (i) If this Indenture is qualified under the TIA and the TIA so
requires, prior to the deposit of any property or securities with the Indenture
Trustee that is to be made the basis for the release of any property or
securities subject to the Lien of this Indenture, the Issuer shall, in addition
to any obligation imposed in Section 13.1(a) or elsewhere in this Indenture,
furnish to the Indenture Trustee an Officer's Certificate certifying or stating
the opinion of each person signing such certificate as to the fair value (within
90 days of such deposit) to the Issuer of the property or securities to be so
deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any
signer thereof as to the matters described in clause (i), the Issuer shall
also deliver to the Indenture Trustee an
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Independent Certificate as to the same matters, if the fair value to the
Issuer of the securities to be so deposited and of all other such
securities made the basis of any such withdrawal or release since the
commencement of the then-current fiscal year of the Issuer, as set forth
in the certificates delivered pursuant to clause (i) and this clause (ii),
is 10% or more of the Aggregate Invested Amount, but such a certificate
need not be furnished with respect to any securities so deposited, if the
fair value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the Aggregate
Invested Amount.
(iii) If this Indenture is qualified under the TIA and the TIA so
requires, whenever any property or securities are to be released from the
Lien of this Indenture, the Issuer shall also furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of each
person signing such certificate as to the fair value (within 90 days of
such release) of the property or securities proposed to be released and
stating that in the opinion of such person the proposed release will not
impair the security under this Indenture in contravention of the
provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any
signer thereof as to the matters described in clause (iii), the Issuer
shall also furnish to the Indenture Trustee an Independent Certificate as
to the same matters if the fair value of the property or securities and of
all other property, or securities released from the Lien of this Indenture
since the commencement of the then current calendar year, as set forth in
the certificates required by clause (iii) and this clause (iv), equals 10%
or more of the Aggregate Invested Amount, but such certificate need not be
furnished in the case of any release of property or securities if the fair
value thereof as set forth in the related Officer's Certificate is less
than $25,000 or less than one percent of the then Aggregate Invested
Amount.
(v) Notwithstanding any provision of this Section, the Issuer may
(A) collect, liquidate, sell or otherwise dispose of the Issuer Assets as
and to the extent permitted or required by the Transaction Documents and
(B) make cash payments out of the Issuer Accounts as and to the extent
permitted or required by the Transaction Documents.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person my certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate to legal
matters, upon a certificate or opinion of, or representations by, counsel,
unless such officer knows, or in the exercise of reasonable care
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should know, that the certificate or opinion or representations with respect to
the matters upon which his or her certificate or opinion is based are erroneous.
Any such certificate of an Authorized Officer or Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an officer or officers of the Servicer, the Seller or
the Issuer, stating that the information with respect to such factual matters is
in the possession of the Servicer, the Seller or the Issuer, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application,
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document (x) as a condition of the granting of such
application, or (y) as evidence of the Issuer's compliance with any term hereof,
it is intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in each case be
conditions precedent to the right of the Issuer to have such application granted
or to the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Indenture Trustee's right to rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article 10.
(a) Any request, demand, authoriza-tion, direc-tion, notice, consent,
waiver or other action pro-vided by this Indenture to be given or taken by the
Investor Note--holders may be embodied in and evidenced by one or more
instru-ments of substantially similar tenor signed by such Investor Noteholders
in person or by an agent duly ap-pointed in writing; and except as herein
otherwise ex-pressly provid-ed, such action shall become effective when such
instru-ment or instruments are delivered to the Indenture Trustee and, when
required, to the Issuer. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Indenture Trustee and the Issuer, if
made in the manner provided in this Section 13.3.
(b) The fact and date of the execu-tion by any Investor Note-holder of any
such instrument or writ-ing may be proved in any reasonable manner which the
Indenture Trustee deems sufficient.
(c) Any request, demand, authoriza-tion, direc-tion, notice, consent,
waiver or other act by an Investor Note--holder shall bind every Holder of every
Investor Note issued upon the registration of transfer there-of or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Indenture Trustee or the Issuer in reliance thereon, regardless of
whether notation of such action is made upon such Investor Note-.
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(d) The Indenture Trustee may require such addi-tional proof of any matter
referred to in this Sec-tion 13.3 as it shall deem necessary.
(a) Any notice or communication by the Issuer or the Indenture Trustee to
the other shall be in writing and delivered in person or mailed by first-class
mail (registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the other's address:
If to the Issuer:
Greyhound Funding LLC
c/o Global Securitization Services, LLC
25 West 43rd Street, Suite 704
New York, NY 10036
Attention: President
Telecopier No.: (212) 302-8767
with a copy to the Administrator:
PHH Vehicle Management Services, LLC
900 Old Country Road
Garden City, New York 11530
Telecopier: (516) 222-3751
Attention: General Counsel
If to the Indenture Trustee:
The Chase Manhattan Bank
450 W. 33rd Street, 14th Floor
New York, New York 10001
Attn: Capital Markets Fiduciary Services, VMS Asset Backed Notes
Phone: (212) 946-8600
Fax: (212) 946-3916
The Issuer or the Indenture Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications;
provided, however, the Issuer may not at any time designate more than a total of
three (3) addresses to which notices must be sent in order to be effective.
Any notice (i) given in person shall be deemed delivered on the date of
delivery of such notice, (ii) given by first class mail shall be deemed given
five (5) days after the date that such notice is mailed, (iii) delivered by
telex or telecopier shall be deemed given on the date of delivery
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<PAGE>
of such notice, and (iv) delivered by overnight air courier shall be deemed
delivered one Business Day after the date that such notice is delivered to such
overnight courier.
Notwithstanding any provisions of this Indenture to the contrary, the
Indenture Trustee shall have no liability based upon or arising from the failure
to receive any notice required by or relating to this Indenture or the Investor
Notes.
If the Issuer mails a notice or communication to Investor Noteholders, it
shall mail a copy to the Indenture Trustee at the same time.
Notices required to be given to the Rating Agencies by the Issuer or the
Indenture Trustee shall be in writing, personally delivered or mailed certified
mail, return receipt requested to (i) in the case of Moody's, at the following
address: Moody's Investors Service, 99 Church Street, New York, New York 10004
and (ii) in the case of Standard & Poor's, at the following address: Standard &
Poor's Ratings Service, 55 Water Street (40th Floor), New York, New York 10041,
Attention: Asset Backed Surveillance Department.
(b) Where the Indenture provides for notice to Investor Noteholders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if sent in writing and mailed, first-class postage prepaid,
to each Investor Noteholder affected by such event, at its address as it appears
in the Note Register, not later than the latest date, and not earlier than the
earliest date, prescribed (if any) for the giving of such notice. In any case
where notice to Investor Noteholder is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any particular
Investor Noteholder shall affect the sufficiency of such notice with respect to
other Investor Noteholders, and any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by any Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Investor Noteholders shall be filed with the Indenture Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In the case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made that is satisfactory to the Indenture
Trustee shall constitute a sufficient notification for every purpose hereunder.
If this Indenture is qualified under the TIA and any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this indenture by any of the provisions of the TIA, such required
provision shall control.
If this Indenture is qualified under the TIA, the provisions of TIA ss.ss.
310 through 317 that impose duties on any person (including the provisions
automatically deemed included herein
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unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
The Indenture Trustee may make reasonable rules for action by or at a
meeting of Investor Noteholders.
The parties may sign any number of copies of this Indenture. One signed
copy is enough to prove this Indenture.
Except as set forth in an Indenture Supplement, nothing in this Indenture
or in the Investor Notes, expressed or implied, shall give to any Person, other
than the parties hereto and their successors hereunder and the Holders, any
benefit or any legal or equitable right, remedy or claim under the Indenture.
In any case where any Payment Date, redemption date or maturity date of
any Investor Note shall not be a Business Day, then (notwithstanding any other
provision of this Indenture) payment of interest or principal (and premium, if
any), as the case may be, need not be made on such date but may be made on the
next succeeding Business Day with the same force and effect as if made on the
Payment Date, redemption date, or maturity date; provided, however. that no
interest shall accrue for the period from and after such Payment Date,
redemption date, or maturity date, as the case may be.
THIS INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
If any one or more of the covenants, agreements, provisions or terms of
this Indenture shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Indenture and shall
in no way affect the validity of enforceability of the other provisions of this
Indenture or of the Investor Notes or rights of the Noteholders thereof.
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<PAGE>
This Indenture may be executed in two or more counterparts (and by
different parties on separate counterparts), each of which shall be an original,
but all of which together shall constitute one and the same instrument.
All agreements of the Issuer in this Indenture and the Investor Notes
shall bind its successor; provided, however, the Issuer may not assign its
obligations or rights under this Indenture or any Transaction Document. All
agreements of the Indenture Trustee in this Indenture shall bind its successor.
The Table of Contents, Cross-Reference Table, and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
If this Indenture is subject to recording in any appropriate public
recording offices, such recording is to be effected by the Issuer and at its
expense accompanied by an Opinion of Counsel (which may be counsel to the
Indenture Trustee or any other counsel reasonably acceptable to the Indenture
Trustee) to the effect that such recording is necessary either for the
protection of the Investor Noteholders or any other person secured hereunder or
for the enforcement of any right or remedy granted to the Indenture Trustee
under this Indenture or to satisfy any provision of the TIA (if this Indenture
is qualified thereunder).
The Indenture Trustee, by entering into this Indenture, and each Investor
Noteholder, by accepting an Investor Note, hereby covenant and agree that they
will not at any time (i) institute against the Issuer or join in any institution
against the Issuer of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any United States Federal
or state bankruptcy or similar law in connection with any obligations relating
to the Investor Notes, this Indenture or any of the other Transaction Documents
or (ii) institute against, or join any other Person in instituting against, the
Origination Trust, SPV, any other Special Purpose Entity, or any general partner
or single member of any Special Purpose Entity that is a partnership or limited
liability company, respectively, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding or other proceedings under any federal or
state bankruptcy or similar law.
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<PAGE>
The Indenture Trustee, by entering into this Indenture, and each Investor
Noteholder, by accepting an Investor Note, represents, warrants and covenants
that (a) each of the Lease SUBI and the Fleet Receivable SUBI is a separate
series of the Origination Trust as provided in Section 3806(b)(2) of Chapter 38
of Title 12 of the Delaware Code, 12 Del.C. ss. 3801 et seq., (b)(i) the debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to the Lease SUBI, the Lease SUBI Portfolio or the Fleet
Receivable SUBI shall be enforceable against the Lease SUBI Portfolio or the
Fleet Receivable SUBI only, as applicable, and not against any other SUBI
Portfolio (used in this Section as defined in the Origination Trust Agreement)
or the UTI Portfolio and (ii) the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to any other SUBI
(used in this Section as defined in the Origination Trust Agreement), any other
SUBI Portfolio, the UTI or the UTI Portfolio shall be enforceable against such
other SUBI Portfolio or the UTI Portfolio only, as applicable, and not against
any other SUBI Assets, (c) except to the extent required by law, UTI Assets or
SUBI Assets with respect to any SUBI (other than the Lease SUBI and the Fleet
Receivable SUBI) shall not be subject to the claims, debts, liabilities,
expenses or obligations arising from or with respect to the Lease SUBI or Fleet
Receivable SUBI, respectively, in respect of such claim, (d)(i) no creditor or
holder of a claim relating to the Lease SUBI, the Fleet Receivable SUBI or the
Lease Receivable SUBI Portfolio shall be entitled to maintain any action against
or recover any assets allocated to the UTI or the UTI Portfolio or any other
SUBI or the assets allocated thereto, and (ii) no creditor or holder of a claim
relating to the UTI, the UTI Portfolio or any SUBI other than the Lease SUBI or
the Fleet Receivable SUBI or any SUBI Assets other than the Lease SUBI Portfolio
or the Fleet Receivables shall be entitled to maintain any action against or
recover any assets allocated to the Lease SUBI or the Fleet Receivable SUBI, and
(e) any purchaser, assignee or pledgee of an interest in the Lease SUBI, the
Lease SUBI Certificate, the Fleet Receivable SUBI, the Lease SUBI Certificate,
the Fleet Receivable SUBI Certificate, any other SUBI, any other SUBI
Certificate (used in this Section as defined in the Origination Trust
Agreement), the UTI or the UTI Certificate must, prior to or contemporaneously
with the grant of any such assignment, pledge or security interest, (i) give to
the Origination Trust a non-petition covenant substantially similar to that set
forth in Section 6.9 of the Origination Trust Agreement, and (ii) execute an
agreement for the benefit of each holder, assignee or pledgee from time to time
of the UTI or UTI Certificate and any other SUBI or SUBI Certificate to release
all claims to the assets of the Origination Trust allocated to the UTI and each
other SUBI Portfolio and in the event that such release is not given effect, to
fully subordinate all claims it may be deemed to have against the assets of the
Origination Trust allocated to the UTI Portfolio and each other SUBI Portfolio.
IN WITNESS WHEREOF, the Indenture Trustee and the Issuer have caused, this
Base Indenture to be duly executed by their respective duly authorized officers
as of the day and year first written above.
GREYHOUND FUNDING, LLC,
as Issuer
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By:
Name:
Title:
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By:
Name:
Title:
<PAGE>
Exhibit 4.50
SERIES 1999-1 SUPPLEMENT, dated as of June 30, 1999 (as amended,
Indenture Supplemented, restated or otherwise modified from time to time, this
"Indenture Supplement") among GREYHOUND FUNDING LLC, a special purpose limited
liability company established under the laws of Delaware (the "Issuer"), PHH
VEHICLE MANAGEMENT SERVICES, LLC ("VMS"), as administrator (in such capacity,
the "Administrator"), PARK AVENUE RECEIVABLES CORPORATION, a Delaware
corporation (including its successors and assigns (excluding, however, the APA
Bank as assignee pursuant to Section 2.4), the "Initial Purchaser"), THE CHASE
MANHATTAN BANK ("Chase"), a New York banking corporation (the "APA Bank"),
Chase, in its capacity as Funding Agent (the "Funding Agent"), and Chase, in its
capacity as Indenture Trustee (together with its successors in trust thereunder
as provided in the Base Indenture referred to below, the "Indenture Trustee"),
to the Base Indenture, dated as of June 30, 1999, between the Issuer and the
Indenture Trustee (as amended, modified, restated or supplemented from time to
time, exclusive of Indenture Supplements creating new Series of Investor Notes,
the "Base Indenture").
WHEREAS, Sections 2.2 and 12.1 of the Base Indenture provide, among
other things, that the Issuer and the Indenture Trustee may at any time and from
time to time enter into a Indenture Supplement to the Base Indenture for the
purpose of authorizing the issuance of one or more Series of Investor Notes.
NOW, THEREFORE, the parties hereto agree as follows:
There is hereby created a Series of Investor Notes to be issued
pursuant to the Base Indenture and this Indenture Supplement and such Series of
Investor Notes shall be designated generally as Floating Rate Asset Backed
Variable Funding Notes, Series 1999-1.
The proceeds from the sale of the Series 1999-1 Investor Notes (as
defined herein) and the proceeds from any Increase (as defined herein) shall be
deposited in the Series 1999-1 Collection Subaccount and shall be used by the
Issuer to fund the acquisition and maintenance of the SUBI Certificates under
the Transfer Agreement and to reduce the Invested Amounts of other Series of
Investor Notes.
(a) All capitalized terms not otherwise de-fined herein are defined
in the Definitions List attached to the Base Indenture as Schedule 1 thereto.
All Arti-cle, Section or Subsection references herein shall refer to Articles,
Sections or Subsections of the Base Inden-ture, except as otherwise provided
herein. Unless other-wise stated herein, as the context otherwise requires or if
such term is otherwise defined in the Base Indenture, each capitalized
<PAGE>
term used or defined herein shall relate only to the Series 1999-1 Investor
Notes and not to any other Series of Investor Notes issued by the Issuer.
(b) The following words and phrases shall have the following
meanings with respect to the Series 1999-1 Investor Notes and the definitions of
such terms are applicable to the singular as well as the plural form of such
terms and to the masculine as well as the feminine and neuter genders of such
terms:
"Additional Costs Cap" means, for any Payment Date, an amount equal
to the quotient of the product of (a) 0.25% per annum, (b) the weighted
average Series 1999-1 Invested Amount during the immediately preceding
Series 1999-1 Interest Period and (c) the number of days in such Series
1999-1 Interest Period divided by 360.
"Additional Interest" is defined in Section 5A.3(b).
"Adjusted LIBO Rate" means, with respect to each day during each
Eurodollar Period pertaining to a portion of the Series 1999-1 Invested
Amount allocated to a Eurodollar Tranche, an interest rate per annum
(rounded upwards, if necessary, to the nearest 1/16th of 1%) equal to the
LIBO Rate for such Eurodollar Period multiplied by the Statutory Reserve
Rate.
"Alternate Base Rate" means, for any day, a rate per annum equal to
the greater of (a) the Prime Rate in effect on such day and (b) the
Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any
change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective from and including the
effective day of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.
"Amortization Event" is defined in Article 4.
"APA Bank" is defined in the recitals hereto.
"APA Bank Purchase Date" means either the date of the Purchase or,
if the APA Bank funds the Series 1999-1 Invested Amount on the Series
1999-1 Initial Funding Date pursuant to Section 2.3, the Series 1999-1
Initial Funding Date.
"Applicable Margin" means on any date of determination, (a) after
the occurrence of a CP Conduit Wind-Down Event described in clause (ii),
(iii), (iv) or (v) of the definition thereof, .50% per annum and (b) after
the occurrence of any other CP Conduit Wind-Down Event, 1.00% per annum.
"Article 7 Costs" means any amounts due pursuant to Article 7.
"Available Pricing Amount" means, on any Business Day, the sum of
(i) the Unallocated Balance plus (ii) the Increase Amount, if any, on such
date.
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"Board" means the Board of Governors of the Federal Reserve System
or any successor thereto.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the Series 1999-1 Closing Date, (b) any change in law,
rule or regulation or in the interpretation or application thereof by any
Governmental Authority after the Series 1999-1 Closing Date or (c)
compliance by any Purchaser with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority
made or issued after the Series 1999-1 Closing Date.
"Commercial Paper" means the promissory notes of the Initial
Purchaser issued by the Initial Purchaser in the commercial paper market.
"Commitment" means the APA Bank's obligation to purchase a Series
1999-1 Investor Note on the Series 1999-1 Initial Funding Date, to acquire
the Initial Purchaser's Series 1999-1 Investor Note and to maintain and,
subject to certain conditions, increase, the Series 1999-1 Invested Amount
in an aggregate amount not to exceed at any one time outstanding
$2,585,700,000, as such amount may be increased or reduced from time to
time as provided herein.
"Commitment Amount" means the amount of the Commitment.
"Commitment Fee" is defined in Section 2.7(e).
"Commitment Fee Payment" is defined in Section 5A.4(c)(vi).
"Commitment Fee Rate" is defined in the Series 1999-1 Fee Letter.
"Commitment Period" means the period commencing on June 30, 1999 and
terminating on the Series 1999-1 Commitment Termination Date.
"Conduit Assignee" shall mean any commercial paper conduit
administered by Chase and designated by Chase from time to time to accept
an assignment from the Initial Purchaser of the Series 1999-1 Invested
Amount.
"CP Conduit Insolvency Event" means the occurrence of any one or
more of the following: (i) any proceeding shall have been instituted by
the Initial Purchaser seeking to adjudicate it as bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of any order for relief or the appointment
of a receiver, Indenture Trustee or other similar official for it or any
substantial part of its property, or (ii) any proceeding of the type
described in the foregoing clause (i) shall be instituted against the
Initial Purchaser
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<PAGE>
and shall have remained undismissed for a period of sixty (60) consecutive
days, or an order granting relief requested in any such proceeding shall
be entered.
"CP Conduit Wind-Down Event" means the occurrence of any of the
following events:
(i) an Amortization Event or Potential Amortization Event (other
than an Amortization Event arising as a result of the
occurrence of a Lease Rate Cap Event) shall have been declared
or automatically occurred;
(ii) the providers of the Initial Purchaser's program liquidity
and/or letter of credit facilities shall have given notice
that an event of default has occurred and is continuing under
their respective agreements with the Initial Purchaser;
(iii) on the fifth Business Day prior to the Scheduled Commitment
Termination Date, the Commitment has not been extended for at
least 364 days;
(iv) the Initial Purchaser has notified the Funding Agent that it
is unable or unwilling to issue the Commercial Paper in order
to fund the Series 1999-1 Initial Invested Amount or an
Increase pursuant to Section 2.3(b);or
(v) the Commercial Paper Notes shall no longer be rated at least
A-1 and P-1 by Standard & Poor's and Moody's, respectively.
"CP Rate Period" means, with respect to any CP Tranche, a period of
days not to exceed 270 days commencing on a Business Day selected in
accordance with Section 2.7(b); provided that (x) if a CP Rate Period
would end on a day that is not a Business Day, such CP Rate Period shall
end on the next succeeding Business Day and (y) during the Series 1999-1
Amortization Period, each CP Rate Period shall end on or prior to the next
succeeding Payment Date.
"CP Tranche" means a portion of the Series 1999-1 Invested Amount
for which the Series 1999-1 Monthly Interest is calculated by reference to
a particular Discount and a particular CP Rate Period.
"Daily Principal Utilization Amount" means, for any Business Day
during the Commitment Period, the sum of (i) the amount of any Decrease to
be applied to reduce the Series 1999-1 Invested Amount pursuant to Section
2.5, (ii) the amount that the Issuer has elected to apply to reduce the
principal amount of any Outstanding Series of Investor Notes (other than
the Series 1999-1 Investor Notes) and (iii) the portion of the purchase
price for Additional Units to be allocated to the Lease SUBI Portfolio and
paid for pursuant to the Transfer Agreement on such Business Day to be
financed with the proceeds of the Series 1999-1 Investor Notes.
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"Decrease" is defined in Sec-tion 2.5.
"Deficiency" is defined in Section 5A.4(b).
"Discount" means, with respect to any Commercial Paper, the interest
or discount component thereof, including the portion thereof constituting
dealer commissions.
"Dividend Amount" means, with respect to any Payment Date, the
aggregate amount of dividends payable to the Series 1999-1 Preferred
Members in respect of their Series 1999-1 Preferred Membership Interests
pursuant to Section 9.2(b) of the LLC Agreement.
"Effective Date" is defined in Section 9.1.
"Eurodollar Period" means, with respect to any Eurodollar Tranche:
(a) initially, the period commencing on the Series 1999-1 Initial
Funding Date or conversion date, as the case may be, with respect to such
Eurodollar Tranche and ending one month thereafter (or such other period
which is acceptable to the APA Bank and which in no event will be less
than 7 days); and
(b) thereafter, each period commencing on the last day of the
immediately preceding Eurodollar Period applicable to such Eurodollar
Tranche and ending one month thereafter (or such other period which is
acceptable to the APA Bank and which in no event will be less than 7
days);
provided that all Eurodollar Periods must end on the next Payment Date and
all of the foregoing provisions relating to Eurodollar Periods are subject
to the following:
(1) if any Eurodollar Period would otherwise end on a
day that is not a Business Day, such Eurodollar Period shall
be extended to the next succeeding Business Day unless the
result of such extension would be to carry such Eurodollar
Period into another calendar month, in which event such
Eurodollar Period shall end on the immediately preceding
Business Day;
(2) any Eurodollar Period that would otherwise extend
beyond the Scheduled Commitment Termination Date shall end on
the Scheduled Commitment Termination Date; and
(3) any Eurodollar Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Eurodollar Period) shall end on the last
Business Day of the calendar month at the end of such
Eurodollar Period.
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<PAGE>
"Eurodollar Tranche" means a portion of the Series 1999-1 Invested
Amount for which the Series 1999-1 Monthly Interest is calculated by
reference to an Adjusted LIBO Rate determined by reference to a particular
Eurodollar Period.
"Excess Fleet Receivable Amount" means, with respect to any
Settlement Date, an amount equal to the excess, if any, of (a) the
aggregate amount of Collections in respect of the Fleet Receivables
received by the Issuer during the immediately preceding Monthly Period
over (b) the 1999-1B Invested Amount as of the immediately preceding
Settlement Date.
"Excluded Taxes" means, with respect to the Funding Agent, any
Purchaser or any other recipient of any payment to be made by or on
account of any obligation of the Issuer hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America or by any other Governmental Authority as a result of a present or
former connection between the jurisdiction of such Governmental Authority
imposing such tax and the Funding Agent, any Purchaser or any other such
recipient (except a connection arising solely from the Funding Agent's,
such Purchaser's or such recipient's having executed, delivered or
performed its obligations hereunder, receiving a payment hereunder or
enforcing the Series 1999-1 Investor Notes) and (b) any branch profits tax
imposed by the United States of America or any similar tax imposed by any
other jurisdiction in which the Issuer is located.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
quotations for such day of such transactions received by the Funding Agent
from three Federal funds brokers of recognized standing selected by it.
"Failure Fee" is defined in Section 2.7(g).
"Failure Fee Payment" is defined in Section 5A.4(c)(xv).
"Failure Fee Rate" means, with respect to (a) the period from and
including October 1, 1999 to but excluding October 7, 1999, 0.15% and (b)
each Series 1999-1 Interest Period thereafter, the sum of the Failure Fee
Rate in effect during the preceding period and 0.15%; provided, however
that the Failure Fee Rate shall not exceed 0.60% per annum.
"Floating Tranche" means a portion of the Series 1999-1 Invested
Amount not allocated to a Eurodollar Tranche for which the Series 1999-1
Monthly Interest is calculated by reference to the Alternate Base Rate.
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"Increases" is defined in Sec-tion 2.3(a).
"Increase Amount" is defined in Section 2.3(a).
"Increase Date" is defined in Section 2.3(a).
"Increased Costs" means, for each Payment Date, the sum of (1) any
Article 7 Costs due and payable on such Payment Date, (2) any other unpaid
Program Costs due and payable on such Payment Date, (3) any amounts due
and payable pursuant to Section 2.8 on such Payment Date and (4) the
Increased Costs Carry Forward Amount for the preceding Payment Date.
"Increased Costs Carry Forward Amount" means, for each Payment Date,
the excess, if any, of (a) Increased Costs for such Payment Date over (b)
the Additional Costs Cap for such Payment Date.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indenture Supplement" has the meaning set forth in the preamble.
"Interest Shortfall" is defined in Section 5A.3(b).
"Lease Rate Cap Event" means the failure on the part of the Issuer
on any Settlement Date to have the Series 1999-1 Lease Rate Caps that it
is required to have in accordance with Section 5A.12.
"LIBO Rate" means, with respect to each day during each Eurodollar
Period pertaining to a Eurodollar Tranche, the rate appearing on Page 3750
of the Dow Jones market screen (or on any successor or substitute page of
such Service, providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the Funding Agent
from time to time in accordance with its customary practices for purposes
of providing quotations of interest rates applicable to dollar deposits in
the London interbank market) at approximately 11:00 a.m. (London time) on
the second Business Day prior to the commencement of such Eurodollar
Period, as the rate for dollar deposits with a maturity comparable to the
Eurodollar Period applicable to such Eurodollar Tranche.
"Lockout Period" means the period from and including the date on
which each Outstanding Series of Investor Notes shall have been declared
to be immediately due and payable as a result of the occurrence of an
Event of Default defined in clause (a) or (b) of Section 9.1 of the Base
Indenture to and including the date on which the principal of and interest
on all Series of Investor Notes shall have been paid in full.
"Monthly Interest Payment" is defined in Section 5A.4(c)(v).
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"Monthly Principal Payment" is defined in Section 5A.6.
"Optional Termination Date" is defined in Section 2.5(c).
"Optional Termination Notice" is defined in Section 2.5(c).
"Other Taxes" means any and all current or future stamp or
documentary taxes or other excise or property taxes, charges or similar
levies arising from any payment made under the Transaction Documents or
from the execution, delivery or enforcement of, or otherwise with respect
to, any Transaction Document.
"Outstanding" means, with respect to the Series 1999-1 Investor
Notes, the Series 1999-1 Invested Amount shall not have been reduced to
zero and all accrued interest and other amounts owing on the Series 1999-1
Investor Notes and to the Funding Agent and the Purchaser hereunder shall
not have been paid in full.
"Payment Date" means the 7th day of each month, or if such date is
not a Business Day, the next succeeding Business Day, commencing August 9,
1999.
"Potential CP Conduit Wind-Down Event" means any event or
circumstance that with notice, the lapse of time, or both, would become a
CP Conduit Wind-Down Event.
"Prepayment Date" is defined in Article 5.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by Chase as its prime rate in effect at its prin-cipal
office in New York City; each change in the Prime Rate shall be effective
from and including the date such change is publicly announced as being
effective.
"Principal Overpayment Amount" means, for each Settlement Date, the
excess, if any, of (a) the aggregate amount withdrawn from the Series
1999-1 General Collection Subaccount and deposited in the Series 1999-1
Principal Collection Subaccount pursuant to Section 5A.2(e) during the
immediately preceding Monthly Period over (b) the Series 1999-1 Principal
Payment Amount for such Settlement Date.
"Program Costs" shall mean the sum of (i) all expenses, indemnities
and other amounts due and payable to the Purchasers and the Funding Agent
under the Indenture or this Indenture Supplement (including, without
limitation, any Article 7 Costs) and (ii) the product of (A) all unpaid
fees and expenses due and payable to counsel to, and independent auditors
of, the Issuer (other than fees and expenses payable on or in connection
with the closing of the issuance of Series 1999-1 or any other Series) and
(B) a fraction, the numerator of which is the Commitment Amount and the
denominator of which is the sum of (x) the aggregate commitment amounts on
such Business Day (in respect of any variable funding notes of any other
Outstanding Series), (y) the
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Commitment Amount plus (z) the aggregate Invested Amounts of all other
Outstanding Series (other than variable funding notes).
"Program Fee" is defined in Section 2.7(f).
"Program Fee Payment" is defined in Section 5A.4(c)(vii).
"Program Fee Rate" is defined in the Series 1999-1 Fee Letter.
"Purchase" means the assignment by the Initial Purchaser to the APA
Bank of the Initial Purchaser' s Series 1999-1 Invested Amount pursuant to
Section 2.4.
"Purchase Price" means, on the APA Bank Purchase Date, an amount
equal to the sum of (i) the lower of (A) the Series 1999-1 Invested Amount
on such date and (B) the sum of (1) the Series 1999-1 Allocated Aggregate
Unit Balance and (2) the product of the aggregate amount of Unit
Repurchase Payments payable by the Servicer pursuant to the Origination
Trust Servicing Agreement and the Series 1999-1 Invested Percentage on
such date plus (ii) the sum of (1) all accrued and unpaid Discount on all
outstanding Commercial Paper issued to fund the Series 1999-1 Invested
Amount from the issuance date(s) thereof to but excluding the APA Bank
Purchase Date plus (2) the aggregate Discount to accrue on all outstanding
Commercial Paper issued to fund the Series 1999-1 Invested Amount from and
including the APA Bank Purchase Date, to and excluding the maturity date
of each CP Tranche; provided, however that, after the occurrence of an
Lease Rate Cap Event, the Purchase Price on any APA Bank Purchase Date
will equal the sum of (x) the Series 1999-1 Invested Amount on such date
plus (y) the sum of (1) all accrued and unpaid Discount on all outstanding
Commercial Paper issued to fund the Series 1999-1 Invested Amount from the
issuance date(s) thereof to but excluding the APA Bank Purchase Date plus
(2) the aggregate Discount to accrue on all outstanding Commercial Paper
issued to fund the Series 1999-1 Invested Amount from and including the
APA Bank Purchase Date, to and excluding the maturity date of each CP
Tranche.
"Purchaser" means, prior to the APA Bank Purchase Date, the Initial
Purchaser and, on and after the APA Bank Purchase Date, the APA Bank or
its assigns as permitted by Section 11.10.
"Rating Agencies" means, with respect to the Series 1999-1 Investor
Notes, Standard & Poor's, Moody's and any other nationally recognized
rating agency from which a rating for the Commercial Paper was requested
by the Initial Purchaser and is currently in effect.
"Rating Agency Condition" means, with respect to any action
specified herein as requiring satisfaction of the Rating Agency Condition,
that each Rating Agency shall have been given 10 days' (or such shorter
period as shall be acceptable to each Rating Agency) prior notice thereof
and that each of the Rating Agencies shall have notified the Initial
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Purchaser and the Funding Agent in writing that such action will not
result in a reduction or withdrawal of the then current rating of the
Commercial Paper.
"Record Date" means, with respect to each Payment Date, the
immediately preceding Business Day.
"Sale Notice" means an irrevocable written notice given by an
authorized signatory or authorized officer of the Initial Purchaser (or on
behalf of the Initial Purchaser by Chase, in its capacity as the Initial
Purchaser's administrative agent) to the Funding Agent committing to sell,
assign and transfer to the APA Bank, the Initial Purchaser 's Series
1999-1 Invested Amount, which notice shall designate (i) the APA Bank
Purchase Date, (ii) the Initial Purchaser's Series 1999-1 Invested Amount,
(iii) the Purchase Price (including a calculation of the Purchase Price),
(iv) that no CP Conduit Insolvency Event has occurred and (v) wire
transfer instructions specifying the account(s) into which the proceeds of
the Purchase Price shall be deposited.
"Scheduled Commitment Termination Date" means the Payment Date in
June, 2000, as such date may be extended from time to time with the
written agreement of each of the Issuer, the Initial Purchaser and the APA
Bank (or, after the APA Bank Purchase Date, the Issuer and the APA Bank).
"Series 1999-1" means Series 1999-1, the Principal Terms of which
are set forth in this Indenture Supplement.
"Series 1999-1 Administrator Fee" is defined in Section 6.2 .
"Series 1999-1 Allocated Adjusted Aggregate Unit Balance" means, as
of any date of determination, the lower of (i) the Series 1999-1 Required
Asset Amount as of such date and (ii) the product of (x) the Adjusted
Aggregate Unit Balance and (y) the percentage equivalent of a fraction the
numerator of which is the Series 1999-1 Required Asset Amount as of such
date and the denominator of which is the sum of (x) the Series 1999-1
Required Asset Amount and (y) the aggregate Required Asset Amounts with
respect to each other Series of Investor Notes as of such date.
"Series 1999-1 Allocated Aggregate Unit Balance" means, as of any
date of determination, the product of (x) the Aggregate Unit Balance and
(y) the percentage equivalent of a fraction the numerator of which is the
Series 1999-1 Required Asset Amount as of such date and the denominator of
which is the sum of (x) the Series 1999-1 Required Asset Amount and (y)
the aggregate Required Asset Amounts with respect to each other Series of
Investor Notes as of such date.
"Series 1999-1 Allocated Asset Amount Deficiency" means, as of any
date of determination, the amount, if any, by which the Series 1999-1
Allocated Adjusted Aggregate Unit Balance is less than the Series 1999-1
Required Asset Amount as of such date.
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"Series 1999-1 Amortization Period" means the period commencing on
the Business Day following the earlier to occur of (i) the Series 1999-1
Commitment Termination Date and (ii) the Optional Termination Date and
ending on the date when (w) the Series 1999-1 Invested Amount shall have
been reduced to zero and all accrued interest and other amounts owing on
the Series 1999-1 Investor Notes and to the Funding Agent and the
Purchaser hereunder shall have been paid in full, (x) all dividends
accrued and accumulated on the Series 1999-1 Preferred Membership
Interests shall have been declared and paid in full, (y) the Series 1999-1
Preferred Membership Interests shall have been redeemed in accordance with
their terms and (z) all amounts owing in respect of the Series 1999-1
Preferred Membership Interests under the Series 1999-1 Preferred
Membership Interest Purchase Agreement shall have been paid in full by the
Issuer.
"Series 1999-1 Closing Date" means June 30, 1999.
"Series 1999-1 Collateral" means the Collateral, the Series 1999-1
Reserve Account, the Series 1999-1 Yield Supplement Account, the Series
1999-1 Distribution Account and the Series 1999-1 Lease Rate Caps.
"Series 1999-1 Collection Subaccount" is defined in Section 5A.1(a).
"Series 1999-1 Commitment Termination Date means the earlier to
occur of (i) the Scheduled Commitment Termination Date and (ii) the date
on which an Amortization Event shall have been declared or automatically
occurred.
"Series 1999-1 Daily Principal Allocation" is defined in Section
5A.2(b).
"Series 1999-1 Distribution Account" is defined in Section 5A.11(a).
"Series 1999-1 Excess Fleet Receivable Amount" means, for any
Settlement Date, an amount equal to the product of (a) the average daily
Series 1999-1 Invested Percentage during the immediately preceding Monthly
Period and (b) the Excess Fleet Receivable Amount for such Settlement
Date.
"Series 1999-1 Fee Letter" means the fee letter, dated as of the
Series 1999-1 Closing Date, among the Issuer, the Administrator and the
Funding Agent, acknowledged by the Indenture Trustee, as amended from time
to time.
"Series 1999-1 Gain on Sale Account Percentage" means 10%.
"Series 1999-1 Initial Funding Date" is defined in Section 2.1(a).
"Series 1999-1 Initial Invested Amount" is defined in Section
2.3(a).
"Series 1999-1 Interest Period" means a period commencing on and
including a Payment Date and ending on and including the day preceding the
next suc-ceeding
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Payment Date; provided, however, that the initial Series 1999-1 Interest
Period shall commence on and include June 30, 1999 and end on and include
August 8, 1999.
"Series 1999-1 Invested Amount" means (i) when used with respect to
the Series 1999-1 Initial Funding Date, the Series 1999-1 Initial Invested
Amount and (ii) when used with respect to any other date, an amount equal
to (a) the Series 1999-1 Invested Amount on the immediately preceding
Business Day plus (b) the amount of any increases in the Series 1999-1
Invested Amount pursuant to Section 2.3 made on such day minus (c) the
amount of principal payments made pursuant to Section 5A.7 to the
Purchaser on such date.
"Series 1999-1 Invested Percentage" means, with respect to any
Business Day (i) prior to the Series 1999-1 Commitment Termination Date,
the percentage equivalent (which percent-age shall never exceed 100%) of a
fraction the numerator of which shall be equal to the Series 1999-1
Allocated Adjusted Aggregate Unit Balance as of the end of the immediately
preceding Business Day and the denominator of which is the sum of the
numerators used to determine invested percentages for allocations (for all
Series of Investor Notes and all classes of such Series of Investor Notes)
as of the end of such immediately preceding Business Day or (ii) on or
after the Series 1999-1 Commitment Termination Date, the percentage
equivalent (which percent-age shall never exceed 100%) of a fraction the
numerator of which shall be equal to the Series 1999-1 Allocated Adjusted
Aggregate Unit Balance as of the Series 1999-1 Commitment Termination
Date, and the denominator of which is the sum of the numerators used to
determine invested percentages for allocations (for all Series of Investor
Notes and all classes of such Series of Investor Notes) as of the end of
the immediately preceding Business Day.
"Series 1999-1 Investor Noteholder" means the Purchaser.
"Series 1999-1 Investor Notes" means any one of the Series 1999-1
Floating Rate Asset Backed Vari-able Funding Notes, executed by the Issuer
and authenticated and delivered by the Indenture Trustee, substan-tially
in the form of Exhibit A.
"Series 1999-1 Lease Rate Cap" means, with respect to one or more
Fixed Rate Leases, an interest rate cap, substantially in the form of
Exhibit E, from an Eligible Counterparty having a notional amount on each
Payment Date at least equal to the Lease Balance (or the aggregate Lease
Balances) of such Fixed Rate Lease or Fixed Rate Leases as of the last day
of the immediately preceding Monthly Period and an effective strike rate
based on the eurodollar rate set forth therein in effect on the dates set
forth therein at least equal to the fixed rate of interest on such Fixed
Rate Lease or the weighted average fixed rate of interest on such Fixed
Rate Leases minus 0.625 per annum; provided, however that on any Payment
Date on which there is any other Series of Investor Notes Outstanding, the
Series 1999-1 Lease Rate Cap with respect to each of the Fixed Rate Loans
may have a notional amount equal to the Series 1999-1 Invested Percentage
on such Settlement Date of the Lease Balance of such Fixed Rate Loan as of
the last day of the immediately preceding Monthly Period.
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"Series 1999-1 Liquid Credit Enhancement Deficiency" means, on any
date of determination, the amount by which the Series 1999-1 Reserve
Account Amount is less than the Series 1999-1 Required Reserve Account
Amount.
"Series 1999-1 Maximum Invested Amount" means, on any date of
determination, an amount equal to the product of 98.04% and the Commitment
Amount on such date.
"Series 1999-1 Monthly Interest" is defined in Section 5A.3(a) .
"Series 1999-1 Monthly Residual Value Gain" means, for any
Settlement Date, an amount equal to the product of (a) the average daily
Series 1999-1 Invested Percentage during the immediately preceding Monthly
Period and (b) the Monthly Residual Value Gain for such Settlement Date.
"Series 1999-1 Note Rate" means for any Series 1999-1 Interest
Period, the interest rate equal to the percentage equivalent of a
fraction,
(a) the numerator of which is equal to the sum of:
(i) for each day prior to the APA Bank Purchase Date during
such Series 1999-1 Interest Period, the aggregate amount of Discount
accruing on all outstanding Commercial Paper issued by the Initial
Purchaser to fund the Series 1999-1 Invested Amount on such day;
plus
(ii) for the APA Bank Purchase Date and each day thereafter
during such Series 1999-1 Interest Period, of the sum of:
(A) the product of (x) the sum of (a) the portion of the
Series 1999-1 Invested Amount allocable to the Floating
Tranche on such day plus (b) for any day during the period
from and including the APA Bank Purchase Date to but excluding
the Payment Date immediately succeeding the APA Bank Purchase
Date, the Unaccrued Discount Payment Amount times (y) the
Alternate Base Rate, divided by (z) 365 (or 366, as the case
may be) plus
(B) the product of (x) the portion of the Series 1999-1
Invested Amount allocable to Eurodollar Tranches on such day
divided by 360 times (y) the weighted average Adjusted LIBO
Rate plus the Applicable Margin on such day in effect with
respect thereto, plus
(C) on the APA Bank Purchase Date, the Unaccrued
Discount Payment Amount; and
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(b) the denominator of which is equal to the average daily Series
1999-1 Invested Amount during such Series 1999-1 Interest Period;
provided, however, that the Series 1999-1 Investor Note Rate will in no
event be higher than the maximum rate permitted by applicable law.
"Series 1999-1 Note Termination Date" means the first to occur of
(a) the date on which the Series 1999-1 Investor Notes are fully paid and
(b) the Series 1999-1 Termination Date.
"Series 1999-1 Prepayment Amount" means, an amount equal to the
Series 1999-1 Invested Amount, plus (i) if the Prepayment Date is prior to
the APA Bank Purchase Date, the sum of (A) all accrued and unpaid Discount
on all outstanding Commercial Paper issued to fund the Series 1999-1
Invested Amount from the issuance date(s) thereof to but excluding the
Prepayment Date, (B) the aggregate Discount to accrue on all outstanding
Commercial Paper issued to fund the Series 1999-1 Invested Amount from and
including the Prepayment Date to and excluding the maturity date of each
CP Tranche, (C) the Commitment Fee calculated for the period from and
including the immediately preceding Payment Date to and excluding the
Prepayment Date, (D) the Program Fee calculated for the period from and
including the immediately preceding Payment Date to and excluding the
Prepayment Date, (E) all Article 7 Costs then due and payable and (F)
without duplication, any other Program Costs then due and payable and any
amounts then due and payable pursuant to Section 2.8 or (ii) if the
Prepayment Date is on or after the APA Bank Purchase Date, the sum of (A)
all accrued and unpaid interest on the Series 1999-1 Invested Amount,
calculated at the applicable Series 1999-1 Investor Note Rate for the
period from and including the immediately preceding Period End Date to and
excluding the Prepayment Date, (B) the Commitment Fee calculated for the
period from and including the immediately preceding Period End Date to and
excluding the earlier of the Prepayment Date and the Series 1999-1
Commitment Termination Date, (C) the Program Fee calculated for the period
from and including the immediately preceding Period End Date to and
excluding the APA Bank Purchase Date, (D) all Article 7 Costs then due and
payable and (E) without duplication, any other Program Costs then due and
payable and any amounts then due and payable pursuant to Section 2.8.
"Series 1999-1 Preferred Member Distribution Account" is defined in
the LLC Agreement.
"Series 1999-1 Preferred Members" means the registered holders of
the Series Preferred Membership Interests.
"Series 1999-1 Preferred Membership Interest Purchase Agreement"
means the Preferred Membership Interest Purchase Agreement, dated as of
the Series 1999-1 Closing Date, among the Issuer, the Initial Purchaser,
Chase, as funding agent thereunder, Chase, as APA Bank thereunder, and the
Administrator, as the same may from time to time be amended, supplemented
or otherwise modified in accordance with its terms.
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"Series 1999-1 Preferred Membership Interests" means the Preferred
Membership Interests, having an aggregate stated liquidation preference
equal to $235,960,108, issued by the Issuer on the Series 1999-1 Closing
Date.
"Series 1999-1 Principal Collection Subaccount" is defined in
Section 5A.1(a).
"Series 1999-1 Principal Payment Amount" means, for any Settlement
Date, an amount equal to the product of (a) the average daily Series
1999-1 Invested Percentage during the immediately preceding Monthly Period
and (b) the Principal Payment Amount for such Settlement Date.
"Series 1999-1 Required Asset Amount" means, as of any date of
determination, the sum of the Series 1999-1 Invested Amount and the Series
1999-1 Required Overcollateralization Amount as of such date.
"Series 1999-1 Required Enhancement Amount" means, on any date of
determination, an amount equal to 14.94% of the Series 1999-1 Maximum
Invested Amount on the Series 1999-1 Closing Date minus 12.69% of the
excess, if any, of the Series 1999-1 Maximum Invested Amount on the Series
1999-1 Closing Date over the Series 1999-1 Invested Amount on such date;
provided, however that if on any Settlement Date (1) the Three Month
Average Charge-Off Ratio exceeds 0.50%, (2) the Twelve Month Average
Charge-Off Ratio exceeds 0.25%, (3) the Three Month Average Residual Value
Loss Ratio exceeds 10%, (4) the Twelve Month Average Residual Value Loss
Ratio exceeds 5%, (5) the Three Month Average Paid-In Advance Loss Ratio
exceeds 1.00%, (6) the Twelve Month Average Paid-In Advance Loss Ratio
exceeds 0.50% or (7) the Three Month Average Delinquency Ratio for any
Settlement Date exceeds 4.5%, the Series 1999-1 Required Enhancement
Amount will equal the product of 15.94% and the Series 1999-1 Maximum
Invested Amount on such date; provided, however, that, after the
declaration or occurrence of an Amortization Event, the Series 1999-1
Required Enhancement Amount shall equal the Series 1999-1 Required
Enhancement Amount on the date of the declaration or occurrence of such
Amortization Event.
"Series 1999-1 Required Reserve Account Amount" means, on any date
of determination, an amount equal to 2.25% of the Series 1999-1 Maximum
Invested Amount on the Series 1999-1 Closing Date.
"Series 1999-1 Required Investor Noteholders" means (i) on any day
prior to the APA Bank Purchase Date, the Initial Purchaser and the APA
Bank and (ii) on the APA Bank Purchase Date and any day thereafter, the
APA Bank.
"Series 1999-1 Required Overcollateralization Amount" means, on any
date of determination during an Accrual Period, the amount by which the
Series 1999-1 Required Enhancement Amount exceeds the sum of (a) the
Series 1999-1 Reserve Account Amount and (b) the amount on deposit in the
Series 1999-1 Principal Collection Subaccount on
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such date (excluding any amounts deposited therein pursuant to Section
5A.2(e) during the Monthly Period commencing after the first day of such
Accrual Period).
"Series 1999-1 Reserve Account" is defined in Section 5A.9(a) .
"Series 1999-1 Reserve Account Amount" means, on any date of
determination, the amount on deposit in the Series 1999-1 Reserve Account
and available for withdrawal therefrom.
"Series 1999-1 Reserve Account Surplus" means, on any date of
determination, the amount, if any, by which the Series 1999-1 Reserve
Account Amount exceeds the Series 1999-1 Required Reserve Account Amount.
"Series 1999-1 Servicing Fee" is defined in Section 6.1.
"Series 1999-1 Servicing Fee Percentage" is defined in Section 6.1.
"Series 1999-1 Settlement Collection Subaccount" is defined in
Section 5A.1(a).
"Series 1999-1 Subaccounts" is defined in Section 5A.1(a).
"Series 1999-1 Termination Date" means the Payment Date that occurs
in the 125th month after the month in which the Series 1999-1 Commitment
Termination Date shall have occurred.
"Series 1999-1 Yield Supplement Account" is defined in Section
5A.10(a).
"Series 1999-1 Yield Supplement Account Amount" means, on any date
of determination, the amount on deposit in the Series 1999-1 Yield
Supplement Account and available for withdrawal therefrom.
"Series 1999-1 Yield Supplement Account Surplus" means, on any date
of determination, the amount, if any, by which the Series 1999-1 Yield
Supplement Account Amount exceeds the Series 1999-1 Yield Supplement
Amount.
"Series 1999-1 Yield Supplement Amount" means, on any date of
determination, an amount equal to the product of the Series 1999-1
Invested Percentage on such date and the Yield Supplement Amount.
"Series 1999-1 Yield Supplement Deficiency" means, on any date of
determination, the amount by which the Series 1999-1 Yield Supplement
Account Amount is less than the Series 1999-1 Yield Supplement Amount.
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is
the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special,
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emergency or supplemental reserves) expressed as a decimal established by
the Board to which the Funding Agent is subject with respect to the
Adjusted LIBO Rate, for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to Regulation D.
Eurodollar Tranches shall be deemed to constitute eurocurrency funding and
to be subject to such reserve requirements without benefit of or credit
for proration, exemptions or offsets that may be available from time to
time to the APA Bank under such Regulation D or comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in the reserve percentage.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Total Cash Available" means, for any Settlement Date, the excess,
if any, of (a) the sum of (i) the aggregate amount of Collections
allocated to the Series 1999-1 General Collection Subaccount pursuant to
Section 5A.2(a) during the immediately preceding Monthly Period, (ii) an
amount equal to the product of the average daily Series 1999-1 Invested
Percentage during such Monthly Period and the amount of the Unit
Repurchase Payments paid by the Servicer on such Settlement Date, (iii) an
amount equal to the product of the average daily Series 1999-1 Invested
Percentage during such Monthly Period and the amount of the Monthly
Servicer Advance made by the Servicer on such Settlement Date, (iv) an
amount equal to the product of the average daily Series 1999-1 Invested
Percentage during such Monthly Period and the amount withdrawn from the
Gain on Sale Account pursuant to Section 5.2(e) of the Base Indenture on
such Settlement Date and (v) the investment income on amounts on deposit
in the Series 1999-1 Principal Collection Subaccount and the Series 1999-1
General Collection Subaccount transferred to the Series 1999-1 Settlement
Collection Subaccount on such Settlement Date pursuant to Section 5.1A(b)
over (b) the aggregate amount withdrawn from the Series 1999-1 General
Collection Subaccount and deposited in the Series 1999-1 Principal
Collection Subaccount pursuant to Section 5A.2(e) during the immediately
preceding Monthly Period.
"Transaction Parties" is defined in Section 2.4(c).
"Unaccrued Discount Payment Amount" means the portion of the
Purchase Price determined in accordance with clause (ii)(2) of the
definition thereof.
"Unallocated Balance" means, as of (i) any Business Day prior to the
APA Bank Purchase Date, the portion of the Series 1999-1 Invested Amount
allocated to any CP Tranche, the CP Rate Period in respect of which
expires on such Business Day and (ii) the APA Bank Purchase Date or any
Business Day thereafter, the sum of (A) the portion of the Series 1999-1
Invested Amount for which interest is then being calculated by reference
to the Alternate Base Rate and (B) the portion of the Series 1999-1
Invested Amount allocated to any Eurodollar Tranche the Eurodollar Period
in respect of which expires on such Business Day.
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"Year 2000 Compliant" means, with respect to a specified Person,
that all of such Persons' computer applications (including those of
suppliers, vendors and customers) that are material to the performance of
the Issuer's, the Servicer's or the Administrator's obligations under the
Transaction Documents are reasonably expected on a timely basis to be able
to perform properly in all material respects date-sensitive functions for
all dates before and after January 1, 2000.
(a) Initial Purchase. Subject to the terms and conditions of this
Indenture Supplement, including delivery of notice in accordance with Section
2.3, (i) on any Business Day during the Commitment Period (the "Series 1999-1
Initial Funding Date"), (A) the Initial Purchaser may, in its sole discretion,
purchase a Series 1999-1 Investor Note in an amount equal to the Series 1999-1
Initial Invested Amount or (B) if the Initial Purchaser shall have notified the
Funding Agent that it has elected not to purchase a Series 1999-1 Investor Note
on the Series 1999-1 Initial Funding Date, the APA Bank shall purchase on the
Series 1999-1 Initial Funding Date a Series 1999-1 Investor Note in an amount
equal to the Series 1999-1 Initial Invested Amount and (ii) thereafter, (A) if
the Initial Purchaser shall have purchased a Series 1999-1 Investor Note on the
Series 1999-1 Initial Funding Date, the Initial Purchaser may, in its sole
discretion, maintain its Series 1999-1 Investor Note, subject to increase or
decrease during the Commitment Period, in accordance with the provisions of this
Indenture Supplement and (B) if the APA Bank shall have purchased Series 1999-1
Investor Notes on the Series 1999-1 Initial Funding Date or, in any case, on or
after the APA Bank Purchase Date, the APA Bank shall maintain its Series 1999-1
Investor Note subject to increase or decrease during the Commitment Period, in
accordance with the provisions of this Indenture Supplement. Payments by the
Initial Purchaser or the APA Bank, as the case may be, in respect of the Series
1999-1 Investor Notes shall be made in immediately available funds on the Series
1999-1 Initial Funding Date to the Funding Agent for remittance to the Indenture
Trustee for deposit into the Series 1999-1 Collection Subaccount.
(b) Maximum Series 1999-1 Invested Amount. Notwithstanding anything
to the contrary contained in this Indenture Supplement, at no time, prior to the
APA Bank Purchase Date, shall the Series 1999-1 Invested Amount exceed the
Series 1999-1 Maximum Invested Amount at such time.
(c) The Series 1999-1 Investor Note shall be issued in fully
registered form without interest coupons, substantially in the form set forth in
Exhibit A hereto.
. On the Series 1999-1 Initial Funding Date, the Issuer shall sign and shall
direct the Indenture Trustee in writing pursuant to Section 2.4 of the Base
Indenture to duly authenticate, and the Indenture Trustee, upon receiving such
direction, shall so authenticate (i) the Series 1999-1
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Investor Notes in such names and such denominations and deliver such Series
1999-1 Investor Notes to the Funding Agent, on behalf of the Initial Purchaser,
or the APA Bank, as the case may be, in accordance with such written directions.
The Series 1999-1 Investor Notes shall be issued in minimum denominations of
$1,000,000 and in integral multiples of $100,000 in excess thereof. The
Indenture Trustee shall indicate in the Investor Note Register the actual Series
1999-1 Invested Amount outstanding on any date of determination, which, absent
manifest error, shall constitute prima facie evidence of the outstanding Series
1999-1 Invested Amount from time to time.
(a) Subject to Section 2.3(c), (i) on the Series 1999-1 Initial
Funding Date, the Initial Purchaser may agree, in its sole discretion, and the
APA Bank shall purchase a Series 1999-1 Investor Note in accordance with Section
2.1 and (ii) on any Business Day during the Commitment Period, the Initial
Purchaser may agree, in its sole discretion, and the APA Bank hereby agrees that
the Series 1999-1 Invested Amount may be increased (an "Increase"), upon the
request of the Issuer (each date on which an increase in the Series 1999-1
Invested Amount occurs hereunder being herein referred to as the "Increase Date"
applicable to such Increase); provided, however, that the Issuer shall have
given the Funding Agent (with a copy to the Indenture Trustee) irrevocable
written notice (effective upon receipt), substantially in the form of Exhibit B
hereto, of such request no later than (i) 8:30 A.M., New York City time, on the
Series 1999-1 Initial Funding Date or such Increase Date, as the case may be, in
the case of any Increase Date occurring prior to the APA Bank Purchase Date or
(ii) (x) if the Series 1999-1 Initial Invested Amount or Increase Amount is to
be priced solely with reference to the Alternate Base Rate, on or prior to 12:00
noon, New York City time, on the Series 1999-1 Initial Funding Date or such
Increase Date, as the case may be, or (y) if all or a portion of the Series
1999-1 Initial Invested Amount or Increase Amount is to be allocated to a
Eurodollar Tranche, 1:00 p.m., New York City time, three Business Days prior to
the Series 1999-1 Initial Funding Date or such Increase Date, as the case may
be, in the case of any Increase Date occurring on or after the APA Bank Purchase
Date. Such notice shall state (x) the Series 1999-1 Initial Funding Date or the
Increase Date, as the case may be, (y) the initial invested amount (the "Series
1999-1 Initial Invested Amount") or, the proposed amount of such Increase (the
"Increase Amount"), as the case may be, and (z) on and after the APA Bank
Purchase Date, what portions thereof will be allocated to a Eurodollar Tranche
and the Floating Tranche.
(b) If, prior to the APA Bank Purchase Date, the Initial Purchaser
elects not to fund any portion of a requested Increase, the Initial Purchaser
shall notify the Funding Agent thereof and deliver a Sale Notice in accordance
with Section 2.4 and the APA Bank shall purchase the Initial Purchaser's Series
1999-1 Invested Amount in accordance with Section 2.4 and fund such Increase in
an amount equal to such Increase; provided, however that on the APA Bank
Purchase Date the APA Bank shall not be obligated to fund any portion of an
Increase that would cause the sum of the Series 1999-1 Invested Amount and the
amount specified in clause (ii) of the definition of "Purchase Price" to exceed
the Commitment Amount.
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(c) No Purchaser shall be required to make the initial purchase of
Series 1999-1 Investor Notes on the Series 1999-1 Initial Funding Date or to
increase the Series 1999-1 Invested Amount on any Increase Date hereunder
unless:
(i) the related aggregate initial purchase amount or Increase
Amount is equal to $1,000,000 or an integral multiple of $100,000 in
excess thereof;
(ii) after giving effect to the initial purchase amount or
Increase Amount, the Series 1999-1 Invested Amount would not exceed the
(A) prior to the APA Bank Purchase Date, the Series 1999-1 Maximum
Invested Amount on the Series 1999-1 Initial Funding Date or Increase
Date, as the case may be, or (B) on or after the APA Bank Purchase Date,
the Commitment Amount on the Series 1999-1 Initial Funding Date or
Increase Date, as the case may be;
(iii) after giving effect to the initial purchase amount or
Increase Amount, no Series 1999-1 Allocated Asset Amount Deficiency,
Series 1999-1 Liquid Credit Enhancement Deficiency or Series 1999-1 Yield
Supplement Deficiency would have occurred and be continuing;
(iv) no Amortization Event or Potential Amortization Event
shall have occurred and be continuing;
(v) in the case of any funding by the Initial Purchaser, no CP
Conduit Wind-Down Event or Potential CP Conduit Wind-Down Event shall have
occurred and be continuing;
(vi) all of the representations and warranties made by each of
the Issuer, SPV, the Origination Trust and the Servicer in each
Transaction Document to which it is a party are true and correct in all
material respects on and as of the Series 1999-1 Initial Funding Date or
such Increase Date, as the case may be, as if made on and as of such date
(except to the extent such representations and warranties are expressly
made as of another date); and
(vii) all conditions precedent set forth in Sections 4.1 and
4.2 of the Transfer Agreement to the funding of the SUBI Certificates
being funded on the Series 1999-1 Initial Funding Date or such Increase
Date, as the case may be, shall have been satisfied, including, without
limitation, in the case of the Series 1999-1 Initial Funding Date,
delivery of the Initial Assignment to the Issuer and the Indenture Trustee
in accordance with Section 4.1 of the Transfer Agreement, and, in the case
of any Increase Date, delivery of the Additional Assignment to the Issuer
and the Indenture Trustee in accordance with Section 4.2 of the Transfer
Agreement.
The Issuer's acceptance of funds in connection with (x) the initial purchase of
Series 1999-1 Investor Notes on the Series 1999-1 Initial Funding Date and (y)
each Increase occurring on any Increase Date shall constitute a representation
and warranty by the Issuer to the applicable
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Purchaser as of the Series 1999-1 Initial Funding Date or such Increase Date
(except to the extent such representations and warranties are expressly made as
of another date), as the case may be, that all of the conditions contained in
this Section 2.3(c) have been satisfied.
(d) If there is a Principal Overpayment Amount for any Settlement
Date, the Issuer shall request an Increase in accordance with Section 2.3(a) in
an amount equal to such Principal Overpayment Amount effective on such
Settlement Date. Notwithstanding the provisions of Section 2.3(c), the Purchaser
shall be required to fund such an Increase even if the Issuer is unable to
satisfy the conditions set forth in clauses (i), (ii), (iv) or (vi) of Section
2.3(c).
(e) After receipt by the Funding Agent of the notice required by
Section 2.3(a) from the Issuer, the Funding Agent shall, except as otherwise
provided in Section 2.3(d), so long as the conditions set forth in Sections
2.3(a) and (c) are satisfied, promptly provide telephonic notice (i) prior to
the APA Bank Purchase Date, to the Initial Purchaser, and (ii) on and after the
APA Bank Purchase Date, to the APA Bank, of the Increase Date and of the
Increase Amount. If the Initial Purchaser elects to fund an Increase, the
Initial Purchaser agrees to pay in immediately available funds the amount of
such Increase on the related Increase Date to the Funding Agent for deposit into
the Series 1999-1 Collection Subaccount. On or after the APA Bank Purchase Date,
the APA Bank agrees to pay in immediately available funds the amount of such
Increase on the related Increase Date to the Funding Agent for deposit in the
Series 1999-1 Collection Subaccount.
(a) On any date during the Commitment Period, the Initial Purchaser
may, in its own discretion, and the Initial Purchaser shall upon the occurrence
of a CP Conduit Wind-Down Event, in each case, by delivering a Sale Notice to
the Funding Agent, the Issuer and the Indenture Trustee, sell to the APA Bank
and the APA Bank hereby agrees to purchase all right, title and interest of the
Initial Purchaser in the Series 1999-1 Invested Amount. Any Sale Notice shall be
delivered by the Initial Purchaser to the Funding Agent, the Issuer and the
Indenture Trustee prior to 12:30 p.m., New York City time, on the APA Bank
Purchase Date and shall constitute an irrevocable offer by the Initial Purchaser
to sell 100% of the Series 1999-1 Invested Amount at the Purchase Price. Any
Sale Notice shall be deemed to be a representation and warranty by the Initial
Purchaser that no CP Conduit Insolvency Event shall have occurred and be
continuing. The APA Bank hereby agrees to purchase from the Initial Purchaser
the Series 1999-1 Invested Amount for a purchase price equal to the Purchase
Price on the APA Bank Purchase Date (which date, subject to Section 2.4(b), may
be the same as the date of the Sale Notice). Notwithstanding anything to the
contrary set forth in this Indenture Supplement, the APA Bank shall not have any
obligation to purchase the Initial Purchaser's Series 1999-1 Invested Amount if,
on such Purchase Date, any CP Conduit Insolvency Event shall have occurred and
be continuing.
(b) If, at or prior to 12:30 p.m., New York City time, on any
Business Day, the Initial Purchaser delivers the Sale Notice to the Funding
Agent specifying that the APA Bank Purchase Date shall be the same date as the
date of the Sale Notice, the Funding Agent shall, by
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no later than 1:30 p.m., New York City time, notify (by telecopy or by telephone
call promptly confirmed in writing by telecopy) the APA Bank of the receipt and
content of the Sale Notice and the APA Bank shall purchase the Initial
Purchaser's Series 1999-1 Investor Note by depositing the Purchase Price in
immediately available funds into the account(s) specified by the Initial
Purchaser in the Sale Notice no later than 3:30 p.m., New York City time. If the
Initial Purchaser delivers the Sale Notice to the Funding Agent after 12:30
p.m., New York City time, on any Business Day or the Initial Purchaser delivers
the Sale Notice to the Funding Agent specifying that the APA Bank Purchase Date
shall be a date other than the date of the Sale Notice, the Funding Agent shall
promptly advise (by telecopy or by telephone call promptly confirmed in writing
by telecopy) the APA Bank of the receipt and content of the Sale Notice and the
APA Bank shall purchase the Initial Purchaser's Series 1999-1 Investor Note by
depositing the Purchase Price in immediately available funds into the account(s)
specified by the Initial Purchaser in the Sale Notice no later than 3:30 p.m.,
New York City time, on the next Business Day or such date, as the case may be.
Notwithstanding the fact that the APA Bank Purchase Date may occur on a date
which is later than the date on which the Sale Notice is delivered to the
Funding Agent, the obligation of the APA Bank to make such purchase and to make
payment of the amounts required to be paid by it pursuant to Section 2.4(a)
shall arise immediately upon receipt by the Funding Agent of the Sale Notice.
Upon payment of the Purchase Price as provided herein and delivery to the
Indenture Trustee by the Funding Agent of the Initial Purchaser's Series 1999-1
Investor Note, the Issuer shall sign and shall direct the Indenture Trustee in
writing to duly authenticate, and the Indenture Trustee, upon receiving such
direction, shall so authenticate, a new Series 1999-1 Investor Note in the name
of the APA Bank and in a denomination equal to the Commitment Amount as set
forth in such written direction and shall deliver such Series 1999-1 Investor
Note to the APA Bank in accordance with such written direction.
(c) The transfer of the Initial Purchaser's Series 1999-1 Investor
Note pursuant to this Section 2.4 shall be without recourse or warranty, express
or implied, except that the Series 1999-1 Investor Note is free and clear of
adverse claims created by or arising as a result of claims against the Initial
Purchaser. By executing and delivering a Sale Notice pursuant to Section 2.4(a),
(i) the Initial Purchaser makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Series 1999-1 Investor Note or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Series 1999-1 Investor Note, or any other agreement, instrument or other
document furnished pursuant thereto or in connection therewith, including
without limitation any Transaction Document, and (ii) the Initial Purchaser
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Issuer, SPV, the Origination Trust, the
Administrator or the Servicer (collectively, the "Transaction Parties") or the
Funding Agent, or the performance or observance by the Transaction Parties of
any of their respective obligations under the Series 1999-1 Investor Note or the
Transaction Documents.
(a) On any Business Day during the Commitment Period or the Series
1999-1 Amortization Period (except after the APA Bank Purchase Date (which shall
be governed by
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Section 5A.7(b))), upon the written request of the Issuer or the Administrator
on behalf of the Issuer, the Series 1999-1 Invested Amount may be reduced (a
"Decrease") by the Indenture Trustee's withdrawing from the Series 1999-1
Principal Collection Subaccount, depositing into the Series 1999-1 Distribution
Account and distributing to the Funding Agent, for the account of the Series
1999-1 Investor Noteholder, funds on deposit in the Series 1999-1 Principal
Collection Subaccount on such day in accordance with Section 5A.7(c) in an
amount not to exceed the amount of such funds on deposit on such day; provided
that the Administrator shall have given the Funding Agent (with a copy to the
Indenture Trustee) irrevocable written notice (effective upon receipt), prior to
3:00 P.M., New York City time, (i) on the second Business Day prior to such
Decrease, in the case of any Decrease occurring prior to the APA Bank Purchase
Date and (ii) (A) if the Decrease relates solely to a Floating Tranche, on the
Business Day of such Decrease or (B) if all or any portion of the Decrease
relates to a Eurodollar Tranche, on the Business Day that is three Business Days
prior to such Decrease, in the case of any Decrease occurring on or after the
APA Bank Purchase Date, and which notice shall state the amount of such
Decrease; provided, further, that (x) such Decrease shall be in an amount equal
to $1,000,000 and integral multiples of $100,000 in excess thereof and (y) prior
to the APA Bank Purchase Date, such Decrease shall be in an amount no greater
than the Unallocated Balance on such day. Upon each Decrease, the Indenture
Trustee shall indicate in the Note Register such Decrease.
(b) On or after the APA Bank Purchase Date, any reduction in the
Series 1999-1 Invested Amount on any Business Day shall be allocated first to
reduce the Unallocated Balance and then to reduce the portion of the Series
1999-1 Invested Amount allocated to Eurodollar Tranches in such order as the
Issuer may select in order to minimize costs payable pursuant to Section 7.4.
(c) (i) On any Business Day, the Issuer shall have the right to
deliver an irrevocable written notice (an "Optional Termination Notice") to the
Indenture Trustee, the Administrator and the Rating Agencies in which the Issuer
declares that the Commitment and the Commitment Period shall terminate on the
date (the "Optional Termination Date") set forth in such notice (which date, in
any event, shall be a Payment Date not less than twenty Business Days from the
date on which such notice is delivered).
(ii) From and after the Optional Termination Date, the Series 1999-1
Amortization Period shall commence for all purposes under this Indenture
Supplement and the other Transaction Documents. The Indenture Trustee shall give
prompt written notice of its receipt of an Optional Termination Notice to the
Purchasers.
(d) If at any time after the Series 1999-1 Closing Date, the Issuer
issues any other Series of Investor Notes, the Issuer shall reduce the Series
1999-1 Invested Amount in accordance with Section 2.5(a) in an amount equal to
the proceeds of such Series of Investor Notes on the Series Closing Date with
respect to such Series.
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(a) The Issuer may from time to time request that the Purchaser and
the APA Bank agree to increase the Commitment. An increase in the Commitment
shall be effective hereunder if each of the Initial Purchaser and the APA Bank
(or, after the APA Bank Purchase Date, solely the APA Bank) shall have agreed to
such increase.
(b) On any Business Day during the Commitment Period, the Issuer
may, upon two (2) Business Days' prior written notice to the Funding Agent
(effective upon receipt) (with copies to the Administrator and the Indenture
Trustee) reduce the Commitment in an amount equal to $5,000,000 or a whole
multiple of $1,000,000 in excess thereof; provided that no such termination or
reduction shall be permitted if, after giving effect thereto and to any
reduction in the Series 1999-1 Invested Amount on such date, the Series 1999-1
Invested Amount would exceed (i) prior to the APA Bank Purchase Date, the Series
1999-1 Maximum Invested Amount then in effect or (ii) on or after the APA Bank
Purchase Date, the Commitment Amount then in effect. On the Series Closing Date
of any other Series of Investor Notes, the Issuer shall reduce the Commitment in
an amount equal to the reduction in the Series 1999-1 Invested Amount pursuant
to Section 2.5(d). Once reduced, the Commitment may not be subsequently
reinstated.
(a) Interest shall be payable on the Series 1999-1 Investor Notes on
each Payment Date pursuant to Section 5A.5(a).
(b) On any Business Day, the Issuer may, subject to Section 2.7(d),
elect to allocate all or any portion of the Available Pricing Amount (i), prior
to the APA Bank Purchase Date, to one or more CP Tranches with CP Rate Periods
commencing on such Business Day by giving the Funding Agent irrevocable written
or telephonic (confirmed in writing) notice thereof, which notice must be
received by the Funding Agent prior to 8:30 A.M., New York City time, on such
Business Day or (ii) on or after the APA Bank Purchase Date, to one or more
Eurodollar Tranches with Eurodollar Periods commencing on such Business Day by
giving the Funding Agent irrevocable written or telephonic (confirmed in
writing) notice thereof, which notice must be received by the Funding Agent
prior to 1:00 p.m., New York City time, three Business Days prior to such
Business Day. Such notice shall specify (i) the applicable Business Day, (ii)
the CP Rate Period for each CP Tranche or the Eurodollar Period for each
Eurodollar Tranche, as the case may be, to which a portion of the Available
Pricing Amount is to be allocated and (iii) the portion of the Available Pricing
Amount being allocated to each such CP Tranche or Eurodollar Tranche, as the
case may be. On or after the APA Bank Purchase Date, the Funding Agent shall
notify the APA Bank of the contents of each such notice promptly upon receipt
thereof. Prior to the APA Bank Purchase Date, the Issuer shall allocate the
Series 1999-1 Invested Amount so that the aggregate amounts allocated to
outstanding CP Rate Periods at all times equal the Series 1999-1 Invested
Amount.
(c) Any reduction in the Series 1999-1 Invested Amount on any
Business Day shall be allocated in the following order of priority:
First, to reduce the Unallocated Balance, as appropriate; and
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Second, to reduce the portion of the Series 1999-1 Invested Amount
allocated to Eurodollar Tranches in such order as the Issuer may select in
order to minimize costs payable pursuant to Section 7.4.
(d) Notwithstanding anything to the contrary contained in this
Section 2.7, (i) prior to the APA Bank Purchase Date, (A) the Initial Purchaser
shall approve the length of each CP Rate Period and the portion of the Series
1999-1 Invested Amount allocated to such CP Rate Period, (B) the Initial
Purchaser may select, in its sole discretion, any new CP Rate Period if (x) the
Issuer does not provide notice of a new CP Rate Period on a timely basis or (y)
the Funding Agent, on behalf of the Initial Purchaser, determines, in its sole
discretion, that the CP Rate Period requested by the Issuer is unavailable or
for any reason commercially undesirable and (C) the portion of the Series 1999-1
Invested Amount allocable to each CP Tranche must be in an amount equal to
$1,000,000 or an integral multiple of $100,000 in excess thereof and (ii) on and
after the APA Bank Purchase Date, (A) the portion of the Series 1999-1 Invested
Amount allocable to each Eurodollar Tranche must be in an amount equal to
$100,000 or an integral multiple of $100,000 in excess thereof, (B) no more than
10 Eurodollar Tranches shall be outstanding at any one time, (C) after the
occurrence and during the continuance of any Amortization Event or Potential
Amortization Event, the Issuer may not elect to allocate any portion of the
Available Pricing Amount to a Eurodollar Tranche and (D) after the end of the
Commitment Period, the Issuer may not select any Eurodollar Period that does not
end on or prior to the next succeeding Payment Date.
(e) The Indenture Trustee (acting at the written direction of the
Administrator upon which the Indenture Trustee may conclusively rely) shall
distribute pursuant to Section 5A.5(b), from amounts deposited in the Series
1999-1 Distribution Account pursuant to Section 5A.4(c), to the Funding Agent,
for the account of the APA Bank, on each Payment Date, a commitment fee with
respect to the Series 1999-1 Interest Period ending on such Payment Date (the
"Commitment Fee" ) (i) during the Commitment Period at the Commitment Fee Rate
of the average daily Commitment Amount during such Series 1999-1 Interest Period
less the average daily Series 1999-1 Invested Amount during any portion of such
Series 1999-1 Interest Period that falls on or after the APA Bank Purchase Date
and (ii) during the Series 1999-1 Amortization Period at the Commitment Fee Rate
of an amount equal to 102% of the average daily Series 1999-1 Invested Amount
during such Series 1999-1 Interest Period; provided however, that no Commitment
Fee will be payable hereunder for any Series 1999-1 Interest Period or portion
thereof during the Series 1999-1 Amortization Period that commences on or after
the APA Bank Purchase Date. The Commitment Fee shall be payable (i) monthly in
arrears on each Payment Date and (ii) on the Series 1999-1 Commitment
Termination Date.
(f) The Indenture Trustee (acting at the written direction of the
Administrator upon which the Indenture Trustee may conclusively rely) shall
distribute pursuant to Section 5A.5(c), from amounts deposited in the Series
1999-1 Distribution Account pursuant to Section 5A.4(c), to the Funding Agent,
for the account of the Initial Purchaser, on each Payment Date prior to the APA
Bank Purchase Date and on the Payment Date immediately succeeding the APA Bank
Purchase Date, a program fee (the "Program Fee") with respect to each Series
1999-1
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Interest Period ending on such Payment Date (or, in the case of the Payment Date
immediately succeeding the APA Bank Purchase Date, the period from and including
the immediately preceding Payment Date to but excluding the APA Bank Purchase
Date) (i) during the Commitment Period, at the Program Fee Rate of the
Commitment Amount during such period and (ii) during the Series 1999-1
Amortization Period, at the Program Fee Rate of an amount equal to 102% of the
average daily Series 1999-1 Invested Amount during such period. The Program Fee
shall be payable (i) monthly in arrears on each Payment Date prior to the APA
Bank Purchase Date and (ii) on the Payment Date immediately succeeding the APA
Bank Purchase Date.
(g) The Indenture Trustee (acting at the written direction of the
Administrator upon which the Indenture Trustee may conclusively rely) shall
distribute pursuant to Section 5A.5(c), from amounts deposited in the Series
1999-1 Distribution Account pursuant to Section 5A.4(c), to the Funding Agent,
for the account of the APA Bank, on the October 1999 Payment Date a fee (the
"Failure Fee") in an amount equal to the Failure Fee Rate of the excess of the
Commitment Amount over $700,000,000 during the period from and including October
1, 1999 to but excluding such Payment Date and on each Payment Date thereafter
the applicable Failure Fee Rate on the amount of the excess of the Commitment
Amount over $700,000,000 during the period from and including the immediately
preceding Payment Date to but excluding such Payment Date.
(h) Calculations of per annum rates under this Indenture Supplement
shall be made on the basis of a 360- (or 365-/366-, in the case of interest on
the Floating Tranche based on the Prime Rate) day year. Calculations of
Commitment Fees, Program Fees and Failure Fees shall be made on the basis of a
360-day year. Each determination of the Adjusted LIBO Rate by the Funding Agent
shall be conclusive and binding upon each of the parties hereto in the absence
of manifest error.
(a) The Issuer agrees to indemnify and hold harmless the Indenture
Trustee, the Funding Agent, each Purchaser and each of their respective
officers, directors, agents and employees (each, a "Company indemnified person")
from and against any loss, liability, expense, damage or injury suffered or
sustained by (a "Claim") such Company indemnified person by reason of (i) any
acts, omissions or alleged acts or omissions arising out of, or relating to,
activities of the Issuer pursuant to the Indenture or the other Transaction
Documents to which it is a party, (ii) a breach of any representation or
warranty made or deemed made by the Issuer (or any of its officers) in the
Indenture or other Transaction Document or (iii) a failure by the Issuer to
comply with any applicable law or regulation or to perform its covenants,
agreements, duties or obligations required to be performed or observed by it in
accordance with the provisions of the Indenture or the other Transaction
Documents, including, but not limited to, any judgment, award, settlement,
reasonable attorneys' fees and other reasonable costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim, except to the extent such loss, liability, expense, damage or injury (A)
resulted from the gross negligence, bad faith or wilful misconduct of such
Company indemnified person or its officers, directors, agents,
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principals, employees or employers, (B) resulted solely from a default by an
Obligor with respect to any Sold Unit or Fleet Receivable or (C) include any
income or franchise taxes imposed on (or measured by) any Company indemnified
person's net income; provided that any payments made by the Issuer pursuant to
this Section 2.8 shall be made solely from funds available therefor pursuant to
Section 5A.5(e), shall be non-recourse other than with respect to such funds,
and shall not constitute a claim against the Issuer to the extent that such
funds are insufficient to make such payment.
(b) The Administrator agrees to indemnify and hold harmless the
Indenture Trustee, the Funding Agent, each Purchaser and each of their
respective officers, directors, agents and employees (each, a "Administrator
indemnified person") from and against any Claim by reason of (i) any acts,
omissions or alleged acts or omissions arising out of, or relating to,
activities of the Administrator pursuant to the Indenture or the other
Transaction Documents to which it is a party, (ii) a breach of any
representation or warranty made or deemed made by the Administrator (or any of
its officers) in the Indenture or other Transaction Document or (iii) a failure
by the Administrator to comply with any applicable law or regulation or to
perform its covenants, agreements, duties or obligations required to be
performed or observed by it in accordance with the provisions of the Indenture
or the other Transaction Documents, including, but not limited to, any judgment,
award, settlement, reasonable attorneys' fees and other reasonable costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim, except to the extent such loss, liability, expense,
damage or injury (A) resulted from the gross negligence, bad faith or wilful
misconduct of such Administrator indemnified person or its officers, directors,
agents, principals, employees or employers, (B) resulted solely from a default
by an Obligor with respect to any Sold Unit or Fleet Receivable or (C) include
any income or franchise taxes imposed on (or measured by) any Administrator
indemnified person's net income.
Sections 5.1 through 5.4 of the Base Indenture and each other
Section of Article 5 of the Indenture relating to another Series shall read in
their entirety as provided in the Base Indenture or any applicable Indenture
Supplement. Article 5 of the Indenture (except for Sections 5.1 through 5.4
thereof and any portion thereof relating to another Series) shall read in its
entirety as follows and shall be exclusively applicable to the Series 1999-1
Investor Notes:
(a) The Indenture Trustee shall establish and maintain in the name
of the Indenture Trustee for the benefit of the Series 1999-1 Investor
Noteholders (i) a subaccount of the Collection Account (the "Series 1999-1
Collection Subaccount"); and (ii) three subaccounts of the Series 1999-1
Collection Subaccount: (1) the Series 1999-1 General Collection Subaccount, (2)
the Series 1999-1 Principal Collection Subaccount and (3) the Series 1999-1
Settlement Collection Subaccount (respectively, the "Series 1999-1 General
Collection Subaccount," the "Series 1999-1 Principal Collection Subaccount" and
the "Series 1999-1 Settlement Collection
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Subaccount"); the accounts established pursuant to this Section 5A.1(a),
collectively, the "Series 1999-1 Subaccounts"), each Series 1999-1 Subaccount to
bear a designation indicating that the funds deposited therein are held for the
benefit of the Series 1999-1 Investor Noteholders. The Indenture Trustee shall
possess all right, title and interest in all moneys, instruments, securities and
other property on deposit from time to time in the Series 1999-1 Subaccounts and
the proceeds thereof for the benefit of the Series 1999-1 Investor Noteholders.
The Series 1999-1 Subaccounts shall be under the sole dominion and control of
the Indenture Trustee for the benefit of the Series 1999-1 Investor Noteholders.
(b) (i) So long as no Amortization Event has occurred, the Issuer
shall instruct the institution maintaining the Collection Account in writing to
invest funds on deposit in the Series 1999-1 Subaccounts at all times in
Permitted Investments selected by the Issuer (by standing instructions or
otherwise); provided, however, that funds on deposit in a Series 1999-1
Subaccounts may be invested together with funds held in other subaccounts of the
Collection Account. Amounts on deposit and available for investment in the
Series 1999-1 General Collection Subaccount and the Series 1999-1 Principal
Collection Subaccount shall be invested by the Indenture Trustee at the written
direction of the Issuer, so long as no Amortization Event has occurred, in
Permitted Investments that mature, or that are payable or redeemable upon demand
of the holder thereof, in the case of any such investment made during the
Commitment Period or on any day prior to the APA Bank Purchase Date during the
Series 1999-1 Amortization Period, on or prior to the next Business Day and (ii)
in the case of any such investment made on any day on or after the APA Bank
Purchase Date during the Series 1999-1 Amortization Period, on or prior to the
Business Day immediately preceding the next Payment Date. On each Settlement
Date, all interest and other investment earnings (net of losses and investment
expenses) on funds deposited in the Series 1999-1 Principal Collection
Subaccount and the Series 1999-1 General Collection Subaccount shall be
deposited in the Series 1999-1 Settlement Collection Subaccount. The Issuer
shall not direct the Indenture Trustee to dispose of (or permit the disposal of)
any Permitted Investments prior to the maturity thereof to the extent such
disposal would result in a loss of principal of such Permitted Investment. In
the absence of written direction as provided hereunder, all funds on deposit in
the Collection Account shall remain uninvested.
(ii) After the occurrence of an Amortization Event, the Funding
Agent shall instruct the institution maintaining the Collection Account in
writing to invest funds on deposit in the Series 1999-1 Subaccounts from time to
time in Permitted Investments selected by the Funding Agent (by standing
instructions or otherwise). Amounts on deposit and available for investment in
the Series 1999-1 Subaccounts shall be invested by the Indenture Trustee at the
written direction of the Funding Agent in Permitted Investments that mature, or
that are payable or redeemable upon demand of the holder thereof on or prior to
the Business Day immediately preceding the next Payment Date. On each Settlement
Date, all interest and other investment earnings (net of losses and investment
expenses) on funds deposited in the Series 1999-1 General Collection Subaccount
and the Series 1999-1 Principal Collection Subaccount shall be deposited in the
Series 1999-1 Settlement Collection Subaccount. The Funding Agent shall not
direct the Indenture Trustee to dispose of (or permit the disposal of) any
Permitted Investments prior to the maturity thereof to the extent such disposal
would result in a loss of principal of such Permitted
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Investment. In the absence of written direction as provided hereunder, all funds
on deposit shall remain uninvested.
(a) Prior to 1:00 P.M., New York City time, on each Deposit Date,
the Administrator shall direct the Indenture Trustee in writing to allocate to
the Series 1999-1 Investor Noteholders and deposit in the Series 1999-1 General
Collection Subaccount an amount equal to the product of the Series 1999-1
Invested Percentage on such Deposit Date and the Collections deposited into the
Collection Account on such Deposit Date.
(b) The Administrator shall direct the Indenture Trustee in writing
to allocate to the Series 1999-1 Investor Noteholders and deposit in the Series
1999-1 Collection Subaccount the following amounts on each Business Day (the
"Series 1999-1 Daily Principal Allocation"):
(i) the proceeds from the initial sale of the Series 1999-1 Investor
Notes or any Increase;
(ii) any amounts allocated to another Series of Investor Notes that
the Issuer or the Administrator, on behalf of the Issuer, has elected to
apply to reduce the Series 1999-1 Invested Amount; and
(iii) on the Series 1999-1 Initial Funding Date, the proceeds of the
issuance of the Series 1999-1 Preferred Membership Interests, in an amount
equal to the amount of such proceeds.
(c) On each Determination Date, the Administrator shall direct the
Indenture Trustee in writing to allocate to the Series 1999-1 Investor
Noteholders and deposit in the Series 1999-1 Settlement Collection Subaccount on
the immediately succeeding Settlement Date the following amounts:
(i) any Unit Repurchase Payments made by the Servicer, in an amount
equal to the product of the average daily Series 1999-1 Invested
Percentage during the immediately preceding Monthly Period and the amount
of such Unit Repurchase Payments;
(ii) the Monthly Servicer Advance made by the Servicer, in an amount
equal to the product of the average daily Series 1999-1 Invested
Percentage during the immediately preceding Monthly Period and the amount
of such Monthly Servicer Advance;
(iii) amounts withdrawn from the Gain on Sale Account, in an amount
equal to the product of the average daily Series 1999-1 Invested
Percentage during such Monthly Period and the amount withdrawn from the
Gain on Sale Account pursuant to Section 5.2(e) of the Base Indenture on
such Settlement Date; and
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(iv) payments made under the Series 1999-1 Lease Rate Caps.
(d) On each Business Day, the Administrator will direct the
Indenture Trustee in writing to allocate, prior to 1:00 P.M., New York City
time, the Series 1999-1 Daily Principal Allocation deposited in the Series
1999-1 Collection Subaccount in the following priority:
(i) if such Business Day is a Settlement Date, allocate to the
Series 1999-1 Settlement Collection Subaccount, an amount equal to the
lesser of (A) the proceeds from any Increase on such Settlement Date and
(B) the Principal Overpayment Amount for such Settlement Date; and
(ii) allocate any remaining portion of the Series 1999-1 Daily
Principal Allocation to the Series 1999-1 Principal Collection Subaccount.
(e) If the sum of (i) the Series 1999-1 Daily Principal Allocation
and (ii) the amount on deposit in the Series 1999-1 Principal Collection
Subaccount on any Business Day is less than the Daily Principal Utilization
Amount for such Business Day, the Administrator will direct the Indenture
Trustee in writing, prior to 1:00 P.M., New York City time, to withdraw an
amount equal to such deficit from the Series 1999-1 General Collection
Subaccount and deposit it into the Series 1999-1 Principal Collection
Subaccount.
(f) During the Commitment Period, the Administrator may direct the
Indenture Trustee in writing on any Business Day to withdraw amounts on deposit
in the Series 1999-1 Principal Collection Subaccount for any of the following
purposes:
(i) if such Business Day is an Additional Closing Date, to pay all
or a portion of the Transferred Asset Payment due on such Additional
Closing Date pursuant to the Transfer Agreement;
(ii) if the Administrator shall have given the Funding Agent
irrevocable written notice of a Decrease (effective upon receipt) prior to
3.00, P.M., New York City time, at least two Business Days prior to such
day, in the case of any notice given prior to the APA Bank Purchase Date,
on such day, in the case of any notice given on or after the APA Bank
Purchase Date with respect to the Floating Tranche, or at least three
Business Days prior to such day, in the case of any notice given on or
after the APA Bank Purchase Date with respect to a Eurodollar Tranche, to
reduce the Series 1999-1 Invested Amount in accordance with Section 2.5;
or
(iii) to reduce the Invested Amount of any other Series of Investor
Notes.
(g) On any Business Day prior to the APA Bank Purchase Date during
the Series 1999-1 Amortization Period, the Administrator may direct the
Indenture Trustee in writing to withdraw amounts on deposit in the Series 1999-1
Principal Collection Subaccount and apply them to reduce the Series 1999-1
Invested Amount in accordance with Section 2.5; provided, that the Administrator
shall have given the Funding Agent irrevocable written notice of such
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Decrease (effective upon receipt) prior to 3:00, P.M., New York City time, at
least two Business Days prior to such day.
(a) On each Determination Date, the Administrator shall determine
the amount of interest payable on the next succeeding Payment Date on the Series
1999-1 Investor Notes ("Series 1999-1 Monthly Interest"). Series 1999-1 Monthly
Interest for each Series 1999-1 Interest Period will equal the product of (i)
the Series 1999-1 Note Rate for such Series 1999-1 Interest Period, (ii) the
average daily Series 1999-1 Invested Amount during such Series 1999-1 Interest
Period and (iii) the actual number of days elapsed in such Series 1999-1
Interest Period divided by 360. If a change in the Discount, the Adjusted LIBO
Rate or the Alternate Base Rate on or after any Determination Date results in a
change in Series 1999-1 Monthly Interest for the Series 1999-1 Interest Period
ending on the Payment Date immediately succeeding such Determination Date, the
Administrator shall amend the Monthly Settlement Statement to reflect the
adjustment in the Series 1998-1 Monthly Interest for such Series 1999-1 Interest
Period caused by such change and any consequent adjustments and the
Administrator shall also provide written notification to the Indenture Trustee
of any such change. Any amendment to the Monthly Settlement Statement pursuant
to this Section 5A.3(a) shall be completed by 1:00 p.m., New York City time, on
the day preceding the next Payment Date.
(b) On each Determination Date, the Administrator shall determine
the excess, if any (the "Interest Shortfall"), of (i) the sum of (i) the Series
1999-1 Monthly Interest for the Series 1999-1 Interest Period ending on the next
succeeding Payment Date and (ii) the amount of any unpaid Interest Shortfall, as
of the preceding Payment Date (together with any Additional Interest on such
Interest Shortfall) over (iii) the amount which will be available to be
distributed to the Purchasers on such Payment Date in respect thereof pursuant
to this Indenture Supplement. If the Interest Shortfall with respect to any
Payment Date is greater than zero, an additional amount ("Additional Interest")
equal to the product of (A) the number of days until such Interest Shortfall
shall be repaid divided by 365 (or 366, as the case may be), (B) the Alternate
Base Rate plus 2.0% and (C) such Interest Shortfall (or the portion thereof
which has not been paid to the Series 1999-1 Investor Noteholders) shall be
payable as provided herein on each Payment Date following such Payment Date, to
but excluding the Payment Date on which such Interest Shortfall is paid to the
Series 1999-1 Investor Noteholders.
(a) On each Settlement Date, the Administrator shall direct the
Indenture Trustee in writing to withdraw from the Series 1999-1 General
Collection Subaccount and allocate to the Series 1999-1 Settlement Collection
Subaccount an amount equal to Total Cash Available for such Settlement Date
(less an amount equal to the investment income from the Series 1999-1 General
Collection Subaccount and the Series 1999-1 Principal Collection Subaccount
transferred to the Series 1999-1 Settlement Collection Subaccount pursuant to
Section 5A.1(b)).
(b) If the Administrator determines that the aggregate amount
distributable from the Series 1999-1 Settlement Collection Subaccount pursuant
to paragraphs (i) through (xii) of
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Section 5A.4(c) on any Payment Date exceeds the aggregate amount to be deposited
in the Series 1999-1 Settlement Collection Account on such Payment Date pursuant
to Section 5A.1(b) and Section 5A.4(a) (the "Deficiency"), the Administrator
shall notify the Indenture Trustee thereof in writing at or before 10:00 a.m.,
New York City time, on the Business Day immediately preceding such Payment Date,
and the Indenture Trustee shall, by 11:00 a.m., New York City time, on such
Payment Date, withdraw from the Series 1999-1 Reserve Account and deposit in the
Series 1999-1 Settlement Collection Subaccount an amount equal to the least of
(x) such Deficiency, (y) the product of the average daily Series 1999-1 Invested
Percentage during the immediately preceding Monthly Period and Aggregate Net
Lease Losses for such Monthly Period and (z) the amount on deposit in the Series
1999-1 Reserve Account and available for withdrawal and, to the extent that such
amount is less than the Deficiency, withdraw from the Series 1999-1 Yield
Supplement Account and deposit in the Series 1999-1 Settlement Collection
Subaccount an amount equal to the lesser of the amount of such insufficiency and
the amount on deposit in the Series 1999-1 Yield Supplement Account and
available for withdrawal. If the Deficiency with respect to any Payment Date
exceeds the amounts to be withdrawn from the Series 1999-1 Reserve Account and
the Series 1999-1 Yield Supplement Account pursuant to the immediately preceding
sentence, the Administrator shall instruct the Indenture Trustee in writing at
or before 10:00 a.m., New York City time, on the Business Day immediately
preceding such Payment Date, and the Indenture Trustee shall, by 11:00 a.m., New
York City time, on such Payment Date, withdraw from the Series 1999-1 Reserve
Account and deposit in the Series 1999-1 Settlement Collection Subaccount an
amount equal to the lesser of (x) the remaining portion of the Deficiency and
(y) the amount on deposit in the Series 1999-1 Reserve Account and available for
withdrawal (after giving effect to the withdrawal described in the immediately
preceding sentence).
(c) On each Payment Date, based solely on the information contained
in the Monthly Settlement Statement with respect to Series 1999-1 Investor
Notes, the Indenture Trustee shall apply the following amounts allocated to, or
deposited in, the Series 1999-1 Settlement Collection Subaccount on such Payment
Date in the following order of priority:
(i) to SPV, an amount equal to the Series 1999-1 Excess Fleet
Receivable Amount, if any, for such Payment Date;
(ii) to the Gain On Sale Account, an amount equal to the Series
1999-1 Monthly Residual Value Gain, if any, for such Payment Date;
(iii) to the Servicer, an amount equal to the product of the Monthly
Servicer Advance Reimbursement Amount for such Payment Date and the
average daily Series 1999-1 Invested Percentage during the immediately
preceding Monthly Period;
(iv) if VMS is not the Servicer, to the Servicer, an amount equal to
the Series 1999-1 Servicing Fee for the Series 1999-1 Interest Period
ending on such Payment Date;
(v) to the Series 1999-1 Distribution Account, an amount equal to
the Series 1999-1 Monthly Interest payable on such Payment Date plus the
amount of any unpaid
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Interest Shortfall, as of the preceding Payment Date, together with any
Additional Interest on such Interest Shortfall (such amount, the "Monthly
Interest Payment");
(vi) to the Series 1999-1 Distribution Account, an amount equal to
the Commitment Fee for the Series 1999-1 Interest Period ending on such
Payment Date plus the amount of any unpaid Commitment Fee for any prior
Series 1999-1 Interest Period (such amount, the "Commitment Fee Payment");
(vii) to the Series 1999-1 Distribution Account, an amount equal to
the Program Fee for the Series 1999-1 Interest Period ending on such
Payment Date plus the amount of any unpaid Program Fee for any prior
Series 1999-1 Interest Period (such amount, the "Program Fee Payment");
(viii) if VMS is the Servicer, to the Servicer, an amount equal to
the Series 1999-1 Servicing Fee for the Series 1999-1 Interest Period
ending on such Payment Date;
(ix) to the Administrator, an amount equal to the Series 1999-1
Administrator Fee for the Series 1999-1 Interest Period ending on such
Payment Date;
(x) to the Series 1999-1 Distribution Account, an amount equal to
the lesser of (A) Increased Costs for such Payment Date and (B) the
Additional Costs Cap for such Payment Date;
(xi) other than during a Lockout Period, to the Series 1999-1
Preferred Member Distribution Account, an amount equal to the Dividend
Amount for such Payment Date;
(xii) (A) prior to the Series 1999-1 Commitment Termination Date, to
the Series 1999-1 Principal Collection Subaccount, an amount equal to the
Series 1999-1 Allocated Asset Amount Deficiency, if any, on such Payment
Date, (B) during the period from and including the Series 1999-1
Commitment Termination Date to and including the Series 1999-1 Note
Termination Date, to the Series 1999-1 Principal Collection Subaccount, an
amount equal to the lesser of the Series 1999-1 Principal Payment Amount
for such Payment Date and the Series 1999-1 Invested Amount on such
Payment Date and (C) on and after the Series 1999-1 Note Termination Date,
to the Series 1999-1 Preferred Member Distribution Account, an amount
equal to the Series 1999-1 Principal Payment Amount for such Payment Date
(or, on the Series 1999-1 Note Termination Date, the portion thereof not
deposited into the Series 1999-1 Principal Collection Subaccount);
provided, however that on or after the Series 1999-1 Note Termination Date
during a Lockout Period, the Series 1999-1 Principal Payment Amount for
such Payment Date (or, on the Series 1999-1 Note Termination Date, the
portion thereof not deposited into the Series 1999-1 Principal Collection
Subaccount) shall be applied by the Indenture Trustee in accordance with
Section 5.4(d) of the Base Indenture.
(xiii) to the Series 1999-1 Reserve Account, to the extent that a
Series 1999-1 Liquid Credit Enhancement Deficiency exists or, after the
Series 1999-1 Commitment
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Termination Date, to the extent that a Series 1999-1 Allocated Asset
Amount Deficiency exists, an amount equal to the greater of such
deficiencies;
(xiv) to the Series 1999-1 Yield Supplement Account, to the extent
that a Series 1999-1 Yield Supplement Deficiency exists (or, will exist
after giving effect to any reduction in the 1999-1B Invested Amount on
such Payment Date), an amount equal to such deficiency;
(xv) to the Series 1999-1 Distribution Account, an amount equal to
the Failure Fee, if any, for such Payment Date plus the amount of any
unpaid Failure Fee for any prior Payment Date (such amount, the "Failure
Fee Payment"); and
(xvi) to the Series 1999-1 Preferred Member Distribution Account, an
amount equal to the balance remaining in the Series 1999-1 Settlement
Collection Subaccount.
(a) On each Payment Date, based solely on the information contained
in the Monthly Settlement Statement with respect to the Series 1999-1 Investor
Notes, the Indenture Trustee shall, in accordance with Section 6.1 of the Base
Indenture, pay to the Funding Agent, for the account of the Series 1999-1
Investor Noteholders, from the Series 1999-1 Distribution Account the Monthly
Interest Payment to the extent of the amount deposited in the Series 1999-1
Distribution Account for the payment of interest pursuant to Section 5A.4(c)(v).
(b) On each Payment Date, based solely on the information contained
in the Monthly Settlement Statement with respect to Series 1999-1 Investor
Notes, the Indenture Trustee shall pay to the Funding Agent, for the account of
the APA Bank, from the Series 1999-1 Distribution Account the Commitment Fee
Payment for such Payment Date to the extent of the amount deposited in the
Series 1999-1 Distribution Account for the payment of such Commitment Fee
Payment pursuant to Section 5A.4(c)(vi).
(c) On each Payment Date, based solely on the information contained
in the Monthly Settlement Statement with respect to Series 1999-1 Investor
Notes, the Indenture Trustee shall pay to the Funding Agent, for the account of
the Initial Purchaser, from the Series 1999-1 Distribution Account the Program
Fee Payment for such Payment Date to the extent of the amount deposited in the
Series 1999-1 Distribution Account for the payment of such Program Fee Payment
pursuant to Section 5A.4(c)(vii).
(d) On each Payment Date, based solely on the information contained
in the Monthly Settlement Statement with respect to Series 1999-1 Investor
Notes, the Indenture Trustee shall pay to the Funding Agent, for the account of
the Initial Purchaser or the APA Bank, as the case may be, from the Series
1999-1 Distribution Account any Article 7 Costs due and payable on such Payment
Date to the Initial Purchaser or the APA Bank to the extent of the amount
deposited in the Series 1999-1 Distribution Account for the payment of such
Article 7 Costs pursuant to Section 5A.4(c)(x).
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(e) On each Payment Date, based solely on the information contained
in the Monthly Settlement Statement with respect to Series 1999-1 Investor
Notes, the Indenture Trustee shall pay to the Persons owed any other unpaid
Program Costs due and payable on such Payment Date or any amounts due and
payable pursuant to Section 2.8 on such Payment Date from the Series 1999-1
Distribution Account to the extent of the amount deposited in the Series 1999-1
Distribution Account for the payment of such Program Costs pursuant to Section
5A.4(c)(x).
(f) On the October 1999 Payment and on each Payment Date thereafter,
based solely on the information contained in the Monthly Settlement Statement
with respect to Series 1999-1 Investor Notes, the Indenture Trustee shall pay to
the Funding Agent, for the account of the APA Bank, from the Series 1999-1
Distribution Account the Failure Fee Payment for such Payment Date to the extent
of the amount deposited in the Series 1999-1 Distribution Account for the
payment of such Failure Fee Payment pursuant to Section 5A.4(c)(xv).
The amount (the "Monthly Principal Payment") distributable from the
Series 1999-1 Principal Collection Subaccount on each Payment Date during the
Series 1999-1 Amortization Period shall be equal to the amount on deposit in
such account on such Payment Date; provided, however, that the Monthly Principal
Payment on any Payment Date shall not exceed the Series 1999-1 Invested Amount
on such Payment Date. Further, on any other Business Day prior to the APA Bank
Purchase Date during the Series 1999-1 Amortization Period, funds may be
distributed from the Series 1999-1 Distribution Account to the Series 1999-1
Investor Noteholder in accordance with Section 5A.7(c). On each Payment Date
during the Series 1999-1 Amortization Period, based solely on the information
contained in the Monthly Settlement Statement with respect to Series 1999-1
Investor Notes, the Indenture Trustee shall withdraw from the Series 1999-1
Principal Collection Subaccount and deposit in the Series 1999-1 Distribution
Account an amount equal to the Monthly Principal Payment on such Payment Date.
(a) The principal amount of the Series 1999-1 Investor Notes shall
be due and payable on the Series 1999-1 Termination Date.
(b) On each Payment Date on and after the APA Bank Purchase Date
during the Series 1999-1 Amortization Period, based solely on the information
contained in the Monthly Settlement Statement with respect to Series 1999-1
Investor Notes, the Indenture Trustee shall, in accordance with Section 6.1 of
the Base Indenture, pay to the Funding Agent, for the account of the Series
1999-1 Investor Noteholder, from the Series 1999-1 Distribution Account the
Monthly Principal Payment.
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(c) On the date of any Decrease, the Indenture Trustee shall pay to
the Funding Agent, for the account of the Series 1999-1 Investor Noteholders,
from the Series 1999-1 Distribution Account the amount of such Decrease.
When any payment or deposit hereunder or under any other Transaction
Document is required to be made by the Indenture Trustee at or prior to a
specified time, the Administrator shall deliver any applicable written
instructions with respect thereto reasonably in advance of such specified time.
If the Administrator fails to give notice or instructions to make any payment
from or deposit into the Collection Account or any subaccount thereof required
to be given by the Administrator, at the time specified herein or in any other
Transaction Document (after giving effect to appli-cable grace periods), the
Indenture Trustee shall make such payment or deposit into or from the Collection
Account or such subaccount without such notice or instruction from the
Administrator; provided that the Administrator, upon request of the Indenture
Trustee, promptly provides the Indenture Trustee with all information necessary
to allow the Indenture Trustee to make such a payment or deposit in the event
that the Indenture Trustee shall take or refrain from taking action pursuant to
this Section 5A.8., the Administrator shall, by 5:00 p.m., New York City time,
on any day the Indenture Trustee makes a payment or deposit based on information
or direction from the Administrator, provide (i) written confirmation of any
such direction and (ii) written confirmation of all information used by the
Administrator in giving any such direction.
(a) The Indenture Trustee shall establish and maintain in the name
of the Indenture Trustee for the benefit of the Series 1999-1 Investor
Noteholders an account (the "Series 1999-1 Reserve Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Series 1999-1 Investor Noteholders. The Series 1999-1 Reserv-e
Account shall be maintained (i) with a Qualified Institution, or (ii) as a
segregated trust account with the corporate trust department of a depository
institu-tion or trust company having corporate trust powers and acting as
Indenture Trustee for funds deposited in the Series 1999-1 Reserve Account;
provided that, if at any time such Qualified Institution is no longer a
Qualified Institution or the credit rating of any securities issued by such
depositary institution or trust company shall be reduced to below BBB- by S&P or
Baa3 by Moody's, then the Indenture Trustee shall, within 30 days of such
reduction, establish a new Series 1999-1 Reserve Account with a new Qualified
Institution. If the Series 1999-1 Reserve Account is not maintained in
accordance with the previous sentence, then within ten (10) Business Days after
obtaining knowledge of such fact, the Indenture Trustee shall establish a new
Series 1999-1 Reserve Account which complies with such sentence and transfer all
cash and investments from the non-qualifying Series 1999-1 Reserve Account into
the new Series 1999-1 Reserve Account. Initially, the Series 1999-1 Reserve
Account will be estab-lished with The Chase Manhattan Bank.
(b) So long as no Amortization Event has occurred, the Issuer may
instruct the institution maintaining the Series 1999-1 Reserve Account in
writing to invest funds on deposit in
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the Series 1999-1 Reserve Account from time to time in Permitted Investments
selected by the Issuer (by standing instructions or otherwise); provided,
however, that any such investment shall mature not later than the Business Day
prior to the Payment Date following the date on which such funds were received.
After the occurrence of an Amortization Event, the Funding Agent shall instruct
the institution maintaining the Series 1999-1 Reserve Account in writing to
invest funds on deposit in the Series 1999-1 Reserve Account from time to time
in Permitted Investments selected by the Funding Agent (by standing instructions
or otherwise); provided, however, that any such investment shall mature not
later than the Business Day prior to the Payment Date following the date on
which such funds were received. All such Permitted Investments will be credited
to the Series 1999-1 Reserve Account and any such Permitted Investments that
constitute (i) Physical Property (and that is not either a United States
Security Entitlement or a Security Entitlement) shall be delivered to the
Indenture Trustee in accordance with paragraph (a) of the definition of
"Delivery" and shall be held by the Indenture Trustee pending maturity or
disposition; (ii) United States Security Entitlements or Security Entitlements
shall be Controlled by the Indenture Trustee pending maturity or disposition;
and (iii) Uncertificated Securities (and not United States Security
Entitlements) shall be delivered to the Indenture Trustee in accordance with
paragraph (b) of the definition of "Delivery" and shall be maintained by the
Indenture Trustee pending maturity or disposition. The Indenture Trustee shall,
at the expense of the Administrator, take such action as is required to maintain
the Indenture Trustee's security interest in the Permitted Investments credited
to the Series 1999-1 Reserve Account. In absence of written direction as
provided hereunder, funds on deposit in the Series 1999-1 Reserve Account shall
remain uninvested.
(c) All interest and earnings (net of losses and investment
expenses) paid on funds on deposit in the Series 1999-1 Reserve Account shall be
deemed to be on deposit and available for distribution.
(d) If there is a Series 1999-1 Reserve Account Surplus on any
Settlement Date, the Administrator may notify the Indenture Trustee thereof in
writing and instruct the Indenture Trustee to withdraw from the Series 1999-1
Reserve Account and deposit in the Series 1999-1 Preferred Member Distribution
Account, and the Indenture Trustee shall withdraw from the Series 1999-1 Reserve
Account and deposit in the Series 1999-1 Preferred Member Distribution Account,
so long as no Series 1999-1 Allocated Asset Amount Deficiency exists or would
result therefrom, an amount up to the lesser of (i) such Series 1999-1 Reserve
Account Surplus on such Business Day and (ii) the amount on deposit in the
Series 1999-1 Reserve Account on such Business Day and available for withdrawal
therefrom.
(e) Amounts will be withdrawn from the Series 1999-1 Reserve Account
in accordance with Section 5A.4(b).
(f) In order to secure and provide for the repayment and payment of
the Issuer Obligations with respect to the Series 1999-1 Investor Notes, the
Issuer hereby grants a security interest in and assigns, pledges, grants,
transfers and sets over to the Indenture Trustee, for the benefit of the Series
1999-1 Investor Noteholders, all of the Issuer's right, title and interest in
and to the following (whether now or hereafter existing or acquired): (i) the
Series 1999-1 Reserve
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Account, including any security entitlement thereto; (ii) all funds on deposit
therein from time to time; (iii) all certificates and instruments, if any,
representing or evidencing any or all of the Series 1999-1 Reserve Account or
the funds on deposit therein from time to time; (iv) all investments made at any
time and from time to time with monies in the Series 1999-1 Reserve Account,
whether constituting securities, instruments, general intangibles, investment
property, financial assets or other property; (v) all interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for the Series 1999-1 Reserve
Account, the funds on deposit therein from time to time or the investments made
with such funds; and (vi) all proceeds of any and all of the foregoing,
including, without limitation, cash. The Indenture Trustee shall possess all
right, title and interest in all funds on deposit from time to time in the
Series 1999-1 Reserve Account and in all proceeds thereof and shall be the only
person authorized to originate entitlement orders in respect of the Series
1999-1 Reserve Account. The Series 1999-1 Reserve Ac-count shall be under the
sole dominion and control of the Indenture Trustee for the benefit of the Series
1999-1 Investor Noteholders. The Indenture Trustee and the Series 1999-1
Investor Noteholders shall have no interest in any amounts withdrawn from the
Series 1999-1 Reserve Account and deposited in the Series 1999-1 Preferred
Member Distribution Account.
(g) On the Payment Date that the sum of (a) the Series 1999-1
Reserve Account Amount, (b) the Series 1999-1 Yield Supplement Account Amount
and (c) the amount available to be deposited in the Series 1999-1 Preferred
Member Distribution Account in accordance with Section 5A.4(c)(xii) is at least
equal to the aggregate stated liquidation preference of the Series 1999-1
Preferred Membership Interests, the Indenture Trustee, acting in accordance with
the written instructions of the Administrator shall withdraw from the Series
1999-1 Reserve Account all amounts on deposit therein for deposit in the Series
1999-1 Preferred Member Distribution Account.
(a) The Indenture Trustee shall establish and maintain in the name
of the Indenture Trustee for the benefit of the Series 1999-1 Investor
Noteholders an account (the "Series 1999-1 Yield Supplement Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Series 1999-1 Investor Noteholders. The Series 1999-1 Yield
Supplement Account shall be maintained (i) with a Qualified Institution, or (ii)
as a segregated trust account with the corporate trust department of a
depository institu-tion or trust company having corporate trust powers and
acting as Indenture Trustee for funds deposited in the Series 1999-1 Yield
Supplement Account; provided that, if at any time such Qualified Institution is
no longer a Qualified Institution or the credit rating of any securities issued
by such depositary institution or trust company shall be reduced to below BBB-
by S&P or Baa3 by Moody's, then the Indenture Trustee shall, within 30 days of
such reduction, establish a new Series 1999-1 Yield Supplement Account with a
new Qualified Institution. If the Series 1999-1 Yield Supplement Account is not
maintained in accordance with the previous sentence, then within ten (10)
Business Days after obtaining knowledge of such fact, the Indenture Trustee
shall establish a new Series 1999-1 Yield Supplement Account which complies with
such sentence and transfer all cash and investments from the non-qualifying
Series
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1999-1 Yield Supplement Account into the new Series 1999-1 Yield Supplement
Account. Initially, the Series 1999-1 Yield Supplement Account will be
estab-lished with The Chase Manhattan Bank.
(b) So long as no Amortization Event has occurred, the Issuer may
instruct the institution maintaining the Series 1999-1 Yield Supplement Account
in writing to invest funds on deposit in the Series 1999-1 Yield Supplement
Account from time to time in Permitted Investments selected by the Issuer (by
standing instructions or otherwise); provided, however, that any such investment
shall mature not later than the Business Day prior to the Payment Date following
the date on which such funds were received. After the occurrence of an
Amortization Event, the Funding Agent shall instruct the institution maintaining
the Series 1999-1 Yield Supplement Account in writing to invest funds on deposit
in the Series 1999-1 Yield Supplement Account from time to time in Permitted
Investments selected by the Funding Agent (by standing instructions or
otherwise); provided, however, that any such investment shall mature not later
than the Business Day prior to the Payment Date following the date on which such
funds were received. All such Permitted Investments will be credited to the
Series 1999-1 Yield Supplement Account and any such Permitted Investments that
constitute (i) Physical Property (and that is not either a United States
Security Entitlement or a Security Entitlement) shall be delivered to the
Indenture Trustee in accordance with paragraph (a) of the definition of
"Delivery" and shall be held by the Indenture Trustee pending maturity or
disposition; (ii) United States Security Entitlements or Security Entitlements
shall be Controlled by the Indenture Trustee pending maturity or disposition;
and (iii) Uncertificated Securities (and not United States Security
Entitlements) shall be delivered to the Indenture Trustee in accordance with
paragraph (b) of the definition of "Delivery" and shall be maintained by the
Indenture Trustee pending maturity or disposition. The Indenture Trustee shall,
at the expense of the Administrator, take such action as is required to maintain
the Indenture Trustee's security interest in the Permitted Investments credited
to the Series 1999-1 Yield Supplement Account. In absence of written direction
as provided hereunder, funds on deposit in the Series 1999-1 Yield Supplement
Account shall remain uninvested.
(c) All interest and earnings (net of losses and investment
expenses) paid on funds on deposit in the Series 1999-1 Yield Supplement Account
shall be deemed to be on deposit and available for distribution.
(d) If there is a Series 1999-1 Yield Supplement Account Surplus on
any Settlement Date, the Administrator may notify the Indenture Trustee thereof
in writing and request the Indenture Trustee to withdraw from the Series 1999-1
Yield Supplement Account and deposit in the Series 1999-1 Preferred Member
Distribution Account, and the Indenture Trustee shall withdraw from the Series
1999-1 Yield Supplement Account and deposit in the Series 1999-1 Preferred
Member Distribution Account an amount up to the lesser of (i) such Series 1999-1
Yield Supplement Account Surplus on such Business Day and (ii) the amount on
deposit in the Series 1999-1 Yield Supplement Account on such Business Day and
available for withdrawal therefrom.
(e) Amounts will be withdrawn from the Series 1999-1 Yield
Supplement Account in accordance with Section 5A.4(b).
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(f) In order to secure and provide for the repayment and payment of
the Issuer Obligations with respect to the Series 1999-1 Investor Notes, the
Issuer hereby grants a security interest in and assigns, pledges, grants,
transfers and sets over to the Indenture Trustee, for the benefit of the Series
1999-1 Investor Noteholders, all of the Issuer's right, title and interest in
and to the following (whether now or hereafter existing or acquired): (i) the
Series 1999-1 Yield Supplement Account, including any security entitlement
thereto; (ii) all funds on deposit therein from time to time; (iii) all
certificates and instruments, if any, representing or evidencing any or all of
the Series 1999-1 Yield Supplement Account or the funds on deposit therein from
time to time; (iv) all investments made at any time and from time to time with
monies in the Series 1999-1 Yield Supplement Account, whether constituting
securities, instruments, general intangibles, investment property, financial
assets or other property; (v) all interest, dividends, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for the Series 1999-1 Yield Supplement Account, the
funds on deposit therein from time to time or the investments made with such
funds; and (vi) all proceeds of any and all of the foregoing, including, without
limitation, cash. The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Series 1999-1 Yield
Supplement Account and in all proceeds thereof and shall be the only person
authorized to originate entitlement orders in respect of the Series 1999-1 Yield
Supplement Account. The Series 1999-1 Yield Supplement Ac-count shall be under
the sole dominion and control of the Indenture Trustee for the benefit of the
Series 1999-1 Investor Noteholders. The Indenture Trustee and the Series 1999-1
Investor Noteholders shall have no interest in any amounts withdrawn from the
Series 1999-1 Yield Supplement Account and deposited in the Series 1999-1
Preferred Member Distribution Account.
(g) On the Payment Date that the sum of (a) the Series 1999-1
Reserve Account Amount, (b) the Series 1999-1 Yield Supplement Account Amount
and (c) the amount available to be deposited in the Series 1999-1 Preferred
Member Distribution Account in accordance with Section 5A.4(c)(xii) is at least
equal to the aggregate stated liquidation preference of the Series 1999-1
Preferred Membership Interests, the Indenture Trustee, acting in accordance with
the written instructions of the Administrator shall withdraw from the Series
1999-1 Yield Supplement Account all amounts on deposit therein for deposit in
the Series 1999-1 Preferred Member Distribution Account.
(a) The Indenture Trustee shall establish and maintain in the name
of the Indenture Trustee for the benefit of the Series 1999-1 Investor
Noteholders an account (the "Series 1999-1 Distribution Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Series 1999-1 Investor Noteholders. The Series 1999-1
Distri-bution Account shall be maintained (i) with a Qualified Institution, or
(ii) as a segregated trust account with the corporate trust department of a
depository institu-tion or trust company having corporate trust powers and
acting as Indenture Trustee for funds deposited in the Series 1999-1
Distribution Account; provided that, if at any time such Qualified Institution
is no longer a Qualified Institution or the credit rating of any securities
issued by such depositary institution or
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trust company shall be reduced to below BBB- by S&P or Baa3 by Moody's, then the
Indenture Trustee shall, within 30 days of such reduction, establish a new
Series 1999-1 Distribution Account with a new Qualified Institution. If the
Series 1999-1 Distribution Account is not maintained in accordance with the
previous sentence, within ten (10) Business Days after a Trust Officer has
obtained actual knowledge of such fact, the Indenture Trustee shall establish a
new Series 1999-1 Distribution Account which complies with such sentence and
shall instruct the Indenture Trustee in writing to transfer all cash and
investments from the non-qualifying Series 1999-1 Distribution Account into the
new Series 1999-1 Distribution Account. Initially, the Series 1999-1
Distribution Account will be estab-lished with The Chase Manhattan Bank. (b) In
order to secure and provide for the repayment and payment of the Issuer
Obligations with respect to the Series 1999-1 Investor Notes, the Issuer hereby
grants a security interest in and assigns, pledges, grants, transfers and sets
over to the Indenture Trustee, for the benefit of the Series 1999-1 Investor
Noteholders, all of the Issuer's right, title and interest in and to the
following (whether now or hereafter existing or acquired): (i) the Series 1999-1
Distribution Account, including any security entitlement thereto; (ii) all funds
on deposit therein from time to time; (iii) all certificates and instruments, if
any, representing or evidencing any or all of the Series 1999-1 Distribution
Account or the funds on deposit therein from time to time; (iv) all interest,
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for the Series
1999-1 Distribution Account, the funds on deposit therein from time to time; and
(v) all proceeds of any and all of the foregoing, including, without limitation,
cash. The Indenture Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Series 1999-1 Distribution Account and
in all proceeds thereof and shall be the only person authorized to originate
entitlement orders in respect of the Series 1999-1 Distribution Account. The
Series 1999-1 Distribution Ac-count shall be under the sole dominion and control
of the Indenture Trustee for the benefit of the Series 1999-1 Investor
Noteholders.
(a) On the Series 1999-1 Closing Date, the Issuer shall have one or
more Series 1999-1 Lease Rate Caps with respect to all of the Fixed Rate Leases
then allocated to the Lease SUBI Portfolio. On the initial Settlement Date and
on each Settlement Date thereafter the Issuer shall have one or more Series
1999-1 Lease Rate Caps with respect to all of the Fixed Rate Leases then
allocated to the Lease SUBI Portfolio. On each Settlement Date, the Issuer shall
deliver to the Indenture Trustee copies of any additional Series 1999-1 Lease
Rate Caps obtained by the Issuer since the preceding Settlement Date. If the
long-term unsecured credit rating of any provider of a Series 1999-1 Lease Rate
Cap falls below "A2" from Moody's or "A" from S&P, the Transferor shall obtain a
substitute Series 1999-1 Lease Rate Cap from an Eligible Counterparty within ten
Business Days of such decline in credit rating unless such provider provides
some form of collateral for its obligations under its Series 1999-1 Lease Rate
Cap acceptable to the Funding Agent and the Rating Agency Condition is satisfied
with respect to such arrangement. The Issuer will not permit any Series 1999-1
Lease Rate Cap to be terminated or transferred in whole or in part unless a
replacement Series 1999-1 Lease Rate Cap therefor has been provided as described
in the immediately preceding sentence.
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(b) In order to secure and provide for the repayment and payment of
the Issuer Obligations with respect to the Series 1999-1 Investor Notes, the
Issuer hereby grants a security interest in and assigns, pledges, grants,
transfers and sets over to the Indenture Trustee, for the benefit of the Series
1999-1 Investor Noteholders, all of the Issuer's right, title and interest in
and to the Series 1999-1 Lease Rate Caps and all proceeds thereof.
If any one of the following events shall occur with respect to the
Series 1999-1 Investor Notes:
(a) the Series 1999-1 Reserve Account shall have become subject to
an injunction, estoppel or other stay or a Lien (other than a Permitted
Lien);
(b) the Series 1999-1 Yield Supplement Account shall have become
subject to an injunction, estoppel or other stay or a Lien (other than a
Permitted Lien);
(c) a Series 1999-1 Liquid Credit Enhancement Deficiency shall occur
and continue for at least two Business Days;
(d) a Series 1999-1 Allocated Asset Amount Deficiency shall occur
and continue for at least two Business Days;
(e) a Series 1999-1 Yield Supplement Deficiency shall occur and
continue for at least two Business Days;
(f) the Three Month Average Charge-Off Ratio with respect to any
Settlement Date exceeds 0.75%;
(g) the Three Month Average Residual Value Loss Ratio with respect
to any Settlement Date exceeds 12.50%;
(h) the Three Month Average Paid-In Advance Loss Ratio with respect
to any Settlement Date exceeds 1.50%;
(i) the Three Month Average Delinquency Ratio with respect to any
Settlement Date exceeds 6.0%;
(j) the failure on the part of the Issuer to declare and pay
dividends on the Series 1999-1 Preferred Membership Interests on any
Payment Date in accordance with their terms;
(k) any Servicer Termination Event shall occur;
(l) any Termination Event shall occur;
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(m) an Event of Default with respect to the Series 1999-1 Notes
shall occur;
(n) an Insolvency Event shall occur with respect to SPV, the
Origination Trust, ARAC or VMS;
(o) a Lease Rate Cap Event shall occur and continue for two Business
Days;
(p) failure on the part of the Issuer (i) to make any payment or
deposit required by the terms of the Indenture (or within the applicable
grace period which shall not exceed two Business Days after the date such
payment or deposit is required to be made) or (ii) duly to observe or
perform in any material respect any covenants or agreements of the Issuer
set forth in the Base Indenture or this Indenture Supplement (other than
Lease Rate Cap Event), which failure continues unremedied for a period of
30 days after there shall have been given, by registered or certified
mail, to the Issuer by the Indenture Trustee or the Issuer and the
Indenture Trustee by any Series 1999-1 Noteholder, written notice
specifying such default and requiring it to be remedied;
(q) any representation or warranty made by the Issuer in the Base
Indenture or this Indenture Supplement, or any information required to be
delivered by the Issuer to the Indenture Trustee shall prove to have been
incorrect in any material respect when made or when delivered, which
continues to be incorrect in any material respect for a period of 30 days
after there shall have been given, by registered or certified mail, to the
Issuer by the Indenture Trustee or the Issuer and the Indenture Trustee by
any Series 1999-1 Noteholder, written notice thereof;
(r) the Indenture Trustee shall for any reason cease to have a valid
and perfected first priority security interest in the Collateral or any of
VMS, the Issuer or any Affiliate of either thereof shall so assert;
(s) there shall have been filed against ARAC, VMS, the Origination
Trust, SPV or the Issuer (i) a notice of federal tax Lien from the
Internal Revenue Service, (ii) a notice of Lien from the PBGC under
Section 412(n) of the Internal Revenue Code or Section 302(f) of ERISA for
a failure to make a required installment or other payment to a plan to
which either of such sections applies or (iii) a notice of any other Lien
the existence of which could reasonably be expected to have a material
adverse effect on the business, operations or financial condition of such
Person, and, in each case, 40 days shall have elapsed without such notice
having been effectively withdrawn or such Lien having been released or
discharged;
(t) one or more judgments or decrees shall be entered against the
Issuer involving in the aggregate a liability (not paid or fully covered
by insurance) of $100,000 or more and such judgments or decrees shall not
have been vacated, discharged, stayed or bonded pending appeal within 30
days from the entry thereof; or
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(u) any of the Transaction Documents shall cease, for any reason, to
be in full force and effect, other than in accordance with its terms;
then, in the case of any event described in clause (p) through (u) above,
an Amortization Event will be deemed to have occurred with respect to the
Series 1999-1 Investor Notes only, if after the applicable grace period,
either the Indenture Trustee or Series 1999-1 Noteholders holding a
Majority in Interest of the Series 1999-1 Notes, declare that an
Amortization Event has occurred with respect to the Series 1999-1 Notes.
In the case of any event described in clauses (a) through (o) above, an
Amortization Event with respect to the Series 1999-1 Investor Notes will
be deemed to have occurred without notice or other action on the part of
the Indenture Trustee or the Series 1999-1 Noteholders.
The Issuer shall have the option to prepay all outstanding Series
1999-1 Investor Notes by paying an amount equal to the Series 1999-1 Prepayment
Amount. The Issuer shall give the Indenture Trustee and the Funding Agent at
least ten Business Days' prior written notice of the date on which the Issuer
intends to exercise such option to prepay (the "Prepayment Date"). Not later
than 12:00 noon, New York City time, on such Prepayment Date, the Issuer shall
deposit in the Series 1999-1 Distribution Account an amount equal to the Series
1999-1 Prepayment Amount in immediately available funds. The funds deposited
into the Series 1999-1 Distribution Account will be paid by the Indenture
Trustee to the Funding Agent, for the account of the Series 1999-1 Investor
Noteholders, on such Prepayment Date.
. A periodic servicing fee (the "Series 1999-1 Servicing Fee") shall be payable
to the Servicer on each Payment Date for the preceding Monthly Period in an
amount equal to the product of (a) 0.215% per annum (the "Series Servicing Fee
Percentage") times (b) the daily average of the Series 1999-1 Required Asset
Amount for such Monthly Period times (c) the number of days in such Monthly
Period divided by 365 (or 366, as applicable) days. The Series 1999-1 Servicing
Fee shall be payable to the Servicer on each Payment Date pursuant to Section
5A.4(c)(iv) or (viii).
. A periodic fee (the "Series 1999-1 Administrator Fee") shall be payable to the
Administrator on each Payment Date for the preceding Monthly Period in an amount
equal to the product of (a) 0.01% per annum times (b) the daily average of the
Series 1999-1 Required Asset Amount for such Monthly Period times (c) the number
of days in such Monthly Period divided by 365 (or 366, as applicable) days. The
Series 1999-1 Administrator Fee shall be payable to the Administrator on each
Payment Date pursuant to Section 5A.4(c)(ix).
. Notwithstanding any other provision herein, if any Change in Law shall make it
unlawful for the APA Bank to make or maintain any portion of the Series 1999-1
Invested Amount allocated to a Eurodollar Tranche and the APA Bank shall notify
in writing the Funding Agent, the Indenture Trustee and the Issuer, then the
portion of the Series 1999-1 Invested Amount allocated to
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Eurodollar Tranches shall thereafter be calculated by reference to the Alternate
Base Rate. If any such change in the method of calculating interest occurs on a
day which is not the last day of the Eurodollar Period with respect to any
Eurodollar Tranche, the Issuer shall pay to the Funding Agent for the account of
the APA Bank the amounts, if any, as may be required pursuant to Section 7.4.
. (a) If any Change in Law (except with respect to Taxes which shall be governed
by Section 7.3) shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, the APA Bank (except any such reserve
requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on the APA Bank or the London interbank market any
other condition affecting the Transaction Documents or the funding of
Eurodollar Tranches by the APA Bank;
and the result of any of the foregoing shall be to increase the cost to the APA
Bank of making, converting into, continuing or maintaining Eurodollar Tranches
(or maintaining its obligation to do so) or to reduce any amount received or
receivable by the APA Bank hereunder (whether principal, interest or otherwise),
then the Issuer will pay to the APA Bank such additional amount or amounts as
will compensate the APA Bank for such additional costs incurred or reduction
suffered.
(b) If the APA Bank determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on the APA Bank's capital or the capital of any corporation controlling the APA
Bank as a consequence of its obligations hereunder to a level below that which
the APA Bank or such corporation could have achieved but for such Change in Law
(taking into consideration the APA Bank's or such corporation's policies with
respect to capital adequacy), then from time to time, the Issuer shall pay to
the APA Bank such additional amount or amounts as will compensate the APA Bank
for any such reduction suffered.
(c) A certificate of the APA Bank setting forth the amount or
amounts necessary to compensate the APA Bank as specified in subsections (a) and
(b) of this Section 7.2 shall be delivered to the Issuer (with a copy to the
Funding Agent) and shall be conclusive absent manifest error. The agreements in
this Section shall survive the termination of this Indenture Supplement and the
Base Indenture and the payment of all amounts payable hereunder and thereunder.
(d) Failure or delay on the part of the APA Bank to demand
compensation pursuant to this Section 7.2 shall not constitute a waiver of the
APA Bank's right to demand such compensation; provided that the Issuer shall not
be required to compensate the APA Bank pursuant to this Section 7.2 for any
increased costs or reductions incurred more than 270 days prior to the date that
the APA Bank notifies the Issuer of the Change in Law giving rise to such
increased costs or reductions and of the APA Bank's intention to claim
compensation therefor;
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provided further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 270-day period referred to above shall be
extended to include the period of retroactive effect thereof.
. (a) Any and all payments by or on account of any obligation of the Issuer
hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Issuer shall be required
to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 7.3) the Funding Agent or the APA Bank receives an amount equal to
the sum that it would have received had no such deductions been made, (ii) the
Issuer shall make such deductions and (iii) the Issuer shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.
(b) In addition, the Issuer shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Issuer shall indemnify the Funding Agent and the APA Bank
within the later of 10 days after written demand therefor and the Payment Date
next following such demand for the full amount of any Indemnified Taxes or Other
Taxes paid by the Funding Agent or the APA Bank on or with respect to any
payment by or on account of any obligation of the Issuer hereunder or under any
other Transaction Document (including Indemnified Taxes or Other Taxes imposed
or asserted on or attributable to amounts payable under this Section 7.3) and
any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority;
provided that no Person shall be indemnified pursuant to this Section 7.3(c) or
required to pay additional amounts under the proviso of Section 7.3(a) to the
extent that the reason for such indemnification relates to, or arises from, the
failure by such Person to comply with the provisions of Section 7.3(g). A
certificate as to the amount of such payment or liability delivered to the
Issuer by the Funding Agent or the APA Bank shall be conclusive absent manifest
error. Any payments made by the Issuer pursuant to this Section 7.3 shall be
made solely from funds available therefor pursuant to Section 5A.4(c), shall be
non-recourse other than with respect to such funds, and shall not constitute a
claim against the Issuer to the extent that insufficient funds exist to make
such payment. The agreements in this Section shall survive the termination of
this Indenture Supplement and the Base Indenture and the payment of all amounts
payable hereunder and thereunder.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Issuer to a Governmental Authority, the Issuer shall deliver
to the Funding Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Funding Agent.
(e) The Funding Agent and the APA Bank if entitled to an exemption
from or reduction of an Indemnified Tax or Other Tax with respect to payments
made under this
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Indenture Supplement and the Base Indenture shall (but with respect to any
Indemnified Tax or Other Tax arising from a Change in Law, only to the extent
the Funding Agent or the APA Bank is legally able to do so) deliver to the
Issuer (with a copy to the Funding Agent) such properly completed and executed
documentation prescribed by applicable law and reasonably requested by the
Issuer on the later of (i) 30 Business Days after such request is made and the
applicable forms are provided to the APA Bank or (ii) 30 Business Days before
prescribed by applicable law as will permit such payments to be made without
withholding or with an exemption from or reduction of Indemnified Taxes or Other
Taxes.
(f) If the Funding Agent or the APA Bank receives a refund solely in
respect of Taxes or Other Taxes, it shall pay over such refund to the Issuer to
the extent that it has already received indemnity payments or additional amounts
pursuant to this Section 7.3 with respect to such Taxes or Other Taxes giving
rise to the refund, net of all out-of-pocket expenses and without interest
(other than interest paid by the relevant Governmental Authority with respect to
such refund); provided, however, that the Issuer shall, upon request of the
Funding Agent or the APA Bank, repay such refund (plus interest or other charges
imposed by the relevant Governmental Authority) to the Funding Agent or the APA
Bank if the Funding Agent or the APA Bank is required to repay such refund to
such Governmental Authority. Nothing contained herein shall require the Funding
Agent or an APA Bank to make its tax returns (or any other information relating
to its taxes which it deems confidential) available to the Issuer or any other
Person.
(g) If the APA Bank is not incorporated under the laws of the United
States of America or a state thereof or the District of Columbia, the APA Bank
shall:
(i) prior to becoming a party to any Transaction Document,
deliver to the Issuer and the Funding Agent (A) two duly completed copies
of IRS Form 1001 or Form 4224, or successor applicable forms, as the case
may be, and (B) and IRS Form W-8 or W-9, or successor applicable form, as
the case may be;
(ii) deliver to the Issuer and the Funding Agent two (2)
further copies of any such form or certification on or before the date
that any such form or certification expires or becomes obsolete and after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Issuer; and
(iii) obtain such extensions of time for filing and completing
such forms or certifications as may be reasonably be requested by the
Issuer and the Funding Agent;
unless, in any such case, an event (including, without limitation, any change in
treaty, law or regulation) has occurred after the Series 1999-1 Closing Date and
prior to the date on which any such delivery would otherwise be required which
renders all such forms inapplicable or which would prevent the APA Bank from
duly completing and delivering any such form with respect to it, and the APA
Bank so advises the Issuer and the Funding Agent. The APA Bank so organized
shall certify (i) in the case of an IRS Form 1001 or IRS Form 4224, that it is
entitled to receive payments under the Series 1999-1 Investor Notes and the
other Transaction Documents without
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deduction or withholding of any United States federal income taxes and (ii) in
the case of an IRS Form W-8 or IRS Form W-9, that it is entitled to an exemption
from United States backup withholding tax.
. The Issuer agrees to indemnify the APA Bank and to hold the APA
Bank harmless from any loss or expense which the APA Bank may sustain or incur
as a consequence of (a) default by the Issuer in making a borrowing of,
conversion into or continuation of a Eurodollar Tranche after the Issuer has
given irrevocable notice requesting the same in accordance with the provisions
of this Indenture Supplement, or (b) default by the Issuer in making any
prepayment in connection with a Decrease after the Issuer has given irrevocable
notice thereof in accordance with the provisions of Section 2.5 or (c) the
making of a prepayment of a Eurodollar Tranche prior to the termination of the
Eurodollar Period for such Eurodollar Tranche. Such indemnification may include
an amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the amount so prepaid or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of the Eurodollar Period (or in the
case of a failure to borrow, convert or continue, the Eurodollar Period that
would have commenced on the date of such prepayment or of such failure) in each
case at the Adjusted LIBO Rate for such Eurodollar Tranche provided for herein
over (ii) the amount of interest (as reasonably determined by the APA Bank)
which would have accrued to the APA Bank on such amount by placing such amount
on deposit for a comparable period with leading banks in the interbank
Eurodollar market; provided that any payments made by the Issuer pursuant to
this subsection shall be made solely from funds available therefor pursuant to
Section 5A.4(c), shall be non-recourse other than with respect to such funds,
and shall not constitute a claim against the Issuer to the extent that such
funds are insufficient to make such payment. This covenant shall survive the
termination of this Indenture Supplement and the Base Indenture and the payment
of all amounts payable hereunder and thereunder. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by the
APA Bank to the Issuer shall be conclusive absent manifest error.
. If prior to the commencement of any Eurodollar Period:
(a) the Funding Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBO Rate for such Eurodollar
Period, or
(b) the Funding Agent is advised by the APA Bank that the Adjusted
LIBO Rate for such Eurodollar Period will not adequately and fairly
reflect the cost to the APA Bank of making or maintaining the Eurodollar
Tranches during such Eurodollar Period,
then the Funding Agent shall promptly give telecopy or telephonic notice thereof
to the Issuer and the Indenture Trustee, whereupon until the Funding Agent
notifies the Issuer and the Indenture Trustee that the circumstances giving rise
to such notice no longer exist, the Available Pricing Amount shall not be
allocated to any Eurodollar Tranche.
. If the APA Bank requests compensation under Section 7.2, or if the
Issuer is required to pay any additional amount to the APA Bank or any
Governmental Authority for the
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account of the APA Bank pursuant to Section 7.3, then the APA Bank shall use
reasonable efforts to designate a different lending office for funding or
booking its obligations hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of the APA Bank, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 7.2 or 7.3, as the case may be, in the
future and (ii) would not subject the APA Bank to any unreimbursed cost or
expense and would not otherwise be disadvantageous to the APA Bank. The Issuer
hereby agrees to pay all reasonable costs and expenses incurred by the APA Bank
in connection with any such designation or assignment.
. The Issuer and VMS each hereby represents and warrants to the Indenture
Trustee, the Funding Agent and each of the Purchasers that:
(a) each and every of their respective representations and
warranties contained in the Transaction Documents is true and correct as
of the Series 1999-1 Closing Date, as of the Series 1999-1 Initial Funding
Date and as of the date of each Increase; and
(b) as of the Series 1999-1 Closing Date, they have not engaged, in
connection with the offering of the Series 1999-1 Investor Notes, in any
form of general solicitation or general advertising within the meaning of
Rule 502(c) under the Securities Act.
. The Issuer and VMS hereby agree, in addition to their obligations hereunder,
that:
(a) they shall observe in all material respects each and every of
their respective covenants (both affirmative and negative) contained in
the Base Indenture and all other Transaction Documents to which each is a
party;
(b) they will promptly notify Purchaser in the event they discover
or determine that any of their respective computer applications (including
those of their suppliers or vendors) that is material to the performance
of their obligations under the Transaction Documents will not be Year 2000
Compliant on a timely basis;
(c) they shall afford the Funding Agent, the Indenture Trustee or
any representatives of the Funding Agent or the Indenture Trustee access
to all records relating to the SUBI Certificates, the Sold Units and the
Fleet Receivables at any reasonable time during regular business hours,
upon reasonable prior notice (and without prior notice if an Amortization
Event has occurred), for purposes of inspection and shall permit the
Funding Agent, the Indenture Trustee or any representative of the Funding
Agent or the Indenture Trustee to visit any of the Issuer's or VMS's, as
the case may be, offices or properties during regular business hours and
as often as may reasonably be desired to discuss the business, operations,
properties, financial and other conditions of the Issuer or VMS with their
respective officers and employees and with their independent certified
public accountants; and
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(d) they shall not take any action, nor permit SPV to take any
action, requiring the satisfaction of the Rating Agency Condition pursuant
to any Transaction Document without the prior written consent of the
Series 1999-1 Required Investor Noteholders.
. VMS hereby represents and warrants to the Indenture Trustee, the Funding Agent
and each of the Purchasers that:
(a) It has or caused to be (i) initiated a review and assessment of
all areas within its business and operations (including those affected by
its suppliers, vendors and customers) that could be materially adversely
affected by the "Year 2000 Problem" (that is the risk that computer
applications used by VMS (or its suppliers, vendors and customers) may be
unable to recognize and perform properly material date-sensitive functions
involving certain dates prior to, and any date after, January 1, 2000),
(ii) developed a plan and time line addressing the Year 2000 Problem in
all material respects on a timely basis, and (iii) to date, implemented
that plan in all material respects in accordance with that timetable;
(b) Based on the foregoing, it believes that all computer
applications (including those of its suppliers, vendors and customers)
that are material to the performance of its obligations under the
Transaction Documents are Year 2000 Compliant, except to the extent that a
failure to be so could not reasonably be expected to (a) have a Material
Adverse Effect on the Issuer or the transactions documented under the
Transaction Documents, or (b) to result in an Amortization Event;
(c) It (i) has or caused to be completed a review and assessment of
all material computer applications (including, but not limited to those of
its suppliers, vendors, customers and any third party servicers), which
are related to or involved in the origination, collection, management or
servicing of the Leases and the Fleet Receivables (the "Lease Systems")
and (ii) has or caused to be determined that the Lease Systems are Year
2000 Compliant or will be Year 2000 Compliant in all material respects on
a timely basis; and
(d) The costs of all assessment, remediation, testing and
integration related to VMS' plan for becoming Year 2000 Compliant will not
have a material adverse effect on the business or operations of VMS.
. The Administrator hereby agrees that:
(a) it shall provide to the Indenture Trustee and the Funding Agent,
on each Determination Date, a Monthly Settlement Statement, substantially
in the form of Exhibit C, setting forth as of the last day of the most
recent Monthly Period and for such Monthly Period the information set
forth therein; and
(b) it shall provide to the Funding Agent simultaneously with
delivery to the Indenture Trustee, all reports, notices, certificates,
statements and other documents
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required to be delivered to the Indenture Trustee pursuant to the Base
Indenture and the other Transaction Documents, and furnish to the Funding
Agent promptly after receipt thereof a copy of each notice, demand or
other material communication (excluding routine communications) received
by or on behalf of the Issuer or the Administrator with respect to the
Transaction Documents.
. The obligations of the Issuer and the Administrator to the Funding Agent and
the Purchasers under this Indenture Supplement shall not be affected by reason
of any invalidity, illegality or irregularity of any of the SUBI Certificates,
the Sold Units or the Fleet Receivables.
. This Indenture Supplement shall become effective on the date (the "Effective
Date") on which the following conditions precedent have been satisfied:
(a) Documents. The Funding Agent shall have received an original
copy for the Initial Purchaser and the APA Bank, each executed and
delivered in form and substance satisfactory to it of (i) the Base
Indenture, executed by a duly authorized officer of each of the Issuer and
the Indenture Trustee, (ii) the Transfer Agreement, executed by a duly
authorized officer of each of the Issuer and SPV, (iii) this Indenture
Supplement, executed by a duly authorized officer of each of the Issuer,
the Administrator, the Indenture Trustee, the Funding Agent, the Initial
Purchaser and the APA Bank, (iv) the Series 1999-1 Fee Letter, (v) the
Administration Agreement, executed by a duly authorized officer of each of
the Issuer, SPV and the Administrator, (vi) each of the Origination Trust
Documents, executed by duly authorized officers of each of the parties
thereto and (vii) any other Transaction Documents to be executed in
connection with Series 1999-1, each duly executed by the parties thereto.
(b) Corporate Documents; Proceedings of the Issuer, the Administrator,
SPV, the Origination Trust and the Servicer. The Funding Agent shall have
received, with a copy for the Initial Purchaser and the APA Bank, from the
Issuer, the Administrator, SPV, the Origination Trust, VMS and the Servicer true
and complete copies of:
(i) to the extent applicable, the certificate of
incorporation or certificate of formation, including all amendments
thereto, of such Person, certified as of a recent date by the
Secretary of State or other appropriate authority of the state of
incorporation or organization, as the case may be, and a certificate
of compliance, of status or of good standing, as and to the extent
applicable, of each such Person as of a recent date, from the
Secretary of State or other appropriate authority of such
jurisdiction;
(ii) a certificate of the Secretary or an Assistant
Secretary of each of the Administrator, SPV and the Servicer, dated
the Effective Date and certifying (A) that attached thereto is a
true and complete copy of the limited
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liability company agreement of such Person, as in effect on the
Effective Date and at all times since a date prior to the date of
the resolutions described in clause (B) below, (B) that attached
thereto is a true and complete copy of the resolutions, in form and
substance reasonably satisfactory to the Funding Agent, of the Board
of Directors of such Person or committees thereof authorizing the
execution, delivery and performance of the Transaction Documents to
which it is a party and the transactions contemplated thereby, and
that such resolutions have not been amended, modified, revoked or
rescinded and are in full force and effect, (C) that the certificate
of incorporation of such Person has not been amended since the date
of the last amendment thereto shown on the certificate of good
standing (or its equivalent) furnished pursuant to clause (i) above
and (D) as to the incumbency and specimen signature of each officer
or authorized signatory executing any Transaction Documents or any
other document delivered in connection herewith or therewith on
behalf of such Person;
(iii) a certificate of the Secretary or an Assistant
Secretary of each of the Common Member and the Origination Trust
Trustee, dated the Effective Date and certifying as to the
incumbency and specimen signature of each officer or authorized
signatory executing any Transaction Documents or any other document
delivered in connection herewith or therewith on behalf of such
Person; and
(iv) a certificate of another officer as to the
incumbency and specimen signature of the Secretary or Assistant
Secretary executing the certificate pursuant to clause (ii) or (iii)
above.
(c) Good Standing Certificates. The Funding Agent shall have
received copies of certificates of compliance, of status or of good
standing, dated as of a recent date, from the Secretary of State or other
appropriate authority of such jurisdiction, with respect to the Issuer,
the Administrator, SPV and the Origination Trust in each State where the
ownership, lease or operation of property or the conduct of business
requires it to qualify as a foreign corporation, except where the failure
to so qualify would not have a material adverse effect on the business,
operations, properties or condition (financial or otherwise) of the
Issuer, the Administrator, SPV or the Origination Trust, as the case may
be.
(d) Consents, Licenses, Approvals, Etc. The Funding Agent shall have
received, with a counterpart for the Initial Purchaser and the APA Bank,
certificates dated the date hereof of an Authorized Officer of the Issuer,
the Administrator, SPV, the Origination Trust and the Servicer either (i)
attaching copies of all material consents, licenses and approvals required
in connection with the execution, delivery and performance by the Issuer,
the Administrator, SPV, the Origination Trust and the Servicer of the
Transaction Documents to which it is a party and the validity and
enforceability of the Transaction Documents to which it is a party against
the Issuer, the Administrator, SPV, the Origination Trust and the
Servicer, respectively, and such consents, licenses and approvals
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shall be in full force and effect or (ii) stating that no such consents,
licenses or approvals are so required.
(e) No Litigation. The Funding Agent shall have received
confirmation that there is no pending or, to their knowledge after due
inquiry, threatened action or proceeding affecting the Issuer, the
Administrator, SPV, the Origination Trust, the Servicer, ARAC or any of
its Subsidiaries before any Governmental Authority that could reasonably
be expected to have a Material Adverse Effect.
(f) Lien Searches. The Funding Agent shall have received a written
search report listing all effective financing statements that name VMS,
the Origination Trust, SPV or the Issuer as debtor or assignor and that
are filed in the jurisdictions in which filings were made pursuant to
paragraph (h) below and in any other jurisdictions that the Funding Agent
determines are necessary or appropriate, together with copies of such
financing statements (none of which, except for those described in
paragraph (h) below shall cover any portion of the Series 1999-1
Collateral), and tax and judgment lien searches showing no such liens that
are not permitted by the Transaction Documents.
(g) UCC Certificate. The Funding Agent shall have received from each
of VMS, the Origination Trust, SPV and the Issuer a certificate,
substantially in the form of Exhibit D, completed in a manner satisfactory
to the Funding Agent, duly executed by an Authorized Officer of each of
the VMS, the Origination Trust, SPV and the Issuer and dated the Series
1999-1 Closing Date.
(h) Filings, Registrations and Recordings. The SUBI
Certificates shall have been registered in the name of the Issuer and delivered
to the Indenture Trustee, endorsed in blank, and any documents (including,
without limitation, financing statements) required to be filed in order (i) to
create, in favor of the Indenture Trustee, a perfected security interest in the
Collateral with respect to which a security interest may be perfected by a
filing under the UCC or other comparable statute, (ii) to create in favor of the
Issuer a perfected ownership/security interest in the Issuer Assets under the
Transfer Agreement with respect to which a ownership/security interest may be
perfected by filing under the UCC or other comparable statute, (iii) to create
in favor of the Origination Trust perfected ownership/security interest in the
assets transferred thereto pursuant to the Contribution Agreement and any assets
transferred to the Origination Trust by VMS or any of its affiliates within a
year of the Series 1999-1 Closing Date with respect to which a
ownership/security interest may be perfected by filing under the UCC or other
comparable statute, (iv) to create in favor of SPV a perfected ownership
interest in the Fleet Receivables under the Receivable Purchase Agreement and
the assets transferred to SPV pursuant to the Asset Sale Agreement and (v) to
create in favor of the Indenture Trustee a perfected security interest in the
Series 1999-1 Collateral with respect to which a security interest may be
perfected by a filing under the UCC or other comparable statute shall, in each
case, have been properly prepared and executed for immediate filing in each
office in each jurisdiction listed in the UCC Certificate referred to in
paragraph (g) above, and such filings are the only filings required in order to
perfect the security interest of the Indenture Trustee in the Collateral, the
transfer of the Issuer Assets to the Issuer pursuant to the Transfer Agreement,
the transfer of the Fleet
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Receivables, Leases, Vehicles and other assets to the Origination Trust pursuant
to the Contribution Agreement, the transfer of the Fleet Receivables to SPV
pursuant to the Receivable Purchase Agreement and of certain other assets to SPV
pursuant to the Asset Sale Agreement, the transfer of the Series 1999-1
Collateral to the Indenture Trustee, as the case may be. The Funding Agent shall
have received evidence reasonably satisfactory to it of each such filing,
registration or recordation and reasonably satisfactory evidence of the payment
of any necessary fee, tax or expense relating thereto.
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EXHIBIT 4.51
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT, dated as of June 30, 1999, is made among
D.L. PETERSON TRUST, a Delaware business trust (the "Trust"), PHH VEHICLE
MANAGEMENT SERVICES, LLC, a Delaware limited liability company, as servicer for
the Trust (the "Servicer"), and ALLFIRST FINANCIAL CENTER, NATIONAL ASSOCIATION,
as custodian (the "Custodian").
WHEREAS, certain of the Trust Assets of the Trust created pursuant
to that certain Origination Trust Agreement, dated as of June 30, 1999, among
Raven Funding LLC, a Delaware limited liability company ("SPV"), as settlor and
initial beneficiary, PHH Vehicle Management Services, LLC ("VMS"), and
Wilmington Trust Company, as Delaware Trustee (as amended, supplemented or
otherwise modified from time to time, the "Origination Trust Agreement") consist
of Leases Agreements;
WHEREAS, from time to time, Trust Assets, including Lease
Agreements, will be allocated to one or more separate portfolios (each a "SUBI
Portfolio") and a certificate issued to represent a beneficial interest (each a
"SUBI") in each SUBI Portfolio (each a "SUBI Certificate");
WHEREAS, the holder of each SUBI Certificate (each a "SUBI
Certificateholder") will appoint a separate trustee for its SUBI (each a "SUBI
Trustee");
WHEREAS, SPV (in such capacity, the "UTI Holder") holds the
beneficial interest (the "UTI") in the Trust Assets not allocated to a SUBI
Portfolio and VMS has agreed to act as trustee for the UTI (in such capacity,
the "UTI Trustee"; the SUBI Trustees, together with the UTI Trustee, the
"Trustees");
WHEREAS, VMS has agreed to act as servicer of the Trust pursuant to
the terms and conditions of that certain Servicing Agreement, dated as of June
30, 1999, among the Trust, SPV and the Servicer (as amended, supplemented or
otherwise modified from time to time, the "Servicing Agreement"); and
WHEREAS, to facilitate the servicing of the Leases by the Servicer
and the taking of, and maintenance of, possession thereof by the Trust, the
Trust wishes to appoint the Custodian as the agent of the UTI Holder and each
SUBI Certificateholder to maintain possession of the Lease Files relating to the
Lease Agreements allocated to the UTI and each SUBI, respectively;
<PAGE>
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and of other good and valuable consideration the receipt and adequacy
of which are hereby acknowledged, the parties agree as follows:
SECTION 1. DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, all capitalized terms shall
have the meanings attributed to them in the Trust Agreement and the Servicing
Agreement.
SECTION 2. APPOINTMENT AND DUTIES OF CUSTODIAN
2.1 The Trust hereby appoints the Custodian to act exclusively as
the custodian of the Lease Files, in accordance with the terms and conditions of
this Agreement, for the purposes of taking and retaining custody of the Lease
Files relating to the Lease Agreements allocated from time to time to the UTI
and each SUBI Portfolio, all for the exclusive benefit of the UTI Holder and the
SUBI Certificateholder of the related SUBI, respectively. The Custodian hereby
accepts such appointment.
2.2 (a) The Servicer may from time to time deposit with the
Custodian the following documents relating to each of the Lease Agreements
included in the Trust Assets:
(i) the original copy of the Master Lease Agreement or the Consumer
Lease, as the case may be, executed by VMS or the Trust and the Obligor
party thereto; and
(ii) all other documents relating thereto (the "Lease Files");
(b) The sole responsibilities of the Custodian with respect to the
Lease Files shall be to (x) act as custodian of the documents (the "Documents")
in the Lease Files for the Trust for the benefit of the Certificateholders so
long as such Documents are in the Custodian's possession and (y) (1) accept such
Documents from the Servicer; (2) verify that all Documents specified by the
Trust or Servicer from time to time are in the respective Lease Files or, if a
Lease File already exists for any Lease Agreement included in the Trust Assets,
place any Documents received under this subsection 2.2 in the appropriate Lease
File; and (3) secure the Lease Files.
(c) The Custodian hereby acknowledges receipt of the Lease Files
listed on the Schedule of Included Leases attached as Schedule I hereto (the
"Initial Lease Files"). The Schedule of Included Leases separately lists the
Lease Agreements allocated to the UTI and each SUBI. The Custodian makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any of the Documents or (ii) the collectability, insurability, effectiveness
or suitability of any the Documents.
(d) Within 30 Business Days of the date hereof, the Custodian shall
provide written verification of all Documents included in the Initial Lease
Files, in a form substantially similar to Exhibit 2, copies of which will be
provided to each Certificateholder and the Trustees.
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From time to time, the Custodian shall provide written verification of all
Documents received from the Servicer in a form substantially similar to Exhibit
1, copies of which will be provided to the Certificateholder holding a
beneficial interest in the related Lease Agreement, any assignee or pledgee
thereof and the related Trustee.
2.3 Except as set forth in Section 2.4, the Custodian shall accept
only written instructions of an individual designated in writing as an
authorized representative (each, an " Authorized Representative") of the
applicable Certificateholder, or any assignee or pledgee thereof, concerning the
use, handling and disposition of the Lease Files relating to a Lease Agreement
allocated to the UTI or a particular SUBI. Each Authorized Representative of a
Certificateholder or the assignee or pledgee thereof is authorized to give and
receive notices, requests and instructions and to deliver certificates and
documents in connection with this Custodian Agreement on behalf of its
Certificateholder or the assignee or pledgee thereof. The specimen signature for
the Authorized Representative of the UTI Holder and each SUBI Certificateholder
or the pledgee or assignee thereof, initially authorized hereunder is set forth
on Exhibit 4. At the time of any issuance of a new SUBI by the Trust, the UTI
Holder shall deliver to the Custodian the specimen signature for the Authorized
Representative of the Certificateholder of such SUBI or the assignee or pledgee
thereof. From time to time, any Certificateholder, or the assignee or pledgee of
a SUBI Certificate may, by delivering to the Custodian a revised exhibit, change
the information previously given, but each of the other parties hereto shall be
entitled to rely conclusively on the last exhibit until receipt of a superseding
exhibit.
2.4 (a) Unless the Custodian shall have received written notice from
an Authorized Representative to the contrary and subject to the requirements of
Section 2.6, the Custodian, upon the receipt of a written request from an
authorized representative of the Servicer, in substantially the form of Exhibit
3 hereto, detailing the Lease Files to be released or transferred by the
Custodian to the Servicer, shall release or transfer the Lease Files
specifically requested by the Servicer to the Servicer. The Custodian shall
deliver to the Servicer, upon receipt of such written instructions of the
Servicer, as rapidly as practicable, but in no case later than five (5) Business
Days, all of the Lease Files so designated for delivery.
(b) Any instruction by the Servicer to deliver the Lease Files to
the Servicer must inform the Custodian, to the Custodian's satisfaction, of the
terms and method of delivery of the Lease Files to the Servicer. The Servicer
shall hold the Custodian harmless from losses or damages to any Person for the
safe transmittal of the Lease Files if the Custodian has complied with the
Servicer's instructions regarding their delivery. Upon receipt of a notice from
an Authorized Representative of a Certificateholder or the assignee or pledgee
thereof to cease accepting instructions from the Servicer with respect to the
Lease Files relating to the Lease Agreements allocated to the SUBI held by such
Certificateholder, the Custodian shall thereafter accept instructions as set
forth herein with respect to the Lease Files relating to the Lease Agreements
allocated to such SUBI only from such an Authorized Representative until such
notice is withdrawn by such an Authorized Representative.
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2.5 The notices, statements, directions and certificates requested
under or required by this Section 2 shall be full authority for and direction to
the Custodian to execute the certificates and notices and deliver the Lease
Files referred to herein and the Custodian shall promptly do so. The Custodian
in so doing shall have no liability to any Person except on account of its
willful misconduct or gross negligence.
2.6 At any time when a Lease Agreement and the related Leases are to
be repurchased or otherwise disposed of under the terms of the Origination Trust
Documents, the Servicer shall submit a written request to the Custodian in a
form substantially similar to Exhibit 3 with a copy to the Certificateholder
holding a beneficial interest in such Lease Agreement, any assignee or pledgee
thereof and the related Trustee (1) identifying the Lease Agreement for which a
reconveyance or other disposition hereunder is to be made, and (2) requesting
the Custodian to release the specific Lease Files relating to such Lease
Agreements to the Servicer. Upon receipt of such request from the Servicer with
respect to any such sale or other disposition hereunder, the Custodian shall
promptly deliver the Lease Files listed in such request to the Servicer. Upon
receipt of a notice from an Authorized Representative of a Certificateholder or
the assignee or pledgee thereof to cease accepting instructions from the
Servicer, the Custodian shall thereafter accept instructions as set forth herein
only from such an Authorized Representative until such notice is withdrawn by
such an Authorized Representative.
2.7 All Lease Files shall be kept in a secure area at the office of
the Custodian in Delaware specified in Section 5.2. All Lease Files shall be
placed together in a separate area in the office of the Custodian with an
appropriate identifying label and maintained in such a manner so as to permit
retrieval and access.
2.8 The Custodian shall keep all Lease Files clearly segregated from
any other documents or instruments in its files. The Custodian shall clearly
list by customer name and contract number all Lease Files, to indicate that such
Lease Files are the sole property of the Certificateholders, and that the
Custodian is holding such files solely as custodian for the Certificateholders.
2.9 The Custodian hereby agrees and covenants that, on reasonable
prior notice, it will permit any representative of the Servicer, the Servicer's
accountants (auditors), any Certificateholder or any assignee or pledgee of a
SUBI Certificate (or any of their respective agents) during the Custodian's
normal business hours, to examine the books of account, records, reports and
other papers of the Custodian relating to the Lease Files, to make copies and
extracts therefrom, all at such reasonable times and as often as may be
reasonably requested.
2.10 The Custodian shall not have any duty or obligation to take any
action in respect of the collection of any indebtedness evidenced by the Lease
Files or to otherwise act with respect to payment on any such indebtedness.
2.11 The Custodian undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement and no implied covenants
or obligations shall be read into this Agreement against the Custodian; in the
absence of bad faith on its part, the Custodian may
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rely, as to the truth of the statements and correctness of the instructions
given, on instruments and reports furnished to the Custodian and conforming to
the requirements of this Agreement.
2.12 In performing its duties as Custodian, the Custodian shall use
the customary degree of care and attention employed by custodial institutions
holding and transferring documents of a comparable nature.
2.13 The Custodian makes no warranty or representation as to the
completeness or validity of the Lease Files (other than as set out in Section
2.2 hereof) nor as to the perfection or priority of any security or ownership
interest therein in favor of the Certificateholders and is acting solely as
custodian for the Certificateholders to furnish only those services which are
expressly described herein or any other administerial service or action which is
reasonably requested by the Certificateholders in order to accomplish the
purposes of this Agreement.
2.14 The Servicer covenants and agrees to pay to the Custodian and
the Custodian shall be entitled to receive, under a separate agreement with the
Servicer, reasonable compensation for all services rendered by it hereunder and
in the exercise and performance of any of the powers and duties hereunder of the
Custodian, and the Servicer will pay or reimburse the Custodian upon its request
for all reasonable expenses, disbursements and advances incurred or made by the
Custodian in accordance with any of the provisions of this Agreement (including
the reasonable fees and expenses of its agents and counsel) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
SECTION 3. INDEMNIFICATION
3.1 The Servicer agrees to indemnify and hold the Custodian and its
directors, officers, agents and employees harmless against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including
reasonable attorney's fees, that may be imposed on, incurred by, or asserted
against it or them in any way relating to or arising out of this Custodian
Agreement or any action taken or not taken by it or them hereunder unless such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements were imposed on, incurred by or asserted
against the Custodian because of the breach by the Custodian of its obligations
hereunder, which breach was caused by the negligence, lack of good faith or
willful misconduct on the part of the Custodian or any of its directors,
officers, agents or employees. The foregoing indemnification shall survive the
termination of this Custodian Agreement.
3.2 Neither the Custodian nor any of its directors, officers, agents
or employees shall be liable for any action taken or omitted to be taken by it
or them hereunder or in connection herewith in good faith and believed by it or
them to be within the purview of this Custodian Agreement, including, without
limitation, in the selection of shippers and methods of shipment, except for its
or their own negligence, lack of good faith or willful misconduct. In no event
shall the Custodian or its directors, officers, agents and employees be held
liable for any special, indirect, punitive or consequential damages resulting
from any action taken or omitted to be taken
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<PAGE>
by it or them hereunder or in connection herewith even if advised of the
possibility of such damages.
SECTION 4. TERMINATION OF AGREEMENT
4.1 This Agreement may be terminated in part with respect to the
Lease Files relating to the Lease Agreements allocated to the UTI or a
particular SUBI at any time by the related Certificateholder or the assignee or
the pledgee thereof without penalty hereto by written notice delivered by the
Authorized Representative thereof to the Custodian and the Servicer. In such
event, the Certificateholder or the assignee or the pledgee thereof will select
a replacement custodian which is satisfactory to the Servicer. The effective
date of termination shall be as specified in such notice; provided, however,
that at the option of either the Certificateholder or the assignee or pledgee
thereof or the Custodian, the effective date of termination may be postponed to
a date not more than ten (10) days from the date of the delivery of such notice
in order to provide the Custodian an opportunity to prepare for the transfer of
the Lease Files relating to the Lease Agreements allocated to the UTI or the
applicable SUBI, as the case may be, to the replacement custodian.
SECTION 5. MISCELLANEOUS
5.1 Notices. (a) Except as otherwise specifically provided for in
this Agreement, all notices, payments and other communications between the
parties hereto shall be given in writing (including by facsimile) and shall be
either hand delivered or mailed by registered or certified mail, postage
prepaid, return receipt requested, or by facsimile (with receipt confirmed and
with a hard copy sent promptly), Federal Express, other overnight couriers
providing receipts or electronic mail as follows:
If to the UTI Trustee:
PHH Vehicle Management Services, LLC
900 Old Country Road
Garden City, New York
Telecopier: (516) 222-3751
Attention: General Counsel
If to the Delaware Trustee:
Wilmington Trust Company
1100 N. Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administrator
Telecopy Number: (302) 651-9882
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If to the Custodian:
Allfirst Financial Center, National Association
Baymeadow Facility
6704 Curtis Court
Glen Burnie, MD 21061
Attention: George Bellarin
Telephone Number: 410-787-6297
Telecopy Number: 410-787-6254
With a copy to:
Allfirst Financial Center National Association
499 Mitchell Street
Millsboro, DE 19966
Attention: Mr. Hugh Stephens
Telecopy Number: (302) 934-2547
Telephone Number: (302) 934-2572
If to the Servicer:
PHH Vehicle Management Services, LLC
900 Old Country Road
Garden City, New York
Telecopier: (516) 222-3751
Attention: General Counsel
Telecopy Number: (516) 222-3751
(b) Any notice or communication under this Agreement may be given by
certified mail, postage prepaid, return receipt requested, by Federal Express,
telecopy or electronic mail. All notices and communications hereunder shall be
deemed given upon receipt. Any party may change the address to which notices or
communications shall be given by notifying the other party in writing as
provided for in this Section.
5.2 No Set-Off. The Custodian, in its capacity as custodian
hereunder or otherwise, hereby agrees that it will not set-off against the Lease
Files delivered under this Agreement or the proceeds thereof any claims which it
may have against the Trust, the UTI Holder, any other Certificateholder, the
Servicer or any other Person. The Custodian, in its capacity as custodian
hereunder or otherwise, hereby expressly waives any and all rights it may have
to file a lien against any Lease File individually or in the aggregate.
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<PAGE>
5.3 Headings. The headings herein are for purposes of reference only
and shall not otherwise affect the meaning or interpretation of any provision
hereof.
5.4 Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
5.5 Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties on separate counterparts), each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
5.6 . Except as specifically stated otherwise herein, this Agreement
sets forth the entire understanding of the parties relating to the subject
matter hereof, and all prior understandings, written or oral, are superseded by
this Agreement.
5.7 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF NEW YORK.
5.8 Genuineness of Documents. In the absence of bad faith on the
part of the Custodian, the Custodian may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon any
request, instructions, certificate, opinion or other document furnished to the
Custodian, believed by the Custodian to be genuine and to have been signed or
presented by the proper party or parties and conforming to the requirements of
this Custodian Agreement; but in the case of any loan document or other request,
instruction, document or certificate which by any provision hereof is
specifically required to be furnished to the Custodian, the Custodian shall be
under a duty to examine the same to determine whether or not it conforms to the
requirements of this Agreement. The Custodian may consult with counsel and any
opinion of counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such opinion of counsel.
5.9 Amendment. (a) This Agreement may be amended from time to time
by a written amendment duly executed and delivered by the Trust, the Servicer
and the Custodian, but without the consent of any other Person, to correct any
inconsistency or cure any ambiguity or errors in this Agreement only in a manner
that would have no adverse effect on any Certificateholder or any assignee or
pledgee thereof.
(b) This Agreement may be amended from time to time by a written amendment
duly executed and delivered by the Trust, the Servicer and the Custodian, with
the consent of each Certificateholder or the assignee or pledgee thereof.
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<PAGE>
. This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors. No party may assign its rights hereunder
without the other party's prior written consent.
. The Custodian hereby covenants and agrees that it will not insti-tute against,
or join with any other person in institut-ing against, SPV or the Trust any
bankruptcy, reorganization, arrange-ment, insolvency or liquidation proceedings,
or other proceedings under any Federal or state bankruptcy or similar law. The
provisions of this Section 5.11 shall survive the termination of this Agreement
and the resignation or removal of the Custodian.
. This Agreement will inure to the benefit of and be binding upon the parties
hereto and each of the beneficiaries of the Trust (and each pledgee of a
Certificate) who shall be considered to be third-party beneficiaries hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
ALLFIRST FINANCIAL CENTER,
NATIONAL ASSOCIATION,
as Custodian
By
Title:
D.L. PETERSON TRUST
By Wilmington Trust Company,
as Trustee
By
Title:
PHH VEHICLE MANAGEMENT SERVICES
LLC, as Servicer
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<PAGE>
Exhibit 4.52
LOCKBOX SERVICES AGREEMENT
This Agreement is entered into as of June 30, 1999 among D.L. Peterson
Trust (the "Trust"), a Delaware statutory business trust, PHH Vehicle
Management Services LLC, in its capacity a servicer of the Trust ("the
Servicer"), and Bank of America National Trust and Savings Association (the
"Bank") with respect to the following:
A. The Trust is the beneficial owner and the Servicer is the nominee
holder of the Accounts (as defined below) and in the checks and other payment
instruments ("Checks") mailed to the United States Post Office Addresses
#___________________, #____________________ and #__________________
("Lockbox Addresses"); provided, however, that the Servicer acknowledges
that it has no interest in any amounts from time to time deposited in the
Accounts and is the nominee holder of the Accounts solely as servicer under
the LLC, Raven Funding LLC and the Trust.
B. The Servicer, the Trust and the Bank are entering into this
Agreement to provide for the disposition of net proceeds of Checks deposited
in accounts #__________________, #______________________ and #________________
with the Bank (the "Accounts").
C. The Trust was previously a Maryland common law trust (the
"Previous Trust") with The First National Bank of Maryland as trustee and
was a party to the Three Party Agreement Relating to Lockbox Services, dated
as of February 3, 1999, among PHH Vehicle Management Services LLC, The First
National Bank of Maryland, as trustee to the Previous Trust, and the Bank.
The Trust is successor in interest to the Previous Trust.
Accordingly, the Servicer, the Trust and the Bank agree as follows:
Section 1. The Bank is hereby authorized:
(a) to perform the Lockbox Service and to follow its usual operating
procedures for the handling of any Checks, in accordance with the Standard
Terms and Conditions attached hereto as Exhibit A and incorporated herein,
except as modified by this Agreement;
(b) to charge the Accounts for all returned Checks;
(c) to follow its usual procedures in the event the Lockbox
Addresses, the Accounts or any Check should be or become the subject of any
writ, levy, order or other similar judicial or regulatory order or process;
and
(d) to administer all collected and available balances in the
Accounts pursuant to the instructions of the Trust. The Trust will give Bank
sufficient advance notice of any change in the instructions for Bank to act
upon such changes.
<PAGE>
Section 2. (a) If the balances in the Accounts are not sufficient to pay
to the Bank for any returned Check, the Trust Agrees to pay the Bank solely
out of the assets of the Trust on demand any amounts received by the Trust
with respect to such returned Check.
(b) The Servicer agrees to pay the Bank on demand for any fees or
charges due the Bank in connection with the Lockbox Service or this
Agreement. The Servicer will have breached this Agreement if it has not paid
the Bank within 30 days after the demand, the amount due the Bank.
(c) The Servicer hereby authorizes the Bank, without prior notice,
from time to time to debit any other account the Servicer may have with the
Bank for the amount or amounts due the Bank under subsection 2(b).
(d) The Bank agrees it shall not exercise any right of offset,
counterclaim, banker's lien, security interest or other right or claim
against the Accounts, except as permitted under Section 1(b) of this
Agreement.
Section 3. Termination of this Agreement shall be as follows:
(a) The Bank may terminate this Agreement upon 30 days' prior written
notice to the Servicer and the Trust. The Trust may terminate this Agreement
upon 30 days' prior written notice to the Servicer and the Bank. The
Servicer may not terminate this Agreement or the Lockbox Service except with
the written consent of the Trust and upon 30 days' prior written notice to
the Bank and the Trust.
(b) Notwithstanding subsection 3(a), the Bank may terminate this
Agreement at any time by written notice to the Servicer and the Trust if
either the Servicer or the Trust breaches any of the terms of this Agreement.
Upon any such termination, Bank shall transfer all remaining balances in the
Accounts to an account designated by the Trust and the Accounts will be
closed.
(c) Notwithstanding subsection 3(a), the Bank may also terminate
this Agreement at any time if the Servicer (i) breaches any other agreement
with the Bank or any agreement involving the borrowing of money or extension
of credit; (ii) liquidates, dissolves, merges with or into or consolidates
with another entity (PROVIDED HOWEVER, that the Servicer (by merger
or otherwise) may reincorporate in another state or convert from a limited
liability company to a corporation or a substantially similar entity) or
sells, leases or disposes of a substantial portion of its business or assets;
(iii) terminates its business, fails generally or admits in writing its
inability to pay its debts as they become due; any bankruptcy,
reorganization, arrangement, insolvency, dissolution or similar proceeding is
instituted with respect to the Servicer; the Servicer makes any assignment
for the benefit of creditors or enters into any composition with creditors or
takes any action in furtherance of any of the foregoing; or(iv) any material
adverse change occurs in the Servicer's financial condition, results of
operations or ability to perform its obligations under this Agreement, the
Servicer shall promptly give written notice to the Bank of the occurrence of
any of the foregoing events as it applies to it. Upon any such termination,
<PAGE>
the Bank shall transfer all remaining balances in Accounts to an account
designated by the Trust and the Accounts will be closed.
Section 4. (a) The Bank will not be liable to the Servicer or the Trust
for any expense, claim, loss, damage or cost("Damages") arising out of or
relating to its performance under this Agreement other than those Damages
which result directly from its acts or omissions constituting negligence or
willful misconduct by the Bank or any of its employees or agents.
(b) In no event will the Bank be liable for any special indirect,
exemplary or consequential damages, including but not limited to lost profits.
(c) The Bank will be excused from failing to act or delay in acting,
and no such failure or delay shall constitute a breach of this Agreement or
otherwise give rise to any liability of the Bank, if (i) such failure or
delay is caused by circumstances beyond the Bank's reasonable control,
including but not limited to legal constraint, emergency conditions, action
or inaction of governmental, civil or military authority, fire, strike,
lockout or other labor dispute, war, riot, theft, flood, earthquake or other
natural disaster, breakdown of public or private or common carrier
communications or transmission facilities, equipment failure, or act,
negligence or default of the Servicer or the Trust or (ii) such failure or
delay resulted from the Bank's reasonable belief that the action would have
violated any guideline, rule or regulation of any governmental authority.
Section 5. The Servicer shall indemnify the Bank against, and hold it
harmless from, any and liabilities, claims, costs, expenses and damages of any
nature (including but not limited to allocated costs of staff counsel, other
reasonable attorney's fees and any fees and expenses incurred in enforcing
this Agreement) in any way arising out of or relating to disputes or legal
actions concerning the Bank's provision of the Lockbox Service, this
Agreement, any Check or the Lockbox Addresses. This section does not apply
to any cost or damage attributable to the gross negligence or intentional
misconduct of the Bank, its employees or agents. The Servicer's obligations
under this Section shall survive termination of this Agreement.
Section 6. (a) The Servicer and the Trust each represent and warrant to
the Bank that (i) this Agreement constitutes it duly authorized, legal, valid,
binding and enforceable obligation; (ii) the performance of its obligations
under this Agreement and the consummation of the transactions contemplated
hereunder will not (A) constitute or result in a breach of its certificate of
formation or certificate of trust, as applicable, or the provisions of any
material contract to which it is a party or by which it is bound or (B)
result in the violation of any law, regulation, judgment, decree or
governmental order applicable to it; an (iii) all approvals and authorizations
required to permit the execution, delivery, performance and consummation of
this Agreement and the transaction contemplated hereunder have been obtained.
(b) The Servicer and the Trust each agree that it shall be deemed to
make and renew each representation and warrant in subsection 6(a) on and as
of each day on which it uses the Lockbox Service.
<PAGE>
Section 7. The Servicer agrees that it will not permit the Accounts to
become subject to any other pledge, assignment, lien, charge or encumbrance
of any kind nature of description, other than Trust's beneficial ownership
interest referred to herein.
Section 8. The Trust acknowledges and agrees that Bank has the right to
charge the Accounts from time to time, as set forth in Section 1(b) of this
Agreement.
Section 9. (a) Each business day, the Bank will send any Checks not
processed in accordance with the set-up documents as well as any other
materials, such as invoices, received at the Lockbox Address plus information
regarding the deposit for the day to the address specified below for the
Servicer with a copy of the deposit advice to the address specified below for
the Trust.
(b) In addition to the original Bank statement which will be provided to
the Trust, the Bank will provide the Servicer with a duplicate statement.
Section 10. The Servicer agrees to pay to the Bank, upon receipt of the
Bank's invoice, all costs, expenses and attorney's fees (including allocated
costs for in-house legal services) incurred by the Bank in connection with
the enforcement of this Agreement any instrument or agreement required
hereunder, including but not limited to any such costs, expenses and fees
arising out of the resolution of any conflict, dispute, motion regarding
entitlement to right or rights of action, or other action to enforce the
Bank's rights in a case arising under Title 11, United States Code, the
Servicer agrees to pay the Bank, upon receipt of the Bank's invoice, all
costs, expenses and attorneys' fees (including allocated costs for in-house
legal services) incurred by the Bank in the preparation and administration of
this Agreement (including any amendments hereto or instruments or agreements
required hereunder).
Section 11. As of the date of deliver of this Agreement, the Bank
represents that, to the best of its knowledge, it has not received any notice
of any claim, lien, security interest or other encumbrance relating to the
Accounts as of the date of this Agreement. Additionally, the Bank hereby
represents that no security interest relating to the Accounts has been
created in the Bank's favor. The Bank shall, to the extent permitted by law,
give the Trust and the Servicer prompt notice if the Accounts shall become
subject to any writ, judgment, warrant of attachment, execution or similar
process.
Section 12. The Bank, in its capacity under the Agreement, agrees that
it will not institute against, or join any other person in instituting
against, the Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law.
Section 13. Notwithstanding any of the other provisions in this
Agreement, in the event of the commencement of a case pursuant to Title 11,
United States Code, filed by or against the Servicer, or in the event of the
commencement of any similar case under then applicable federal or state law
providing for the relief of debtors or the protection of creditors by or
against the Servicer, the Bank may act as the Bank deems necessary to comply
with all applicable
<PAGE>
provisions of governing statutes and shall be held harmless from any claim of
any of the parties for so doing.
Section 14. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Trust, the Servicer and
the Bank.
Section 15. This Agreement may be executed in counterparts; all such
counterparts shall constitute but one and the same agreement.
Section 16. Any written notice or other written communication to be
given under this Agreement shall be addressed to each party at its address
set forth on the signature page of this Agreement or to such other address as
a party may specify in writing. Except as otherwise expressly provided
herein, any such notice shall be effective upon receipt.
Section 17. This Agreement controls in the event of any conflict
between this Agreement and any other document or written or oral statement.
This Agreement supersedes all prior understandings, writings, proposals,
representations and communications, oral or written, of any party relating to
the subject matter hereof.
Section 18. Neither the Servicer nor the Trust may assign any of its
rights under this Agreement without the prior written consent of the Bank.
Section 19. Nothing contained in the Agreement shall create any agency,
fiduciary, joint venture or partnership relationship between the Servicer,
the Trust and the Bank.
Section 20. This Agreement shall be governed by the laws of the State
of Illinois.
<PAGE>
In witness whereof, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written.
PHH VEHICLE MANAGEMENT Address for notices:
SERVICES LLC
PHH Vehicle Management Services LLC
900 Old Country Road
By:_______________________________ Garden City, New York
Name: Attn: General Counsel
Title: Fax: 516-222-3751
With a copy to:
PHH Vehicle Management Services LLC
307 International Circle
Mail Code - CP
Hunt Valley, Maryland 21030-1337
Attn: General Counsel
Fax: 410-771-2530
D.L. PETERSON TRUST Address for notices:
BY: WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT SOLELY AS Wilmington Trust Company
TRUSTEE 1100 North Market Street
Wilmington, DE 19898-0001
Attn: Corporate Trust Administration
By:_______________________________ Fax: 302-651-1576
Name:
Title:
BANK OF AMERICA NATIONAL TRUST Address for notices:
AND SAVINGS ASSOCIATION
Bank of America
Documentation Management
By:________________________________ 1850 Gateway Blvd., Room #4856
Name: Concord, CA 94520-3282
Title: Fax: 925-675-7131
<PAGE>
Exhibit 4.53
PREFERRED MEMBERSHIP INTEREST PURCHASE AGREEMENT
by and among
GREYHOUND FUNDING, LLC,
as Issuer
PARK AVENUE RECEIVABLES CORPORATION,
THE CHASE MANHATTAN BANK,
as Funding Agent for the benefit of
PARCO and the APA Bank,
and
PHH VEHICLE MANAGEMENT SERVICES LLC
(Series 1999-1
Preferred Membership Interests)
Dated as of June 30, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
<S> <C>
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THIS PREFERRED MEMBERSHIP INTEREST PURCHASE AGREEMENT, dated as of
June 30, 1999 (as amended, supplemented or otherwise modified and in effect from
time to time, this "Agreement"), is by and among GREYHOUND FUNDING, LLC, a
special purpose limited liability company established under the laws of Delaware
(the "Issuer"), PARK AVENUE RECEIVABLES CORPORATION, a Delaware corporation
(together with its successors and assigns, "PARCO"), THE CHASE MANHATTAN BANK, a
New York banking corporation (together with its successors and assigns,
"Chase"), as funding agent for the benefit of PARCO and the APA Bank from time
to time (together with its successors and assigns in such capacity, the "Funding
Agent"), CHASE (the "APA Bank"), and PHH VEHICLE MANAGEMENT SERVICES LLC
("VMS"), as administrator (together with its successors and assigns in such
capacity, the "Administrator").
W I T N E S S E T H :
WHEREAS, the Issuer intends to issue its Series 1999-1 Preferred
Membership Interests pursuant to the LLC Agreement; and
WHEREAS, on the terms and conditions set forth in this Agreement,
PARCO has agreed to buy and the Issuer has agreed to sell the Series 1999-1
Preferred Membership Interests;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
Capitalized terms used herein (includ-ing in the preamble and recitals
hereof) and not defined herein shall have the meanings set forth in, or
incor-porated by reference into, the LLC Agreement, as amended and supplemented
by the Action adopted by the Managers on June 30, 1999 with respect to the
Series 1999-1 Preferred Membership Interests (the "Action"), and the Indenture,
as applicable. Additionally, the following terms shall have the following
meanings for all purposes of this Agreement:
"Adjusted LIBO Rate" is defined in the Action.
"Agreement" is defined in the preamble hereto.
"Alternate Base Rate" is defined in the Action.
"Amortization Event" is defined in the Series 1999-1 Supplement.
"APA Bank" is defined in the preamble hereto.
"Applicable Law" means all applicable laws, statutes, treaties,
rules, codes, ordinances, regulations, certificates, orders, interpretations,
licenses and permits of any
<PAGE>
Governmental Authority from time to time in effect, and judgments, decrees,
injunctions, writs, orders or like action of any court, arbitrator or other
administrative, judicial or quasi-judicial tribunal or agency of competent
jurisdiction (including laws specifically mandating compliance by property
owners).
"Administrator indemnified person" is defined in 6.1(b).
"Asset Purchase Agreement" means the Asset Purchase Agreement, dated
as of June 30, 1999, by and among PARCO, the Funding Agent and the APA Bank, as
the same may from time to time be amended, supplemented or otherwise modified
and in effect.
"Base Indenture" means the Base Indenture, dated as of June 30,
1999, between the Issuer and the Indenture Trustee.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the Series 1999-1 Closing Date, (b) any change in law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the Series 1999-1 Closing Date or (c) compliance by PARCO or the
APA Bank with any request, guideline or directive (whether or not having the
force of law) of any Governmental Authority made or issued after the Series
1999-1 Closing Date.
"Claim" is defined in Section 6.1.
"Commercial Paper" means the short-term promissory notes of PARCO.
"Commitment" is defined in the Asset Purchase Agreement.
"Company indemnified person" is defined in Section 6.1(a).
"CP Conduit" means any commercial paper conduit who acquires by
assignment all or a portion of the Series 1999-1 Preferred Membership Interests.
"Eurodollar Period" is defined in the Action.
"Eurodollar Tranche" is defined in the Action.
"Excluded Taxes " means, with respect to any Company indemnified
person or Administrator indemnified person, (a) income or franchise taxes
imposed on (or measured by) its net income by the United States of America or by
any other Governmental Authority as a result of a present or former connection
between the jurisdiction of such Governmental Authority imposing such tax on the
Funding Agent, PARCO, the APA Bank or any other such recipient (except a
connection arising solely from such Company indemnified person's or
Administrator Indemnified person's having executed, delivered or performed its
obligations hereunder, receiving a payment hereunder or in respect of its Series
1999-1 Preferred Membership Interests) and (b) any branch
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<PAGE>
profits tax imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Issuer is located.
"Fee Letter" means the Fee Letter, dated as of June 30, 1999, by and
among the Issuer and the Funding Agent, on behalf of PARCO and the APA Bank, as
the same may from time to time be amended, supplemented or otherwise modified
and in effect.
"Funding Agent" is defined in the preamble.
"Governmental Authority" means the United States of America, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Indenture" means the Base Indenture, dated as of June 30, 1999,
between the Issuer and the Indenture Trustee, as supplemented by the Series
1999-1 Supplement, as the same may from time to time be amended, further
supplemented or otherwise modified and in effect.
"Indenture Trustee" means the party named as such in the Indenture
until a successor replaces it in accordance with the applicable provisions of
the Indenture and thereafter means the successor serving thereunder.
"Lease Rate Cap Event" is defined in the Series 1999-1 Supplement.
"LLC Agreement" means the Limited Liability Agreement, dated as of
June 30, 1999, of the Issuer, as amended, modified or supplemented from time to
time in accordance with its terms.
"Moody's" means Moody's Investors Service, Inc., and its successors
and assigns.
"Other Costs" is defined in Section 6.6(b).
"Other Transferor" means any Person, other than the Issuer, that has
entered into a purchase agreement, transfer agreement, loan agreement or funding
agreement with PARCO.
"PARCO" is defined in the preamble hereto.
"PARCO Wind-Down Event" means the occurrence of any of the following
events:
(i) an Amortization Event or Potential Amortization Event (other
than an Amortization Event arising as a result of the
occurrence of a Lease Rate Cap Event) shall have been declared
or automatically occurred;
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<PAGE>
(ii) the providers of PARCO's program liquidity and/or letter of
credit facilities shall have given notice that an event of
default has occurred and is continuing under their respective
agreements with PARCO;
(iii) on the fifth Business Day prior to the Scheduled Commitment
Termination Date, the Commitment has not been extended for at
least 364 days;
(iv) PARCO has notified its Funding Agent that it is unable or
unwilling to issue Commercial Paper in order to fund its
Series 1999-1 Preferred Membership Interests; or
(v) its Commercial Paper shall no longer be rated at least A-1 and
P-1 by Standard & Poor's and Moody's, respectively.
"Potential Amortization Event" is defined in the Series 1999-1
Supplement.
"Rating Agency" means either Moody's or S&P.
"Requirements of Law" means, with respect to any Person or any of
its property, the certificate of incor-poration or articles of association and
by-laws or other organizational or governing documents of such Person or any of
its property, and any law, treaty, rule or regula-tion, or determination of any
arbitrator or Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of its
property is subject, whether Feder-al, state or local (including, without
limitation, usury laws, the Federal Truth in Lending Act and retail in-stallment
sales acts).
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors and assigns.
"Scheduled Commitment Termination Date" is defined in the Asset
Purchase Agreement.
"Series 1999-1 Closing Date" means June 30, 1999.
"Series 1999-1 Preferred Membership Interests" means the Series
1999-1 Preferred Membership Interests issued by the Issuer pursuant to the LLC
Agreement, as supplemented by the Action, on the Series 1999-1 Closing Date.
"Series 1999-1 Supplement" means the Series 1999-1 Indenture
Supplement, dated as of June 30, 1999, to the Base Indenture, as the same may
from time to time be amended, supplemented or otherwise modified and in effect.
"Taxes" is defined in Section 6.2(a).
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<PAGE>
"U.S. Person" means any Person that would be considered a "United
States person" under Section 7701(a)(30) of the Internal Revenue Code of 1986,
as amended.
"VMS" is defined in the preamble hereto.
(a) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.1 hereof, and accounting terms partially defined in Section 1.1 hereof to the
extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles. To the extent that the definitions of
accounting terms herein are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained herein shall
control.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; and Section,
subsection, Schedule, Exhibit and Appendix references contained in this
Agreement are references to Sections, subsections, Schedules, Exhibits and the
Appendix in or to this Agreement unless otherwise specified.
(a) The closing of the purchase and sale of the Series 1999-1 Preferred
Membership Interests shall take place at the New York, New York offices of
Simpson Thacher & Bartlett on the Series 1999-1 Closing Date.
(b) On the Series 1999-1 Closing Date, the Issuer agrees to issue
and sell to PARCO a Preferred Membership Certificate, registered in the name of
the Funding Agent on behalf of and for the benefit of PARCO and the APA Bank,
representing the Series 1999-1 Preferred Membership Interests, having an
aggregate stated liquidation preference of $235,960,108, substantially in the
form of Exhibit A (the "Series 1999-1 Preferred Membership Certificate"), for a
purchase price of $235,960,108. Without limiting any other provision of this
Agreement, the obligation of PARCO to purchase the Series 1999-1 Preferred
Membership Interests on the Series 1999-1 Closing Date is subject to the
satisfaction (or waiver by the Funding Agent in its sole discretion) of the
conditions precedent set forth in Article III.
(c) On the Series 1999-1 Closing Date, the Issuer will deliver to
the Funding Agent, on behalf of PARCO, the Series 1999-1 Preferred Membership
Certificate, duly issued- in accordance with the provisions of the LLC
Agreement.
; Notice of Waivers. (a) On any day following a PARCO Wind-Down Event on which
the Series 1999-1 Preferred Membership Interests are assigned by PARCO to the
APA Bank pursuant to the Asset Purchase Agreement, the Funding Agent shall
notify the Issuer of any such assignment and the purchase price therefor.
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(b) Upon an assignment described in Section 2.2(a), the Series
1999-1 Preferred Membership Interests shall be owned by the APA Bank and the
Series 1999-1 Preferred Membership Certificate shall be held by the Funding
Agent solely for the benefit of the APA Bank.
The obligation of PARCO to purchase and pay for the Series 1999-1 Preferred
Membership Interests on the Series 1999-1 Closing Date is subject to the
satisfac-tion of the conditions set forth in this Section 3.1 (any or all of
which (except with respect to an Amortization Event, which may be waived only
with the consent of the APA Bank) may be waived by the Funding Agent in its sole
discretion).
(a) Officer's Certificate of the Issuer. The Funding Agent shall
have received a certificate, dated the Series 1999-1 Closing Date, of the
Chairman of the Managers to the effect that:
(i) Performance by the Issuer. All the terms, covenants,
agreements and conditions of this Agreement and the Transaction Documents to
which it is a party to be complied with and performed by the Issuer at or before
the Series 1999-1 Closing Date shall have been complied with and performed;
(ii) Representations and Warranties. Each of the
representations and warran-ties of the Issuer made in this Agreement and
the Transaction Documents shall be true and correct as of the Series
1999-1 Closing Date (except to the extent they expressly relate to an
earlier time); and
(iii) No Amortization Event. On the Series 1999-1 Closing Date
and, after giving effect to the purchase of Series 1999-1 Preferred
Membership Interests contemplated herein-, no Amortization Event or
Potential Amortization Event shall occur or have occurred.
(b) Officer's Certificate of VMS. The Funding Agent shall have
received a certificate, dated the Series 1999-1 Closing Date of a duly
authorized officer of VMS to the effect that:
(i) Performance by VMS. All the terms, covenants, agreements
and conditions of this Agreement and the Transaction Documents to which
VMS is a party to be complied with and performed by VMS at or before the
Series 1999-1 Closing Date shall have been complied with and performed;
and
(ii) Representations and Warranties. Each of the
representations and warran-ties of VMS made in this Agreement and the
Transaction Documents shall be true and correct as of the Series 1999-1
Closing Date (except to the extent they expressly relate to an earlier).
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(c) Legal Proceedings. The Funding Agent shall have received copies
of the resolutions of the Managers of the Issuer and the managers of VMS, in
form and substance satisfactory to the Funding Agent, authorizing the execution,
delivery and performance of this Agreement and the Transaction Documents to
which it is a party, certified by the Chairman of the Managers of the Issuer, in
the case of the Issuer, or a duly authorized officer of VMS, in the case of VMS,
as of the Series 1999-1 Closing Date, which certificate shall (a) state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded as of the date of such certificate and (b) include an incumbency
certificate of the Issuer and VMS, as applicable. All corporate proceedings and
other legal matters incident to the authorization, form and validity of this
Agreement and the Transaction Documents and all other legal matters relating to
this Agreement, the Transaction Documents and the transactions contemplated
hereby and thereby shall be satisfactory to the Funding Agent in all respects.
(d) Transaction Documents. The Funding Agent shall have received (i)
counter-parts of this Agreement duly executed by the parties hereto and (ii)
executed copies of the Transaction Documents.
(e) Other Documents. The Funding Agent shall have received copies of
each of the other documents and all certificates delivered to Chase, as funding
agent, pursuant to the Series 1999-1 Supplement on the Series 1999-1 Closing
Date in connection with the issuance of the Series 1999-1 Investor Notes.
(f) Opinions of Counsel to the Issuer, SPV and VMS. The Funding
Agent shall have received (i) the opinions of counsel delivered to Chase, as
funding agent, pursuant to the Series 1999-1 Supplement on the Series 1999-1
Closing Date in connection with the issuance of the Series 1999-1 Investor
Notes, each addressed to PARCO and the Funding Agent and dated the Series 1999-1
Closing Date and (ii) opinions of counsel to the Issuer and VMS as to the Series
1999-1 Preferred Membership Interests and this Agreement and as to such other
matters as the Funding Agent and its counsel may reasonably request, dated as of
the Series 1999-1 Closing Date, and satisfactory in form and substance to the
Funding Agent and its counsel, subject to customary assumptions and
qualifications.
(g) No Actions or Proceedings . No action, suit, proceeding or
investigation by or before any Governmental Authority shall have been instituted
to restrain or prohibit the consummation of, or to invalidate, the transactions
contemplated by this Agreement or the Transaction Documents.
(h) Approvals and Consents. All consents, approvals, permits,
orders, authorizatio-ns, waivers, exceptions, variances, exemptions or licenses
of, or registrations, declarations or filings with, any Governmental Authority
required under any Requirements of Law have been obtained or made in connection
with the execution, delivery and performance of this Agreement and the
Transaction Documents by the parties hereto and thereto.
(i) Officer's Certificates. The Funding Agent shall have received an
officer's certificate from each of the Issuer and VMS, in form and substance
reasonably satisfactory to the
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Funding Agent and its counsel, dated as of the Series 1999-1 Closing Date,
certifying as to the satisfaction of the conditions set forth in Sections 3.1(g)
and (h) as they relate to the Issuer and VMS, as applicable.
(j) Other Documents. The Issuer and VMS shall have furnished to the
Funding Agent such other information, certificates, documents and opinions of
counsel as the Funding Agent may reasonably request in connection with the
transactions con-templated by this Agreement and the Transaction Documents.
(k) Fees. The Funding Agent shall have received all fees required to
be paid to the Funding Agent, the APA Bank or PARCO pursuant to the Fee Letter
on or prior to the Series 1999-1 Closing Date.
(l) Rating Confirmation Letters. The Funding Agent shall have
received copies of letters from each of the Rating Agencies confirming the
ratings assigned by each of them to PARCO's Commercial Paper.
As of the Series 1999-1 Closing Date, the Issuer hereby makes the
following representations and warranties to PARCO, the APA Bank and the Funding
Agent, on which PARCO, the APA Bank and the Funding Agent shall rely for all
purposes of this Agreement and the Transac-tion Documents:
(a) Reaffirmation. The Issuer repeats and reaffirms to PARCO, the
APA Bank and the Funding Agent each and every of its representations and
warranties contained in the Transaction Documents and represents and warrants
that such represen-tations are true and correct as of the Series 1999-1 Closing
Date (unless such representations and warranties specifically refer to an
earlier date).
(b) Existence and Power. The Issuer (i) is a special purpose limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware, (ii) is duly qualified to do business as a
foreign limited liability company and in good standing under the laws of each
jurisdiction where the character of its property, the nature of its business or
the performance of its obligations make such qualification necessary, and (iii)
has all powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and for purposes of
the transactions contemplated by this Agreement.
(c) Governmental Authorization. The execution, delivery and
performance by the Issuer of this Agreement (i) is within the Issuer 's power,
has been duly authorized by all necessary action, (ii) requires no action by or
in respect of, or filing with, any governmental body, agency or official which
has not been obtained and (iii) does not contravene, or constitute a default
under, any Requirement of Law or any provision of its certificate of formation
or the LLC Agreement or result in the creation or imposition of any Lien on any
of the Issuer Assets, except
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for Liens created by the Indenture or the other Transaction Documents. This
Agreement has been executed and delivered by a duly authorized officer of the
Issuer.
(d) Binding Effect. This Agreement is a legal, valid and binding
obligation of the Issuer enforceable against the Issuer in accordance with its
terms (except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally or by general equitable principles,
whether considered in a proceeding at law or in equity and by an implied
covenant of good faith and fair dealing).
(e) Litigation. There is no action, suit or proceeding pending
against or, to the knowledge of the Issuer, threatened against or affecting the
Issuer before any court or arbitrator or any Governmental Authority which in any
manner draws into question the validity or enforceability of this Agreement or
the ability of the Issuer to perform its obligations hereunder.
(f) No Consent. No consent, action by or in respect of, approval or
other authorization of, or registration, declaration or filing with, any
Governmental Authority or other Person is required for the valid execution and
delivery of this Agreement or for the performance of any of the Issuer's
obligations hereunder other than such consents, approvals, authorizations,
registrations, declarations or filings as shall have been obtained by the Issuer
prior to the Series 1999-1 Closing Date or as contemplated in Section 7.13 of
the Indenture.
(g) Series 1999-1 Preferred Membership Interests. The Series 1999-1
Preferred Membership Interests have been duly and validly authorized and issued
under the LLC Agreement and the Series 1999-1 Preferred Membership Certificate
has been duly executed by the Issuer and has been validly issued under the LLC
Agreement.
As of the Series 1999-1 Closing Date, VMS hereby makes the following
representations and warranties to PARCO, the APA Bank and the Funding Agent, on
which PARCO, the APA Bank and the Funding Agent shall rely for all purposes of
this Agreement and the Transac-tion Documents:
(a) Reaffirmation. VMS repeats and reaffirms to PARCO, the APA Bank
and the Funding Agent its representations and warranties contained in the
Transaction Documents and represents and warrants that such representations and
warranties are true and correct as of the Series 1999-1 Closing Date (unless
such representations and warranties specifically refer to an earlier date).
(b) Organization and Power. VMS is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full power, authority and legal right to carry on its business
as now conducted and to enter into and perform its obligations hereunder. The
Administrator is qualified to do business and in good standing in every other
jurisdiction where the failure to do so would have a Material Adverse Effect.
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(c) Authorization, Execution and Validity. The Administrator has
duly authorized, executed and delivered this Agreement and (assuming the due
authorization, execution and delivery by each other party thereto) this
Agreement constitute the legal, valid and binding obligations of VMS,
enforceable against VMS in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors', mortgagees' or
lessors' rights in general and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(d) No Conflict. The execution, delivery and performance by VMS of
this Agreement and compliance by VMS with its obligations hereunder do not (i)
require any approval of the shareholders of VMS of any approval or consent of
any trustee or holder of any indebtedness or obligation of VMS, other than such
consents and approvals as have been obtained, (ii) contravene any Applicable
Law, (iii) breach or contravene VMS's limited liability company agreement, or
(iv) contravene or result in any breach of or creation of any Lien (other than
pursuant to the Transaction Documents) upon any property of VMS under any
indenture, mortgage, loan agreement, lease or other agreement or instrument to
which VMS is a party or by which VMS or any of its properties is bound.
(e) Litigation. There are no actions, suits or proceedings pending
or, to the knowledge of VMS, threatened against VMS, before any Governmental
Authority which individually or in the aggregate would impair the ability of VMS
to perform its obligations under this Agreement or which question the validity
of this Agreement or any action taken or to be taken pursuant hereto or thereto.
VMS is not in default with respect to any order of any Governmental Authority,
the default under which would adversely affect the ability of VMS to perform its
obligations under this Agreement.
(f) Consents. No consent, approval or authorization of, or filing,
registration or qualification with, or giving of notice of taking of any other
action with respect to, any Governmental Authority is required in connection
with the execution, delivery and performance by VMS of this Agreement, or the
performance by VMS of the transactions contemplated hereby, other than any such
consent, approval, authorization, filing, registration, qualification, notice or
action as has been duly obtained, given or taken and is in full force and
effect.
The Issuer and VMS hereby, in addition to their obligations hereunder,
agree to:
(a) Performance. Perform on a timely basis each of its respective
covenants and agreements under, and comply with each of the respective terms and
provisions applicable to it in, the Transaction Documents (which terms and
provisions are incorporated by reference herein) and this Agreement;
(b) Information. Furnish, or cause to be furnished by VMS, to PARCO,
the Funding Agent and the APA Bank:
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(i) such information, documents, records or reports respecting
the Issuer, the SPV, the Origination Trust or VMS as the Funding Agent may
from time to time reasonably request;
(ii) such publicly available information, documents, records
or reports respecting the Issuer, the SPV, the Origination Trust or VMS or
the condition or operatio-ns, financial or otherwise, of the Issuer, the
SPV, the Origination Trust or VMS as the Funding Agent may from time to
time reasonably request;
(iii) copies of all notices to or from the Rating Agency with
respect to the Transaction Docume-nts; and
(iv) copies of all notices, opinions, certificates, statements
and reports from time to time furnished to or by the Issuer or VMS
pursuant to the Transaction Documents.
(c) Amendments to Transaction Documents. Not terminate, amend,
waive, supplement or otherwise modify the Transaction Documents except in
accordance with the terms thereof and without the prior written consent of the
Funding Agent (acting at the direction of PARCO and the APA Bank).
(d) Fees. In connection with the transactions contemplated hereby
and by the Transaction Documents, the Issuer agrees to pay to the Funding Agent,
for the benefit of the APA Bank, the fees set forth in the Fee Letter in the
manner specified therein. Notwithstanding the foregoing, any payments made by
the Issuer pursuant to this Section 5.1(d) shall be made solely from funds
available therefor pursuant to Section 6.7, shall be non-recourse other than
with respect to such funds, and shall not constitute a claim against the Issuer
to the extent that such funds are insufficient to make such payment.
(a) The Issuer agrees to indemnify and hold harmless the Funding
Agent, PARCO and each APA Bank, each of their respective officers, directors,
agents and employees (each, a "Company indemnified person") from and against any
loss, liability, expense, damage or injury suffered or sustained by (a "Claim")
such Company indemnified person by reason of (i) any acts, omissions or alleged
acts or omissions arising out of, or relating to, activities of the Issuer
pursuant to this Agreement or the other Transaction Documents to which it is a
party, (ii) a breach of any representation or warranty made or deemed made by
the Issuer (or any of its officers) in this Agreement or other Transaction
Document or (iii) a failure by the Issuer to comply with any applicable law or
regulation or to perform its covenants, agreements, duties or obligations
required to be performed or observed by it in accordance with the provisions of
this
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Agreement or the other Transaction Documents, including, but not limited to, any
judgment, award, settlement, reasonable attorneys' fees and other reasonable
costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim, except to the extent such loss,
liability, expense, damage or injury (A) resulted from the gross negligence, bad
faith or wilful misconduct of such Company indemnified person or its officers,
directors, agents, principals, employees or employers, (B) resulted solely from
a default by an Obligor with respect to any Sold Unit or Fleet Receivable or (C)
include any income or franchise taxes imposed on (or measured by) any Company
indemnified person's net income; provided that any payments made by the Issuer
pursuant to this Section 6.1 shall be made solely from funds available therefor
pursuant to Section 6.7, shall be non-recourse other than with respect to such
funds, and shall not constitute a claim against the Issuer to the extent that
such funds are insufficient to make such payment.
(b) The Administrator agrees to indemnify and hold harmless the
Funding Agent, PARCO and the APA Bank, and each of their respective officers,
directors, agents and employees (each, a "Administrator indemnified person")
from and against any Claim by reason of (i) any acts, omissions or alleged acts
or omissions arising out of, or relating to, activities of the Administrator
pursuant to this Agreement or the other Transaction Documents to which it is a
party, (ii) a breach of any representation or warranty made or deemed made by
the Administrator (or any of its officers) in this Agreement or other
Transaction Document or (iii) a failure by the Administrator to comply with any
applicable law or regulation or to perform its covenants, agreements, duties or
obligations required to be performed or observed by it in accordance with the
provisions of this Agreement or the other Transaction Documents, including, but
not limited to, any judgment, award, settlement, reasonable attorneys' fees and
other reasonable costs or expenses incurred in connection with the defense of
any actual or threatened action, proceeding or claim, except to the extent such
loss, liability, expense, damage or injury (A) resulted from the gross
negligence, bad faith or wilful misconduct of such Administrator indemnified
person or its officers, directors, agents, principals, employees or employers,
(B) resulted solely from a default by an Obligor with respect to any Sold Unit
or Fleet Receivable or (C) include any income or franchise taxes imposed on (or
measured by) any Administrator indemnified person's net income.
(a) If any Change in Law (except with respect to Taxes which shall be
governed by Section 6.3) shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, the APA Bank (except any such reserve
requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on the APA Bank or the London interbank market any
other condition affecting the Transaction Documents or the funding of
Eurodollar Tranches by the APA Bank;
and the result of any of the foregoing shall be to increase the cost to the APA
Bank of making, converting into, continuing or maintaining Eurodollar Tranches
(or maintaining its obligation to
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do so under the Asset Purchase Agreement) in respect of the Series 1999-1
Preferred Membership Interests or to reduce any amount received or receivable by
the APA Bank in respect of the Series 1999-1 Preferred Membership Interests
(whether principal, interest or otherwise), then the Issuer will pay to the APA
Bank such additional amount or amounts as will compensate the APA Bank for such
additional costs incurred or reduction suffered.
(b) If the APA Bank determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on the APA Bank's capital or the capital of any corporation controlling the APA
Bank as a consequence of its obligations under the Asset Purchase Agreement in
respect of the Series 1999-1 Preferred Membership Interests to a level below
that which the APA Bank or such corporation, as applicable, could have achieved
but for such Change in Law (taking into consideration the APA Bank's or such
corporation's policies with respect to capital adequacy), then from time to
time, the Issuer shall pay to the APA Bank such additional amount or amounts as
will compensate the APA Bank for any such reduction suffered.
(c) A certificate of the APA Bank setting forth the amount or
amounts necessary to compensate the APA Bank, as specified in subsections (a)
and (b) of this Section 6.3 shall be delivered to the Issuer (with a copy to the
Funding Agent) and shall be conclusive absent manifest error. The agreements in
this Section shall survive the termination of this Agreement and the payment of
all amounts payable hereunder.
(d) Failure or delay on the part of the APA Bank to demand
compensation pursuant to this Section 6.3 shall not constitute a waiver of the
APA Bank's right to demand such compensation; provided that the Issuer shall not
be required to compensate the APA Bank pursuant to this Section 6.3 for any
increased costs or reductions incurred more than 270 days prior to the date that
the APA Bank notifies the Issuer of the Change in Law giving rise to such
increased costs or reductions and of the APA Bank's intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 270-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
(a) Any and all payments by or on account of any obligation of the Issuer
hereunder and all payments of Dividends in respect of the Series 1999-1
Preferred Membership Interests shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the Issuer
shall be required to deduct any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 6.3) the Funding Agent or the APA Bank receives
an amount equal to the sum that it would have received had no such deductions
been made, (ii) the Issuer shall make such deductions and (iii) the Issuer shall
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Issuer shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
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(c) The Issuer shall indemnify the Funding Agent and the APA Bank
within the later of 10 days after written demand therefor and the Dividend
Payment Date next following such demand for the full amount of any Indemnified
Taxes or Other Taxes paid by the Funding Agent or the APA Bank on or with
respect to any payment by or on account of any obligation of the Issuer
hereunder or in respect of Dividends on the Series 1999-1 Preferred Membership
Interests (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section 6.3) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority; provided that no
Person shall be indemnified pursuant to this Section 6.3(c) or required to pay
additional amounts under the proviso of Section 6.3(a) to the extent that the
reason for such indemnification relates to, or arises from, such Person's not
being a U.S. Person. A certificate as to the amount of such payment or liability
delivered to the Issuer by the Funding Agent or the APA Bank shall be conclusive
absent manifest error. Any payments made by the Issuer pursuant to this Section
6.3 shall be made solely from funds available therefor pursuant to Section 6.7,
shall be non-recourse other than with respect to such funds, and shall not
constitute a claim against the Issuer to the extent that insufficient funds
exist to make such payment. The agreements in this Section shall survive the
termination of this Agreement and the payment of all amounts payable hereunder
and thereunder.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Issuer to a Governmental Authority, the Issuer shall deliver
to the Funding Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Funding Agent.
(e) The Funding Agent and the APA Bank if entitled to an exemption
from or reduction of an Indemnified Tax or Other Tax with respect to payments
made under this Agreement or Dividends on the Series 1999-1 Preferred Membership
Interests shall (but with respect to any Indemnified Tax or Other Tax arising
from a Change in Law, only to the extent the Funding Agent or the APA Bank is
legally able to do so) deliver to the Issuer (with a copy to the Funding Agent)
such properly completed and executed documentation prescribed by applicable law
and reasonably requested by the Issuer on the later of (i) 30 Business Days
after such request is made and the applicable forms are provided to the APA Bank
or (ii) 30 Business Days before prescribed by applicable law as will permit such
payments to be made without withholding or with an exemption from or reduction
of Indemnified Taxes or Other Taxes.
(f) If the Funding Agent or the APA Bank receives a refund solely in
respect of Taxes or Other Taxes, it shall pay over such refund to the Issuer to
the extent that it has already received indemnity payments or additional amounts
pursuant to this Section 6.3 with respect to such Taxes or Other Taxes giving
rise to the refund, net of all out-of-pocket expenses and without interest
(other than interest paid by the relevant Governmental Authority with respect to
such refund); provided, however, that the Issuer shall, upon request of the
Funding Agent or the APA Bank, repay such refund (plus interest or other charges
imposed by the relevant
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Governmental Authority) to the Funding Agent or the APA Bank if the Funding
Agent or the APA Bank is required to repay such refund to such Governmental
Authority. Nothing contained herein shall require the Funding Agent or the APA
Bank to make its tax returns (or any other information relating to its taxes
which it deems confidential) available to the Issuer or any other Person.
(g) The Issuer, PARCO, the Funding Agent, the APA Bank and VMS
recognize and agree that the Series 1999-1 Preferred Membership Interests shall
be treated as equity in the Issuer and not as debt for U.S. federal income tax
purposes and for relevant state and local income, franchise and similar tax
purposes and that none of the foregoing shall take any position in any tax
return or filing inconsistent with that position.
The Issuer agrees to indemnify the APA Bank and to hold the APA Bank
harmless from any loss or expense which the APA Bank may sustain or incur as a
consequence of (a) default by the Issuer in selecting to convert a portion of
the APA Bank's funding of Series 1999-1 Preferred Membership Interests into a
Eurodollar Tranche or to continue a portion of the APA Bank's funding of the
Series 1999-1 Preferred Membership Interests in a Eurodollar Tranche after the
Issuer has given irrevocable notice selecting the same, (b) the failure to
redeem any portion of the Series 1999-1 Preferred Membership Interests on a
Dividend Payment Date after giving a Notice of Redemption with respect thereto
or (c) redeeming the Series 1999-1 Preferred Membership Interests prior to the
termination of the Eurodollar Period for a related Eurodollar Tranche. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of dividends that which would have accumulated on the amount so redeemed
or not so converted or continued, for the period from the date of such
redemption or of such failure to convert or continue to the last day of the
Eurodollar Period (or in the case of a failure to convert or continue, the
Eurodollar Period that would have commenced on the date of such redemption or of
such failure) in each case at the Adjusted LIBO Rate for such Eurodollar Tranche
over (ii) the amount of dividends (as reasonably determined by the APA Bank)
which would have accumulated on such amount of the Series 1999-1 Preferred
Membership Interests by placing such amount on deposit for a comparable period
with leading banks in the interbank Eurodollar market; provided that any
payments made by the Issuer pursuant to this subsection shall be made solely
from funds available therefor pursuant to Section 6.7, shall be non-recourse
other than with respect to such funds, and shall not constitute a claim against
the Issuer to the extent that such funds are insufficient to make such payment.
This covenant shall survive the termination of this Agreement and the Asset
Purchase Agreement and the payment of all amounts payable hereunder and
thereunder. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by the APA Bank to the Issuer shall be conclusive
absent manifest error.
If the APA Bank requests compensation under Section 6.2, or if the
Issuer is required to pay any additional amount to the APA Bank or any
Governmental Authority for the account of the APA Bank pursuant to Section 6.2,
then the APA Bank shall use reasonable efforts to designate a different lending
office for funding or booking its obligations hereunder or to assign its rights
and obligations hereunder to another of its offices, branches or affiliates, if,
in the judgment of the APA Bank, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 6.2 or 6.3, as the case
may be, in the future and (ii) would
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not subject the APA Bank to any unreimbursed cost or expense and would not
otherwise be disadvantageous to the APA Bank. The Issuer hereby agrees to pay
all reasonable costs and expenses incurred by the APA Bank in connection with
any such designation or assignment.
(a) The Administrator agrees to pay on demand all reasonable costs and
expenses in connection with the preparation, execution, delivery and
administration (including periodic auditing and any requested amendments,
waivers or consents) of this Agreement and the other documents to be delivered
in connection with PARCO's investment in the Series 1999-1 Preferred Membership
Interests, including, without limitation, the reasonable fees and out-of-pocket
expenses of its counsel or counsel to the APA Bank with respect thereto and with
respect to advising PARCO, the Funding Agent or the APA Bank as to their
respective rights and remedies under this Agreement and the other Transaction
Documents and all costs and expenses, if any (including reasonable counsel fees
and expenses), in connection with the enforcement of this Agreement and the
other Transaction Documents.
(b) In addition, the Administrator shall pay on demand all other
reasonable out-of-pocket costs and expenses incurred by PARCO or any shareholder
of PARCO ("Other Costs"), including, without limitation, the cost of auditing
PARCO's books by certified public accountants, the cost of rating PARCO's
promissory notes by independent financial rating agencies and the reasonable
fees and out-of-pocket expenses of counsel for such Person or any counsel for
any shareholder of PARCO with respect to (i) advising PARCO or such shareholder
as to its rights and remedies under this Agreement and the other Transaction
Documents, (ii) the enforcement of this Agreement, the other Transaction
Documents and the other documents to be delivered hereunder and thereunder or
(iii) advising PARCO or such shareholder as to matters relating to PARCO's
operations; provided, however, that if PARCO enters into or has entered into
agreements with Other Transferors, the Administrator and such Other Transferors
shall each be liable for such Other Costs ratably in accordance with the usage
under the respective facilities of PARCO to purchase receivables or interests in
receivables (or make loans secured by receivables or interests in receivables)
from the Administrator and each Other Transferor; and provided, further, that if
such Other Costs are attributable to the Administrator and not attributable to
any Other Transferor, the Administrator shall be solely liable for such Other
Costs.
(a) On each Dividend Payment Date before the Series 1999-1 Note
Termination Date, the Issuer shall apply amounts on deposit in the Series 1999-1
Preferred Member Distribution Account and withdrawn therefrom in accordance with
Section 10.7(a) of the LLC Agreement, after payment of all accumulated and
unpaid Dividends (whether or not earned or declared) on the Series 1999-1
Preferred Membership Interests, including any Additional Dividends accrued
thereon, for the following purposes in the following order of priority:
(i) to the Funding Agent, in an amount equal to all fees owing on
such Dividend Payment Date in accordance with Section 5.1(d) and all
unpaid fees owing on any previous Dividend Payment Dates in accordance
with Section 5.1(d); and
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(ii) to the Funding Agent, in any amount equal to any amounts owing
to the Funding Agent or to PARCO or the APA Bank pursuant to Article VI.
(b) On the Series 1999-1 Note Termination Date and on each Dividend
Payment Date thereafter, the Issuer shall apply amounts on deposit in the Series
1999-1 Preferred Member Distribution Account and withdrawn therefrom in
accordance with Section 10.7(b) of the LLC Agreement, after payment of all
accumulated and unpaid Dividends (whether or not earned or declared) on the
Series 1999-1 Preferred Membership Interests, including any Additional Dividends
accrued thereon, and any redemption of the Series 1999-1 Preferred Membership
Interests in accordance with Section 9.2(c)(ii) of the LLC Agreement, for the
following purposes in the following order of priority:
(i) to the Funding Agent, in an amount equal to all fees owing on
such Dividend Payment Date in accordance with Section 5.1(d) and all
unpaid fees owing on any previous Dividend Payment Dates in accordance
with Section 5.1(d); and
(ii) to the Funding Agent, in any amount equal to any amounts owing
to the Funding Agent or to PARCO or the APA Bank pursuant to Article VI.
(c) On the Dividend Payment Date on which the Series 1999-1
Preferred Membership Interests are redeemed in full and on each Dividend Payment
Date thereafter until all amounts due and owing hereunder are paid in full, the
Issuer shall apply amounts on deposit in the Series 1999-1 Preferred Member
Distribution Account and withdrawn therefrom in accordance with Section 10.7(c)
of the LLC Agreement, for the following purposes in the following order of
priority:
(i) to the Funding Agent, in an amount equal to all fees owing on
such Dividend Payment Date in accordance with Section 5.1(d) and all
unpaid fees owing on any previous Dividend Payment Dates in accordance
with Section 5.1(d); and
(ii) to the Funding Agent, in any amount equal to any amounts owing
to the Funding Agent or to PARCO or the APA Bank pursuant to Article VI.
Each of PARCO and the APA Bank hereby irrevocably designates and appoints
the Funding Agent as its agent under this Agreement and each of PARCO and the
APA Bank irrevocably authorizes the Funding Agent, in such capacity, to take
such action on its behalf under the provisions of this Agreement and to exercise
such powers and perform such duties as are expressly delegated to the Funding
Agent by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision tothe contrary
elsewhere in this Agreement, the Funding Agent shall not have any duties or
responsibilities except those expressly set forth herein, or any fiduciary
relationship with either PARCO or the APA Bank, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or otherwise exist against the Funding Agent.
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The Funding Agent may execute any of its duties under this Agreement by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
(who may be counsel for the Issuer or the Administrator), independent public
accountants and other experts selected by it concerning all matters pertaining
to such duties. The Funding Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys in-fact selected by it with reasonable
care.
Neither the Funding Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement (x) with the consent or at the request of either
PARCO or the APA Bank (y) in the absence of its own gross negligence or willful
misconduct or (ii) responsible in any manner to either PARCO or the APA Bank for
any recitals, statements, representations or warranties made by the Issuer, the
Origination Trust, VMS, the Administrator or any officer thereof contained in
this Agreement or in any certificate, report, statement or other document
referred to or provided for in, or received by the Funding Agent under or in
connection with, this Agreement or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or for any failure
of any of the Issuer, the OriginationTrust, VMS or the Administrator to perform
its obligations hereunder. The Funding Agent shall not be under any obligation
to either PARCO or the APA Bank to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or conditions of, this
Agreement or to inspect the properties, books or records of the Issuer or the
Administrator.
. The Funding Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine and correct
and tohave been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation, counsel
to the Issuer or the Administrator), independent accountants and other experts
selected by the Funding Agent and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts. The Funding Agent shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first receive such advice or concurrence of PARCO or the APA Bank, as
applicable, as it deems appropriate or it shall first be indemnified to its
satisfaction by PARCO or the APA Bank, as applicable, against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Funding Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement in
accordance with a request of PARCO or the APA Bank, as applicable, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon PARCO and the APA Bank, as applicable.
The Funding Agent shall not be deemed to have knowledge or notice of the
occurrence of any Amortization Event or Potential Amortization Event, any Event
of Default or Default, any Termination Event or any Servicer Termination Event
unless the Funding Agent has received notice from PARCO, the APA Bank, the
Issuer, the Administrator, SPV or VMS referring to the Series 1999-1 Preferred
Membership Interests and describing such Amortization Event or Potential
Amortization Event, Event of Default or Default, Termination Event or Servicer
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Termination Event or and stating that such notice is a "notice of an
Amortization Event or Potential Amortization Event," "notice of an Event of
Default or Default," "notice of a Termination Event" or "notice of a Servicer
Termination Event", as the case may be. In the event that the Funding Agent
receives such a notice, the Funding Agent shall give notice thereof to PARCO and
the APA Bank. The Funding Agent shall take such action with respect to such
event as shall be reasonably directed by PARCO and the APA Bank, provided that
unless and until the Funding Agent shall have received such directions, the
Funding Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such event as it shall deem advisable
in the best interests of PARCO and the APA Bank. Notwithstanding the foregoing,
in the event that the Funding Agent receives notice from the Issuer of the
occurrence of an event that constitutes a PARCO Wind-Down Event, the Funding
Agent shall give notice thereof to PARCO and the APA Bank within one Business
Day of its receipt of such notice.
Each of PARCO and the APA Bank expressly acknowledges that neither the
Funding Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to it
and that no act by the Funding Agent hereinafter taken, including any review of
the affairs of the Issuer, the Origination Trust or VMS, shall be deemed to
constitute any representation or warranty by the Funding Agent to either PARCO
and the APA Bank. Each of PARCO and the APA Bank represents to the Funding Agent
that it has, independently and without reliance upon the Funding Agent or each
other, and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, operations,
property, financial and other condition and creditworthiness of the Issuer, the
Origination Trust and VMS and made its own decision to enter into this
Agreement. Each of PARCO and the APA Bank also represents that it will,
independently and without reliance upon the Funding Agent or each other, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement, and to make such investigation
as it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Issuer, the
Origination Trust and the Administrator. Except for notices, reports and other
documents expressly required to be furnished to PARCO and the APA Bank by the
Funding Agent hereunder, the Funding Agent shall have no duty or responsibility
to provide either PARCO or the APA Bank with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Issuer, the Origination Trust
or VMS which may come into the possession of the Funding Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
Each of PARCO and the APA Bank agree to indemnify the Funding Agent in its
capacity as such (to the extent not reimbursed by the Issuer and the
Administrator and without limiting the obligation of the Issuer and the
Administrator to do so), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time be imposed on,
incurred by or asserted against the Funding Agent in any way relating to or
arising out of this Agreement or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Funding Agent under or in connection with any of
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the foregoing; provided that neither PARCO or the APA Bank shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from the Funding Agent's gross negligence or willful misconduct. The
agreements in this Section shall survive the payment of all amounts payable
hereunder.
The Funding Agent and its Affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Issuer, VMS or any of
their Affiliates as though the Funding Agent were not the Funding Agent
hereunder.
The Funding Agent may resign as Funding Agent upon 10 days' notice to
PARCO and the APA Bank. If the Funding Agent shall resign as Funding Agent under
this Agreement, then PARCO and the APA Bank shall appoint a successor
administrative agent, which successor administrative agent shall be approved by
the Issuer and the Administrator (which approval shall not be unreasonably
withheld), whereupon such successor administrative agent shall succeed to the
rights, powers and duties of the Funding Agent, and the term "Funding Agent"
shall mean such successor administrative agent effective upon such appointment
and approval, and the former Funding Agent's rights, powers and duties as
Funding Agent shall be terminated, without any other or further act or deed on
the part of such former Funding Agent or any of the parties to this Agreement.
After any retiring Funding Agent's resignation as Funding Agent, the provisions
of this Article VII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Funding Agent under this Agreement.
(a) This Agreement shall continue in full force and effect from the Series
1999-1 Closing Date to the earlier of (i) the first day on which all amounts due
and owing to the Funding Agent, PARCO and the APA Bank under this Agreement and
the Transaction Documents have been indefeasibly paid in full and (ii) the day
on which each of the parties hereto agrees in writing that this Agreement shall
be terminated.
(b) No amendment, supplement, waiver or modification of any
provision of this Agreement or any consent given pursuant to this Agreement
shall in any event be effective unless the same shall be in writing and signed
by the parties hereto, and then such amendment, supplement, waiver, modification
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
All notices and other communications provided for hereunder shall, unless
otherwise stated herein, be in writing (including facsimile, telegraphic, telex
or cable communication) and mailed, facsimiled, telegraphed, cabled or
delivered, as to each party hereto, at its address set forth below or at such
other address as shall be designated by such party in a written notice to the
other party hereto. All such notices and communications shall, when mailed,
facsimiled, telegraphed or cabled, be effective three days after deposit in the
mails, when confirmed by telephone, delivered to the telegraph company or
delivered to the cable company, respectively.
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If to the Issuer:
GREYHOUND FUNDING, LLC
c/o Global Securitization Services, LLC
25 West 43rd Street, Suite 704
New York, New York 10036
Attention: President
Telecopy: (212) 302-8767
If to PARCO:
PARK AVENUE RECEIVABLES CORPORATION
c/o Global Securitization Services, LLC 25
West 43rd Street, Suite 704
New York, New York 10036
Attention: President
Telecopy: (212) 302-8767
with a copy to:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Brad Schwartz
Telecopy: (212) 834-6562
If to the Funding Agent:
THE CHASE MANHATTAN BANK
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Andrew Taylor
Telecopy: (212) 946-7776
If to VMS or the Administrator:
PHH Vehicle Management Services, LLC
900 Old Country Road
Garden City, New York 11530
Attention: General Counsel
Telecopy: (516) 222-
If to the APA Bank:
THE CHASE MANHATTAN BANK
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<PAGE>
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Andrew Taylor
Telecopy: (212) 946-7776
Each payment to be made hereunder shall be made on the required
payment date in lawful money of the United States and in immediately available
funds, if to PARCO or the APA Bank, at the office of the Funding Agent.
No failure on the part of any party hereto to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
Each of the parties hereto, by entering into this Agreement, covenants and
agrees that it will not at any time institute against, or join any other Person
in instituting against, PARCO any bankruptcy, reorganization, arrangement,
insolvency, or liquidation or other similar proceedings under any U.S. Federal
or state bankruptcy or similar law. Each of the parties hereto, by entering into
this Agreement, covenants and agrees that it will not at any time institute
against, or join any other Person in instituting against, the Issuer any
bankruptcy, reorganization, arrangement, insolvency, or liquidation or other
similar proceedings under any U.S. Federal or state bankruptcy or similar law.
Each of the parties hereto, by entering into this Agreement, covenants and
agrees that it will not institute against, or join any other Person in
instituting against, the Origination Trust, SPV, any other Special Purpose
Entity, or any general partner or single member of any Special Purpose Entity
that is a partnership or limited liability company, respectively, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or
other proceedings under any federal or state bankruptcy or similar law.
Capitalized terms used in this Section 8.6 and not otherwise defined herein
shall have the meanings set forth in Schedule 1 to the Base Indenture.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counter-parts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. Any provisions of this Agreement
which are prohibit-ed or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisio-ns hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Each of the
parties hereto hereby waives any right of setoff it may have or to which it may
be entitled under this Agreement from time to time against PARCO or any of their
respective assets.
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<PAGE>
(a) Not-with-stand-ing any-thing to the con-trary con-tained herein, the
obli-ga-tions of PARCO under this Agreement are solely the corpo-rate
obliga-tions of PARCO and, in the case of obligations of PARCO other than its
Commercial Paper, shall be pay-able at such time as funds are re-ceived by or
are available to PARCO in excess of funds neces-sary to pay in full all of its
outstanding Commer-cial Paper and, to the extent funds are not avail-able to pay
such obligations, the claims relat-ing there-to shall not constitute a claim
against PARCO but shall continue to ac-crue. Each party hereto agrees that the
pay-ment of any claim (as defined in Section 101 of Title 11 of the Bankruptcy
Code) of any such party against PARCO shall be subor-di-nated to the payment in
full of all of its Com-mer-cial Paper.
No re-course under any obligation, covenant or agree-ment of PARCO
contained in this Agreement shall be had against any incorporator, stockholder,
officer, director, employee or agent of PARCO, Chase, as its adminis-trative
agent, the Funding Agent or any of their Affiliates (solely by virtue of such
capacity) by the en-force-ment of any as-sess-ment or by any legal or equita-ble
proceed-ing, by virtue of any statute or other-wise; it being expressly agreed
and understood that this Agreement is solely a corpora-te obligation of PARCO
individually, and that no person-al liability whatever shall attach to or be
incurred by any incorpo-ra-tor, stock-hold-er, offi-cer, direc-tor, em-ploy-ee
or agent of PARCO, Chase, as its adminis-tra-tive agent, the Funding Agent or
any of its Affiliates (solely by virtue of such capacity) or any of them under
or by reason of any of the obli-ga-tions, cove-nants or agree-ments of PARCO
con-tained in this Agreement, or implied therefrom, and that any and all
personal liabili-ty for breaches by PARCO of any of such obligations, cove-nants
or agree-ments, either at common law or at equity, or by statute, rule or
regulation, of every such incorpora-tor, stock-hold-er, offi-cer, direc-tor,
em-ployee or agent is hereby ex-pressly waived as a condition of and in
consid-er-ation for the execution of this Agree-ment; provided that the
foregoing shall not relieve any such Person from any liability it might
otherwise have as a result of fraudu-lent actions taken or omissions made by
them. The provisions of this Section 8.7 shall survive termination of this
Agreement.
Notwithstanding any provision of this Agree-ment: (i) the Funding Agent
shall not have any obliga-tions under this Agreement other than those
specif-ically set forth herein, and no implied obli-gations of the Funding Agent
shall be read into this Agreement; and (ii) in no event shall the Funding Agent
be liable under or in connec-tion with this Agreement for indirect, special, or
consequen-tial losses or damages of any kind, including lost prof-its, even if
advised of the possibili-ty thereof and regardless of the form of action by
which such losses or damages may be claimed. Neither the Funding Agent nor any
of its direc-tors, offi-cers, agents or employees shall be liable for any action
taken or omitted to be taken in good faith by it or them under or in connection
with this Agreement, except for its or their own gross negli-gence or willful
miscon-duct. With-out limiting the fore-going, the Funding Agent (a) may consult
with legal counsel (in-cluding counsel for PARCO and the APA Bank), indepen-dent
public accoun-tants and other ex-perts selected by it and shall not be liable
for any action taken or omitted to be taken in good faith by it in accor-dance
with the advice of such counsel, accoun-tants or experts, (b) shall not be
respon-sible to PARCO or the APA Bank for any state-ments, warranties or
representa-tions made in or in connection with this Agreement, the Series 1999-1
Preferred Membership Interests or the other Transaction Documents, (c) shall not
be responsi-ble to PARCO or the APA Bank for the due execu-tion, legality,
validi-ty, en-force-abili-ty,
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<PAGE>
genu-ine-ness, suffi-ciency or value of this Agreement, the Series 1999-1
Preferred Membership Interests or the other Transaction Documents, (d) shall
incur no liability under or in respect of any of PARCO's Commer-cial Paper or
other obli-ga-tions of PARCO in respect of this Agreement, the Series 1999-1
Preferred Membership Interests or the other Transaction Documents and (e) shall
incur no lia-bility under or in respect of this Agree-ment, the Series 1999-1
Preferred Membership Interests or the other Transaction Documents by acting upon
any notice (including notice by tele-phone), consent, certifi-cate or other
instrument or writing (which may be by facsimile) believed by it to be genu-ine
and signed or sent by the proper party or par-ties. Notwith-standing anything
else herein, it is agreed that when the Funding Agent may be required under this
Agree-ment to give notice of any event or condi-tion or to take any action as a
result of the occur-rence of any event or the existence of any condi-tion, the
Funding Agent agrees to give such notice or take such action only to the extent
that it has actual knowl-edge of the occur-rence of such event or the exis-tence
of such condi-tion, and shall incur no liability for any failure to give such
notice or take such action in the absence of such knowl-edge.
All representations, warranties, covenants, guaranties and
indemnifications contained in this Agreement and the Transaction Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the sale and transfer of the Series 1999-1
Preferred Membership Interests to PARCO, and shall survive any sale and transfer
of the Series 1999-1 Preferred Membership Interests by PARCO to the APA Bank or
by PARCO to any CP Conduit. Furthermore, the provisions of Article VI and
Sections 7.3, 7.4, 7.7, 8.5, 8.7 of this Agreement shall survive the termination
of this Agreement.
(a) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Issuer may not assign or transfer any of its rights under this Agreement without
the prior written consent of the Funding Agent, PARCO may not assign or transfer
any of its rights under this Indenture Supplement except as set forth in Section
2.3 and in (b) below of this Section 8.10 and the APA Bank may not assign or
transfer any of its rights under this Agreement except as may be required by
applicable bank regulation requirements.
(b) Without limiting the foregoing, PARCO may, from time to time
with the prior written consent of the Issuer, assign all or a portion of this
Series 1999-1 Preferred Membership Interests in accordance with Section 11.3 of
the LLC Agreement and its rights and obligations under this Agreement to a CP
Conduit. Upon such assignment by PARCO to a CP Conduit, (A) such CP Conduit
shall be the owner of the portion of PARCO's Series 1999-1 Preferred Membership
Interests so assigned, (B) the related administrative agent for such CP Conduit
will act as the agent for such CP Conduit hereunder, (C) such CP Conduit and its
liquidity funding bank shall have the benefit of all the rights and protections
provided therefor hereunder, (D) Dividends with respect to that portion of the
Series 1999-1 Preferred Membership Interests assigned to such CP Conduit shall
be determined in the manner set forth in the Action on the basis of the interest
rate or discount applicable to Commercial Paper issued by such CP Conduit
(rather than PARCO) and to such CP Conduit's liquidity funding bank and (E) if
requested by the Funding Agent or the administrative agent of such CP Conduit,
the parties will execute and
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deliver such further agreements and documents and take such other actions as the
Funding Agent or such administrative agent may reasonably request to evidence
and give effect to the foregoing.
PARCO and the APA Bank hereby agrees that the Series 1999-1 Preferred
Membership Interests acquired by it hereunder will be acquired for investment
only and not with a view to any public distribution thereof, and that such
Person will not offer to sell or otherwise dispose of the Series 1999-1
Preferred Membership Interests (or any interest therein) in violation of any of
the registration requirements of the Securities Act, or any applicable state or
other securities laws or in violation of the LLC Agreement; provided, however,
that Issuer hereby acknowledges and agrees that PARCO may transfer the Series
1999-1 Preferred Membership Interests to the APA Bank in accordance with the
Asset Purchase Agreement without complying with the provisions of Section 11.3
of the LLC Agreement. Each of PARCO and the APA Bank acknowledges that it has no
right to require the Issuer to register the Series 1999-1 Preferred Membership
Interests under the Securities Act or any other securities law. PARCO and the
APA Bank hereby confirm and agree that in connection with any transfer by it of
an interest in the Series 1999-1 Preferred Membership Interests, such Person has
not engaged and will not engage in a general solicitation or general advertising
including advertisements, articles, notices or other communications published in
any newspaper, magazine or similar media or broadcast over radio or television,
or any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
PARCO, the Administrator, the Indenture Trustee, the Funding Agent and the
APA Bank hereby represents, warrants and covenants that (a) each of the Lease
SUBI and the Fleet Receivable SUBI is a separate series of the Origination Trust
as provided in Section 3806(b)(2) of Chapter 38 of Title 12 of the Delaware
Code, 12 Del.C. ss. 3801 et seq., (b)(i) the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to the
Lease SUBI, the Lease SUBI Portfolio or the Fleet Receivable SUBI shall be
enforceable against the Lease SUBI Portfolio or the Fleet Receivable SUBI only,
as applicable, and not against any other SUBI Portfolio or the UTI Portfolio and
(ii) the debts, liabilities, obligations and expenses incurred, contracted for
or otherwise existing with respect to any other SUBI (used in this Section as
defined in the Origination Trust Agreement), any other SUBI Portfolio (used in
this Section as defined in the Origination Trust Agreement), the UTI or the UTI
Portfolio shall be enforceable against such other SUBI Portfolio or the UTI
Portfolio only, as applicable, and not against any other SUBI Assets, (c) except
to the extent required by law, UTI Assets or SUBI Assets with respect to any
SUBI (other than the Lease SUBI and the Fleet Receivable SUBI) shall not be
subject to the claims, debts, liabilities, expenses or obligations arising from
or with respect to the Lease SUBI or Fleet Receivable SUBI, respectively, in
respect of such claim, (d)(i) no creditor or holder of a claim relating to the
Lease SUBI, the Fleet Receivable SUBI or the Lease Receivable SUBI Portfolio
shall be entitled to maintain any action against or recover any assets allocated
to the UTI or the UTI Portfolio or any other SUBI or the assets allocated
thereto, and (ii) no creditor or holder of a claim relating to the UTI, the UTI
Portfolio or any SUBI other than the Lease SUBI or the Fleet Receivable SUBI or
any SUBI Assets other than the Lease SUBI Portfolio or the Fleet Receivables
shall be entitled to maintain any action against or recover any assets allocated
to the Lease SUBI or the Fleet Receivable SUBI, and (e) any purchaser, assignee
or pledgee of an interest in the Lease SUBI, the Lease SUBI Certificate, the
Fleet Receivable
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SUBI, the Lease SUBI Certificate, the Fleet Receivable SUBI Certificate, any
other SUBI, any other SUBI Certificate (used in this Section as defined in the
Origination Trust Agreement), the UTI or the UTI Certificate must, prior to or
contemporaneously with the grant of any such assignment, pledge or security
interest, (i) give to the Origination Trust a non-petition covenant
substantially similar to that set forth in Section 6.9 of the Origination Trust
Agreement, and (ii) execute an agreement for the benefit of each holder,
assignee or pledgee from time to time of the UTI or UTI Certificate and any
other SUBI or SUBI Certificate to release all claims to the assets of the
Origination Trust allocated to the UTI and each other SUBI Portfolio and in the
event that such release is not given effect, to fully subordinate all claims it
may be deemed to have against the assets of the Origination Trust allocated to
the UTI Portfolio and each other SUBI Portfolio. Capitalized terms used in this
Section 8.13 and not otherwise defined herein shall have the meanings set forth
in Schedule 1 to the Base Indenture.
IN WITNESS WHEREOF, the parties have caused this Preferred
Membership Interest Purchase Agreement to be executed by their respective
officers thereunto duly authorized, as of the date and year first above written.
PHH VEHICLE MANAGEMENT LLC
By:
Name:
Title:
PARK AVENUE RECEIVABLES
CORPORATION
By:
Name:
Title:
THE CHASE MANHATTAN BANK,
as the APA Bank
By:
Name:
Title:
THE CHASE MANHATTAN BANK,
as the Funding Agent
By:
Name:
Title:
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Exhibit 4.54
ADMINISTRATION AGREEMENT
This ADMINISTRATION AGREEMENT, dated as of June 30, 1999 (this
"Agreement"), is by and among GREYHOUND FUNDING LLC, a Delaware limited
liability company (the "Issuer"), RAVEN FUNDING LLC, a Delaware limited
liability company ("SPV "), PHH VEHICLE MANAGEMENT SERVICES, LLC, a Delaware
limited liability company, as administrator (the "Administrator"), and THE CHASE
MANHATTAN BANK, an New York banking corporation, not in its individual capacity
but solely as Indenture Trustee (the "Indenture Trustee" under the Base
Indenture (as defined herein)).
WHEREAS, each of the Issuer and SPV has entered into the Transaction
Documents to which it is a party.
WHEREAS, each of the Issuer and SPV desires to have the
Administrator perform certain of its duties under the Transaction Documents and
to provide such additional services consistent with the terms of this Agreement
and the Transaction Documents as the Issuer or SPV, as the case may be, may from
time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and SPV
on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
1. Definitions and Usage. Unless specified herein, capitalized terms
used herein (including the preamble and recitals hereto) shall have the meaning
assigned to such terms in the Definitions List attached as Schedule 1 to the
Base Indenture, dated as of June 30, 1999 (the "Base Indenture"), between the
Issuer, and the Indenture Trustee.
2. Duties of the Administrator. (a) Certain Duties with Respect to
the Indenture. The Administrator agrees to perform all its duties as
Administrator under the Base Indenture and each Indenture Supplement. In
addition, the Administrator agrees to perform the following duties on behalf of
the Issuer under the Base Indenture:
(A) to cause the Note Register to be kept and to give the Indenture
Trustee notice of any appointment of a new Note Registrar and the
location, or change in location, of the Transfer Agent and Registrar and
the office or offices where Notes may be surrendered for registration of
transfer or exchange (Section 2.4 of the Base Indenture);
(B) to prepare and deliver to the Indenture Trustee an Issuer
Request with respect to funds remaining unclaimed for two years after the
related payment was due under the circumstances described in Section
2.6(c) (Section 2.6(c) of the Base Indenture);
<PAGE>
(C) to furnish to the Indenture Trustee at least seven Business Days
before each Payment Date and at such other time as the Indenture Trustee
may request in writing, a list of the names and addresses of Investor
Noteholders of each Series of Investor Notes (Section 2.8 of the Base
Indenture);
(D) to prepare Definitive Notes and arrange the delivery thereof
(Section 2.11 of the Base Indenture);
(E) to prepare, obtain or file the instruments, opinions and
certificates and other documents required for the release of collateral
(Section 3.2(b) of the Base Indenture);
(F) to deliver to the Indenture Trustee copies of each of the
reports, statements, certificates and other materials delivered to the
Issuer by the Servicer and referred to in Section 4.1(a) (Section 4.1(a)
of the Base Indenture);
(G) to deliver to the Indenture Trustee, in accordance with Section
4.1(a)(vi) of the Base Indenture, a copy of the additional information
regarding the financial position, results of operations or business of the
Origination Trust or VMS delivered to the Issuer pursuant to the
Origination Trust Documents (Section 4.1(a)(vi) of the Base Indenture);
(H) to prepare and deliver to the Indenture Trustee or the Paying
Agent written instructions to make withdrawals and payments from the
Collection Account and any Series Accounts specified in the Base Indenture
or in an Indenture Supplement (Sections 4.1(b) and 5.4(b) of the Base
Indenture);
(I) to deliver to any Investor Noteholder and any prospective
purchaser of Investor Notes the information required by Rule 144A(d)(4) of
the Securities Act (Section 4.3 of the Base Indenture);
(J) to deliver to the Indenture Trustee or the Paying Agent and the
Rating Agencies the Monthly Settlement Statement with respect to each
Series of Investor Notes (Section 4.4 of the Base Indenture);
(K) to deliver to the Indenture Trustee or the Paying Agent a copy
of the annual financial statements of the Issuer (Section 4.4(b) of the
Base Indenture);
(L) to prepare and deliver to the Indenture Trustee and the Paying
Agent the Annual Noteholders' Tax Statement required to be delivered to
Investor Noteholders (Section 4.4(c) of the Base Indenture);
(M) to prepare and deliver to the Indenture Trustee written
instructions with respect to the investment of funds on deposit in the
Collection Account and the liquidation of such investments as required or
permitted (Section 5.1(c) of the Base Indenture);
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<PAGE>
(N) to prepare and deliver to the Indenture Trustee written
instructions with respect to the investment of funds on deposit in the
Gain On Sale Account and the liquidation of such investments as required
or permitted (Section 5.2(b) of the Base Indenture);
(O) to prepare and deliver to the Indenture Trustee written
instructions to withdraw amounts from the Gain On Sale Account (Section
5.2(e) of the Base Indenture);
(P) to maintain an office or agency in the City of New York for
registration of transfer or exchange of Investor Notes (Section 8.2);
(Q) to obtain and preserve the Issuer's qualification to do business
in each jurisdiction in which the failure to so qualify would have a
material adverse effect on the business and operations of the Issuer or
which qualification shall be necessary to protect the validity and
enforceability of the Indenture, the Investor Notes and any instrument or
agreement included in the Issuer Assets (Section 8.4 of the Base
Indenture);
(R) to deliver notice to the Indenture Trustee and the Rating
Agencies of any default under any of the Transaction Documents (Section
8.7(b) of the Base Indenture);
(S) to prepare (for execution by the Issuer) and file all such
supplements and amendments to the Base Indenture and all such UCC
financing statements and continuation statements required to be filed by
the terms of the Indenture and the Transfer Agreement (Sections 8.7(c) and
8.11 of the Base Indenture);
(T) to deliver notice to the Indenture Trustee and the Rating
Agencies of any Potential Amortization Event, Amortization Event,
Potential Termination Event, Termination Event, Event of Default or
Default under any of the Transaction Documents (Section 8.8 of the Base
Indenture);
(U) to deliver notice to the Indenture Trustee and each Rating
Agency of the commencement or existence of any proceeding by or before any
Governmental Authority against or affecting the Issuer which is reasonably
likely to have a material adverse effect on the business, condition
(financial or otherwise), results of operations, properties or performance
of the Issuer or the ability of the Issuer to perform its obligations
under the Indenture or the other Transaction Documents to which it is a
party (Section 8.9 of the Base Indenture);
(V) to deliver to the Indenture Trustee and each Rating Agency, such
information as the Indenture Trustee or such Rating Agency may reasonably
request in connection with the transactions contemplated by the Indenture
(Section 8.10 of the Base Indenture);
(W) to obtain annual Opinions of Counsel in accordance with Section
8.12 of the Indenture (Section 8.12 of the Base Indenture);
3
<PAGE>
(X) to prepare and deliver notice to Investor Noteholders of the
removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee (Section 10.8 of the Base Indenture);
(Y) to monitor the Issuer's obligations as to the satisfaction and
discharge of the Indenture and the preparation of an Officers' Certificate
and the obtaining of the Opinion of Counsel and the Independent
Certificate relating thereto (Section 11.1 of the Base Indenture);
(Z) to obtain Opinions of Counsel with respect to the execution of
supplemental indentures and the mailing to the Investor Noteholders of
notices with respect to such supplemental indentures (Sections 12.1 and
12.2 of the Base Indenture);
(AA) to prepare all Officers' Certificates, Opinions of Counsel and
Independent Certificates with respect to any requests by the Issuer to the
Indenture Trustee to take any action under the Indenture (Section 13.1(a)
of the Base Indenture);
(BB) to prepare and deliver Officers' Certificates and obtain
Independent Certificates, if necessary, for the release of property from
the lien of the Indenture (Section 13.1(b) of the Base Indenture); and
(CC) to record the Indenture, if applicable (Section 13.15 of the
Base Indenture).
(b) Certain Duties of the Issuer with Respect to the Transfer
Agreement. The Administrator agrees to perform the following duties on behalf of
the Issuer under the Transfer Agreement:
(A) to pay to SPV on each Additional Closing Date from amounts
available under the Indenture the Transferred Asset Payment for such
Additional Closing Date (Section 2.3 of the Transfer Agreement); and
(B) to do and perform, from time to time, any and all acts and to
prepare for execution by the Issuer of any and all further instruments
required or reasonably requested by SPV more fully to effect the purposes
of the Transfer Agreement, including the preparation of any financing
statements or continuation statements relating to any Transferred Assets
purchased thereunder for filing under the provisions of the UCC of any
applicable jurisdiction (Section 8.10 of the Transfer Agreement).
(c) Certain Duties of SPV with Respect to the Transfer Agreement.
The Administrator agrees to perform the following duties on behalf of SPV under
the Transfer Agreement:
(A) to prepare (for execution by SPV) and deliver to the Issuer the
Initial Assignment (Section 2.2(a) of the Base Indenture);
4
<PAGE>
(B) to prepare (for execution by SPV) and deliver to the Issuer
Additional Assignments (Section 2.2(b) of the Base Indenture);
(C) to obtain and preserve SPV's qualification to do business in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on the business and operations of SPV or which
qualification shall be necessary to protect the validity and
enforceability of the Transfer Agreement and any instrument or agreement
included in the Transferred Assets (Section 6.1 of the Transfer
Agreement);
(D) to prepare (for execution by SPV) and file all such UCC
financing statements and continuation statements required to be filed by
the terms of the Transfer Agreement (Sections 6.4(c), 7.1, 7.3 and 8.10 of
the Transfer Agreement);
(E) to deliver notice to the Issuer, the Indenture Trustee and the
Rating Agencies of any Potential Termination Event (Section 6.5 of the
Transfer Agreement);
(F) to deliver notice to the Issuer, the Indenture Trustee and each
Rating Agency of the commencement or existence of any proceeding by or
before any Governmental Authority against or affecting SPV which is
reasonably likely to have a material adverse effect on the business,
condition (financial or otherwise), results of operations, properties or
performance of SPV or the ability of SPV to perform its obligations under
the Transfer Agreement or the other Transaction Documents to which it is a
party (Section 6.6 of the Transfer Agreement);
(G) to deliver to the Issuer, the Indenture Trustee and each Rating
Agency, such information as the Issuer, the Indenture Trustee or such
Rating Agency may reasonably request in connection with the transactions
contemplated by the Transfer Agreement (Section 6.7 of the Transfer
Agreement); and
(H) to mark SPV's computer files, if any, to reflect the transfer of
the Transferred Assets to the Issuer (Section 7.2 of the Transfer
Agreement).
3. Indemnification of Indenture Trustee. The Administrator hereby
agrees to pay to the Indenture Trustee $500 per month pursuant to the Fee
Schedule between the Indenture Trustee and the Administrator. The Indenture
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Administrator agrees to reimburse the Indenture
Trustee for all reasonable out-of-pocket expenses incurred or made by the
Indenture Trustee, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Indenture Trustee's
agents, counsel, accountants and experts. The Administrator hereby agrees to
indemnify the Indenture Trustee against any and all loss, liability or expense
(including the reasonable fees of counsel) incurred by it in connection with the
administration of the trust under the Indenture and the performance of its
duties thereunder.
5
<PAGE>
The Administrator's payment obligations to the Indenture Trustee
pursuant to this Section 3 shall survive the resignation or termination of the
Indenture Trustee and the discharge of the Indenture. When the Indenture Trustee
incurs expenses after the occurrence of a Default specified in Section 8.1(f) of
the Base Indenture with respect to the Issuer, the expenses are intended to
constitute expenses of administration under the Bankruptcy Code or any other
applicable federal or state bankruptcy, insolvency or similar law.
4. Additional Duties; Additional Information. Subject to Section 9
of this Agreement, and in accordance with the directions of the Issuer or SPV,
the Administrator shall administer, perform or supervise the performance of such
other activities in connection with the Issuer Assets and the Transaction
Documents as are not covered by any of the foregoing provisions and as are
expressly requested by the Issuer or SPV, as the case may be, and are reasonably
within the capability of the Administrator. The Administrator shall furnish to
the Issuer or SPV from time to time such additional information regarding the
Issuer Assets and the Transaction Documents as such party shall reasonably
request.
5. Records. The Administrator shall maintain appropriate books of
account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer or SPV at
any time during normal business hours.
6. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement on behalf of the Issuer and, as
reimbursement for its expenses related thereto, the Administrator shall be
entitled to receive a fee for each Monthly Period in an amount equal to 0.01%
per annum of the Required Asset Amount with respect to each Series of Investor
Notes Outstanding on the last day of the immediately preceding Monthly Period
(calculated for the actual number of days elapsed during such period over a
360-day year), payable by the Holders of the Investor Notes of each Series in
accordance with the related Indenture Supplement on each Payment Date. As
compensation for the performance of the Administrator's obligations under this
Agreement on behalf of SPV and, as reimbursement for its expenses related
thereto, the Administrator shall be entitled to receive a fee for each Monthly
Period in an amount equal to $1,000, payable by SPV on each Payment Date only to
the extent of any distributions received by SPV on account of its Common
Membership Interest on such Payment Date.
7. Use of Subcontractors. The Administrator may contract with other
Persons to assist it in performing its duties under this Agreement, and any
performance of such duties by a Person identified to the Indenture Trustee in an
Officer's Certificate of the Administrator shall be deemed to be action taken by
the Administrator. Any such contract shall not relieve the Administrator of its
liability and responsibility with respect to the duties to which such contract
relates.
8. Transactions with Affiliates. In carrying out the foregoing
duties or any of its other obligations under this Agreement, the Administrator
may enter into transactions or otherwise deal with any of its Affiliates;
provided, however, that the terms of any such transactions or dealings shall be
in accordance with any directions received from the Issuer and
6
<PAGE>
the Indenture Trustee and shall be, in the Administrator's opinion, no less
favorable to the parties hereto than would be available from unaffiliated
parties.
9. Indemnification. The Administrator shall indemnify and hold
harmless the Issuer, the Indenture Trustee, the SPV and their respective
directors, officers, agents and employees (collectively, the "Indemnified
Parties") from and against any loss, liability, expense, damage or injury
suffered or sustained by reason of any acts, omissions or alleged acts or
omissions arising out of the activities of the Administrator pursuant to this
Agreement, including but not limited to any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim;
provided, however, that the Administrator shall not indemnify any Indemnified
Party if such acts, omissions or alleged acts or omissions constitute bad faith,
negligence or willful misconduct by such Indemnified Party. The indemnity
provided herein shall survive the termination of this Agreement and the removal
of the Administrator.
10. Independence of the Administrator. Unless otherwise provided in
the Transaction Documents, the Administrator shall be an independent contractor
and shall not be subject to the supervision of the Issuer or SPV with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Indenture Trustee, the
Administrator shall have no authority to act for or represent the Indenture
Trustee in any way and shall not otherwise be deemed an agent of the Indenture
Trustee.
11. No Joint Venture. Nothing contained in this Agreement (i) shall
constitute the Administrator and any of the Issuer or SPV as members of any
partnership, joint venture, association, syndicate, unincorporated business or
other separate entity, (ii) shall be construed to impose any liability as such
on any of them or (iii) shall be deemed to confer on any of them any express,
implied or apparent authority to incur any obligation or liability on behalf of
the others.
12. Other Activities of Administrator. Nothing herein shall prevent
the Administrator or its Affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other person or entity even though such person or entity may engage in business
activities similar to those of the parties hereto.
13. Term of Agreement; No Resignation.
(a) This Agreement shall continue in force until the termination of
the Indenture and the LLC Agreement in accordance with their respective terms
and the payment in full of all obligations owing thereunder, upon which event
this Agreement shall automatically terminate.
(b) The Administrator shall not resign from the obligations and
duties imposed hereunder.
14. Notices. Any notice, report or other communication given
hereunder shall be in writing and addressed of follows:
7
<PAGE>
(a) if to the Issuer, to:
Greyhound Funding LLC
c/o Global Securitization Services, LLC
25 West 43rd Street, Suite 704
New York, NY 10036
Attention: President
Telecopier No.: (212) 302-8767
(b) if to SPV, to:
Raven Funding LLC
c/o Global Securitization Services, LLC
25 West 43rd Street, Suite 704
New York, NY 10036
Attention: President
Telecopier No.: (212) 302-8767
(c) if to the Administrator, to:
PHH Vehicle Management Services, LLC
900 Old Country Road
Garden City, New York 11530
Telecopier: (516) 222-3751
Attention: General Counsel
(d) If to the Indenture Trustee, to:
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Capital Markets Fiduciary Services, VMS Auto Lease Backed
Securitization
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, delivered by
overnight courier or hand-delivered to the address of such party as provided
above.
15. Amendments. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, SPV and the
Administrator with any consents required pursuant to Section 12.2 of the Base
Indenture
16. Successors and Assigns. This Agreement may not be assigned by
the Administrator unless such assignment is previously consented to in writing
by the Issuer, SPV and the Indenture Trustee and subject to the satisfaction of
the Rating Agency Condition with
8
<PAGE>
respect to each Series of Outstanding Notes and each series of Preferred
Membership Interests. An assignment with such consent and satisfaction, if
accepted by the assignee, shall bind the Each of the parties hereto acknowledges
that the Issuer has pledged all of its rights under this Agreement to the
Indenture Trustee on behalf of the Investor Noteholders pursuant to the
Indenture and (ii) SPV has pledged all of its rights under this Agreement to the
Issuer pursuant to the Transfer Agreement.
17. Governing Law. This agreement and the rights and obligations of
the parties hereunder shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York.
18. Heading. The Section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
19. Counterparts. This Agreement may be executed in counterparts,
each of which when so executed shall be an original, but all of which together
shall constitute but one and the same agreement.
20. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
21. Nonpetition Covenants. 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 Investor Notes and the redemption of all series of
Preferred Membership Interests, it will not institute against, or join any other
Person in instituting against, any of the Issuer or SPV 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. The provisions of this Section 21 shall survive the termination
of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
GREYHOUND FUNDING LLC
By:______________________________________
Name:
Title:
9
<PAGE>
RAVEN FUNDING LLC
By:______________________________________
Name:
Title:
PHH VEHICLE MANAGEMENT SERVICES, LLC
By:______________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By:______________________________________
Name:
Title:
10
<PAGE>
EXHIBIT 5.1
August 30, 1999
Avis Rent A Car, Inc.
900 Old Country Road
Garden City, NY 11530
Ladies and Gentlemen:
We have acted as special counsel to Avis Rent A Car, Inc. (the "Company") in
connection with the Registration Statement on Form S-4 (the "Registration
Statement") to be filed with the Securities and Exchange Commission in
connection with the registration under the Securities Act of 1933, as amended,
of $500 million aggregate principal amount of 11% Senior Subordinated Notes due
2009 of the Company (the "New Notes") to be offered and issued by the Company
and guaranteed by Avis Rent A Car System, Inc., Avis International, Ltd., Avis
Management Services, Ltd., Avis Caribbean, Limited, Avis Asia and Pacific,
Limited, Avis Enterprises, Inc., Avis Service, Inc., Avis Lube, Inc., Avis
Leasing Corporation, Rent-A-Car Company, Incorporated, Reserve Claims Management
Co., Avis Fleet Leasing and Management Corporation, PHH Vehicle Management
Services LLC, Dealers Holdings, Inc., Williamsburg Motors, Inc., Edenton Motors,
Inc., Wright Express LLC, PHH Canadian Holdings, Inc., PHH Deutschland, Inc.,
PHH/Paymentech LLC, FAH Company, Inc. (collectively, the "Subsidiary
Guarantors), under an Indenture dated as of June 30, 1999 by and among the
Company, the Subsidiary Guarantors and The Bank of New York, as Trustee (the
"Indenture").
Upon the basis of the foregoing, we are of the opinion that, upon issuance
thereof in the manner described in the Registration Statement, the New Notes
will be valid and binding obligations of the Company and will be entitled to the
benefits of the Indenture, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization and by general equitable principles
(regardless of whether the issue of enforceability is considered in a proceeding
in equity or at law). Additionally, upon issuance of the New Notes in the manner
described in the Registration Statement, the New Notes will constitute valid and
binding obligations of the Subsidiary Guarantors, respectively, and will be
entitled to the benefits of the Indenture, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization and by general
equitable principles (regardless of whether the issue of enforceability is
considered on a proceeding in equity or at law).
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Prospectus which is part of the Registration Statement.
Very truly yours,
/s/ White & Case LLP
TBG:PA:MO:AI
<PAGE>
Exhibit 10.20
INFORMATION TECHNOLOGY SERVICES AGREEMENT
BY
AND
BETWEEN
PHH VEHICLE MANAGEMENT SERVICES, LLC
AND
CENDANT CORPORATION
<PAGE>
TABLE OF CONTENTS
Article Page
- ------- ----
1. DEFINITIONS .......................................................... 1
2. SCOPE OF SERVICES .................................................... 4
2.1 Description of Services ........................................ 4
2.2 Additional Cendant Services .................................... 4
3. CHARGES AND PAYMENT .................................................. 4
3.1 Invoicing and Payments ......................................... 4
3.2 Taxes .......................................................... 5
3.3 Disputed Charges ............................................... 5
3.4 Pro-ration ..................................................... 5
4. MANAGEMENT ........................................................... 5
4.1 Account Team for VMS ........................................... 5
4.2 Cendant Management Process ..................................... 6
4.3 VMS Authorized Users ........................................... 6
4.4 VMS Responsibilities ........................................... 7
4.5 Use of Subcontractors .......................................... 8
4.6 Reports and Meetings ........................................... 8
4.7 VMS Audit Rights ............................................... 9
5. PERFORMANCE STANDARDS ................................................ 9
5.1 Performance Standards in General ............................... 9
5.2 Periodic Review ................................................ 10
5.3 Measurement and Monitoring Tools ............................... 10
6. RESPONSIBILITY FOR RESOURCES ......................................... 10
6.1 Software License ............................................... 10
6.2 International Considerations ................................... 10
6.3 Hardware ....................................................... 11
6.4 VMS Third Party Software ....................................... 11
7. SAFEGUARDING OF DATA; CONFIDENTIALITY ................................ 11
7.1 VMS Data ....................................................... 11
7.2 Safeguarding of VMS Data ....................................... 12
7.3 Confidentiality ................................................ 12
8. INDEMNITIES .......................................................... 14
8.1 Cendant Indemnities ............................................ 14
8.2 VMS Indemnities ................................................ 14
8.3 Infringement ................................................... 15
8.4 Additional Indemnities ......................................... 15
<PAGE>
8.5 Indemnification Procedures ..................................... 15
8.6 Exclusive Remedy ............................................... 16
8.7 Subrogation .................................................... 16
9. REPRESENTATIONS, WARRANTIES AND COVENANTS ............................ 16
9.1 Software Rights ................................................ 16
9.2 Viruses ........................................................ 16
9.3 Disabling Code ................................................. 17
9.4 Pass-Through Warranties ........................................ 17
9.5 Disclaimer ..................................................... 17
10. LIMITATION ON LIABILITY .............................................. 17
10.1 Limitation on Liability ........................................ 17
10.2 Force Majeure .................................................. 18
11. CENDANT INSURANCE AND RISK OF LOSS ................................... 19
11.1 Cendant Insurance .............................................. 19
11.2 VMS Insurance .................................................. 19
11.3 Risk of Loss ................................................... 19
12. TERM AND TERMINATION ................................................. 20
12.1 Termination for Cause .......................................... 20
12.2 Cendant Termination for Cessation of Business .................. 20
12.3 Termination for Insolvency ..................................... 21
12.4 Extension of Termination Effective Date ........................ 21
12.5 Termination Assistance ......................................... 21
12.6 Unrecovered Allowable Costs .................................... 21
13. DISPUTE RESOLUTION ................................................... 22
13.1 Dispute Resolutions ............................................ 22
13.2 Continued Performance .......................................... 22
13.3 Governing Law; Jurisdiction .................................... 22
14. GENERAL ............................................................... 23
14.1 Binding Nature; No Assignment .................................. 23
14.2 Timeliness ..................................................... 23
14.3 Right to Perform Services for Others ........................... 23
14.4 Entire Agreement; Amendment .................................... 23
14.5 Counterparts ................................................... 23
14.6 Headings ....................................................... 23
14.7 Non-Hiring ..................................................... 23
14.8 Notices ........................................................ 24
14.9 Severability ................................................... 24
14.10 Consents and Approvals ......................................... 24
14.11 No Waiver of Default ........................................... 24
14.12 Media Releases ................................................. 25
14.13 Survival ....................................................... 25
14.14 No Third Party Beneficiaries ................................... 25
14.15 Compliance with Laws and Regulations ........................... 26
-ii-
<PAGE>
ATTACHMENTS:
SCHEDULE Al: Data Center And Systems Services
SCHEDULE A2: Data Communications Services
SCHEDULE A3: Help Desk Services
SCHEDULE B: Performance Standards
Exhibit B1: Key Batch Jobs
SCHEDULE C: Fees For Computer Services
Exhibit C1: Cost Allocation Basis
SCHEDULE D: Cendant Supplied Third Party Software
SCHEDULE E: VMS Third Party Software
SCHEDULE F: Transition Assistance
Exhibit Fl: Specific Termination Assistance Services
-iii-
<PAGE>
INFORMATION TECHNOLOGY SERVICES AGREEMENT
This Information Technology Services Agreement together with the applicable
Schedules and Appendices incorporated herein or which may be added hereto from
time to time by agreement of the parties (all of which collectively constitutes
the Agreement between the parties, the legal terms and conditions of which
shall be referred to as the "Agreement"), effective as of June 29, 1999 (the
"Effective Date"), is entered into by and between PHH Vehicle Management
Services, LLC, a Delaware limited liability company with its principal place of
business located at 307 International Circle, Hunt Valley, MD 21030 ("VMS"), and
Cendant Corporation, a Delaware corporation with a place of business located at
6 Sylvan Way, Parsippany, NJ 07054 ("Cendant").
WITNESSETH
WHEREAS, VMS is a wholly owned subsidiary of Cendant; and
WHEREAS, VMS is a provider of fully integrated fleet management services
to corporate clients and government agencies on a worldwide basis and more fully
described herein; and
WHEREAS, Cendant provides information technology services to VMS
including, but not limited to, information technology processes, methodologies,
report management and system functionality requirements of VMS; and
WHEREAS, VMS desires to obtain from Cendant such processing systems and
services and other information systems and services for VMS's business
operations and Cendant desires to provide such systems and services, all in a
manner consistent with this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Parties agree as follows:
ARTICLE 1. DEFINITIONS
"Account Team for VMS" shall have the meaning ascribed to such term in Section
4.1.
"Additional Services" shall have the meaning ascribed to such term in Section
2.2.
"Affiliate" for either party shall mean, with respect to any entity, any other
entity Controlling, Controlled by or under common Control with such entity.
"Cendant Managed Network" shall mean that portion of the Network managed by
Cendant at VMS's request, as further described in Section 1(a) of Schedule A.
"Cendant Software" shall mean the Cendant proprietary software and the Cendant
Third Party Software.
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"Cendant Third Party Software" shall mean The software which is licensed by
Cendant or its Affiliates from third party vendors and which is used to provide
the Services, and shall include any maintenance commitment contained in the
agreement or license governing same. Software owned by Cendant or its Affiliates
shall not be deemed Cendant Third Party Software. The Cendant Third Party
Software as of the Effective Date is listed on Schedule D.
"Confidential Information" shall have the meaning ascribed to such term in
Section 9.3(a)(2).
"Control" and its derivatives shall mean, with regard to any entity, the legal,
beneficial, or equitable ownership, directly or indirectly, of 50% or more of
the capital stock (or other ownership interest, if not a corporation) of such
entity ordinarily having voting rights.
"Data Center" shall mean the facility or facilities, including the related
Equipment, Software and personnel, which Cendant uses to provide the Services,
as further described in Schedule A. As of the Effective Date, the Data Center is
primarily located in Garden City, New York.
"Equipment" shall mean the computer equipment used by Cendant to provide the
Services, including associated attachments, features, accessories and peripheral
devices.
"Financial Plan" shall have the meaning ascribed to such term in Section
4.2(a)(l).
"Help Desk" shall have the meaning ascribed to such term in Schedule A4.
"Network" shall mean the network comprised of communications equipment,
components and services for data communications used to transmit and receive
data signals among VMS Locations, the Data Center and other locations mutually
agreed upon by the Parties in accordance with this Agreement.
"Network Access" shall mean communication lines, services, and equipment
required to provide and maintain a connection between VMS's data terminal
equipment and Cendant's Network Node site.
"Network Node" shall mean the Cendant-provided communications front-end, router,
multiplexor or similar processor. The Data Center will contain a Network Node.
Multiple processors at any given site are considered part of the Network Node at
that site.
"New Systems" shall mean any System that is not included in the scope of this
Agreement as of the Effective Date.
"Out-of-Pocket Expenses" shall mean (i) reasonable out-of-pocket costs and
expenses owed by Cendant to third parties that are expenses of the type that
would be incurred on VMS's behalf and/or (ii) expenses that shall be actually
paid or otherwise satisfied by Cendant and be reimbursed by VMS.
"Parties" means Cendant and VMS collectively.
"Party" shall mean either VMS or Cendant, as the case may be.
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"Performance Standards" shall have the meaning ascribed to such term in Section
5.1.
"Port" shall mean Cendant-provided equipment, which provides the entry point to
the Cendant Network Node for a given Network Access line. Port includes any
equipment or portions thereof, which function to connect a master modem or DSU
to the Network Node. Port also includes a portion of the Network Node
input-output hardware.
"Prime Rate" shall mean the rate of interest per annum publicly announced from
time to time by The Chase Manhattan Bank as its prime rate in effect as its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Services" shall have the meaning ascribed to such term in Section 2.1.
"Software" shall mean Systems Software and any other Software comprising part of
the Systems.
"Systems" shall mean the hardware/software/firmware components required to
provide data processing and information management (including data bases,
systems and application software) for VMS's business operations and any newly
developed hardware/software/firmware developed hereunder and used by Cendant to
provide Services hereunder.
"Systems Software" shall mean those software programs that perform tasks basic
to the functioning of the Equipment and which are required to operate the
Software or otherwise support the provision of Services by Cendant. Systems
Software includes operating systems, systems utilities, data security software,
telecommunication monitors and database managers.
"Third Party Development" shall have the meaning ascribed to such term in
Section 6.1(b).
"Unrecovered Allowable Costs" shall have the meaning ascribed to such term in
Section 12.6.
"VMS" shall mean PHH Vehicle Management Services, LLC, Wright Express
Corporation and Cendant Business Answers PLC.
"VMS Authorized User" shall mean an Affiliate and its agents and representatives
which have, with VMS's consent, access to use the Systems or any part thereof
for the conduct of the VMS business operation.
"VMS Data" shall mean information entered by or on behalf of VMS or a VMS
Authorized User into the Systems or derived from such information through use of
the Systems.
"VMS Owned Software" shall mean software owned or developed by VMS or a VMS
Affiliate as of the Effective Date during the Term and designated by VMS for
Cendant to support and/or operate for VMS pursuant to the terms and conditions
of this Agreement. VMS Owned Software as of the Effective Date including, but is
not limited to, Software listed in Schedule E.
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"VMS Software" shall mean, collectively, VMS Owned Software and VMS Third Party
Software.
"VMS Third Party Software" shall mean the software licensed by VMS or an VMS
Affiliate from third party licensors as of the Effective Date and during the
Term and designated by VMS for Cendant to support and/or operate for VMS
pursuant to the terms and conditions of this Agreement. VMS Third Party Software
as of the Effective Date is listed in Schedule F.
Other terms used in this Agreement are defined in the context in which they are
used and shall have the meanings there indicated.
ARTICLE 2. SCOPE OF SERVICES
2.1 Description of Services.
(a) Pursuant to the terms and conditions of this Agreement, Cendant shall
provide to VMS information technology services including, but not limited to
those described in Schedule A for VMS's business operations including vehicle
leasing, advisory services, card processing and fleet management services in the
U.S., Canada, Europe and such other locations as the parties may agree to from
time to time (the "Services"). Such Services shall be rendered at Cendant's Data
Center described in Schedule A and/or in the provisions of this Agreement.
(b) Cendant will control the time, place and manner of its performance of
the Services, except as otherwise provided in this Agreement. Except as may be
necessary on an emergency basis to maintain the continuity of the Services
Cendant shall not, without VMS's consent, and such consent shall not be
unreasonably withheld or delayed, modify (i) the composition or nature of the
Services or (ii) the manner in which the Services are provided or delivered, if
such modification or modifications would have a cost in excess of $100,000.00
per year or a material adverse effect on the business of VMS. If Cendant must
replace a line, circuit, equipment or service provided to VMS by Cendant or
another vendor, except in an emergency, Cendant shall not remove, or ask the
other vendor to remove, the old service until the replacement has been installed
and accepted by VMS or Cendant, where appropriate.
2.2 Additional Cendant Services. In the event VMS wants Cendant to provide
additional services which are not part of the Services ("Additional Services"),
and, if Cendant is willing to provide such Additional Services, the Parties
shall execute a mutually agreeable addendum to this Agreement (the "Addendum")
with respect to such Additional Services. Additional Services and the Addendum
shall be subject to the terms and conditions set forth in this Agreement.
Additional Services shall be provided and charged to VMS only upon VMS's prior
approval.
ARTICLE 3. CHARGES AND PAYMENT
3.1 Invoicing and Payments. VMS shall pay Cendant the charges set forth in
Schedule C for the Services. Cendant shall invoice VMS for all amounts payable
by VMS in respect of
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any calendar month pursuant to Schedule C no later than the sixth business day
of such month and VMS shall pay Cendant for undisputed invoiced amounts within
thirty (30) days following receipt of such invoice.
3.2 Taxes. VMS will pay, or reimburse Cendant for, all sales, use, transfer,
privilege, excise, value added, general sales, or other taxes, whether foreign,
national, state or local, however designated, which are levied or imposed by
reason of or are related to the Services contemplated hereby including
withholding taxes, excluding, however, income and franchise taxes on profits,
which may be levied by any taxing jurisdiction in the United States against
Cendant.
3.3 Disputed Charges. VMS shall pay all undisputed charges when such payments
are due under this Article. VMS may withhold payment of a particular charge, or
portion of a charge, where VMS in good faith disputes the entirety of that
charge or that portion. The parties shall be bound by the dispute resolution
provision set forth in Article 14 hereof with regard to all disputed charges.
Such withholding shall not extend to any portion of the charge not included in
said good faith dispute. In the event VMS withholds payment erroneously,
interest at the per annum rate of the Prime Rate plus three percent (3%) shall
be assessed from the date such withheld amounts were in fact due and payable.
3.4 Pro-ration. Charges payable periodically hereunder shall be prorated for any
period less than the specified period.
ARTICLE 4. MANAGEMENT
4.1 Account Team for VMS.
(a) The "Account Team for VMS" shall consist of a senior Cendant
representative from each major area of Services, designated as Data Center, Help
Desk and Cendant Managed Network. It shall be led by a Cendant Account Executive
who need not be one of the individuals designated from the major Service areas.
The organizational structure and responsibilities of the Account Team for VMS
shall be subject to change from time to time upon the mutual agreement of the
Parties. The Account Team for VMS shall have primary Cendant responsibility for
(i) overall management of the relationship between VMS and Cendant and (ii)
communications between VMS and Cendant.
(b) The responsibilities of the Account Team for VMS shall be to (i)
understand VMS's business requirements to the extent necessary to perform the
Services, as those requirements have been disclosed by VMS to Cendant; (ii)
discuss with the VMS project executive issues and concerns of VMS regarding the
Services; (iii) take appropriate steps so that the Services are performed in
accordance with the provisions of this Agreement; (iv) monitor the status of
efforts to resolve problems in delivery of the Services and report such status
to VMS; (v) review the status of previously reported VMS change and service
requests; (vi) respond to VMS requests for information and meet with VMS
representatives at VMS's request and (vii) generally work with other VMS
employees during the Term.
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4.2 Cendant Management Process.
(a) Annual Financial Plan.
(1) VMS will provide Cendant in a format that is reasonably
acceptable to Cendant and VMS, no later than August 30th of each year, VMS's
projected volume of transactions for the next succeeding calendar year (each
such calendar year, a "Planning Period"), and shall reply within ten (10) days
to Cendant's request for additional information regarding such projections, in
order to assist Cendant in developing an annual financial plan (the "Financial
Plan") reflecting the projections for costs for the Services for VMS for such
Planning Period. VMS acknowledges that Cendant will be making decisions
regarding required staffing levels (the "Staffing Plan") based on the
information provided by VMS and the final Financial Plan; therefore, any
required replacements and/or reductions of personnel from such Staffing Plan
which are requested after the commencement of the Planning Period must be
submitted in writing and approved by Cendant.
(2) provided VMS supplies the information contemplated in
subparagraph (1) above in a timely manner, Cendant shall prepare the Financial
Plan by September 30th of each year during the Term, unless the Parties mutually
agree otherwise in writing. Cendant shall consider such information provided by
VMS in developing each Financial Plan; provided, however, that VMS shall have
right of approval over only those portions of the Financial Plan that represent
costs chargeable solely to VMS or to VMS and an Affiliate, (i.e., costs that are
not to be shared among customers other than Affiliate of VMS).
(3) As VMS may reasonably request, Cendant shall provide VMS with
information regarding the items contained in the Financial Plan and will review
and discuss such items with VMS.
(4) Until otherwise notified by VMS, and except as set forth in the
Financial Plan, Cendant shall obtain VMS's written approval prior to incurring
costs greater than $100,000 for a service to be provided to VMS. If VMS fails to
provide written approval within five (5) business days after Cendant provides
notice of such cost or commitment, Cendant will not be liable for any costs,
lost opportunities and/or deadlines missed.
(b) Management of Technology. Cendant shall review annually with VMS the
short- and long-term technology and operations plans for providing information
services to VMS, and shall provide VMS with such other plans and information
regarding Cendant's technology direction as VMS reasonably requests. Cendant
shall consider VMS's reasonable comments with respect to such technology plans
and operations, and shall follow VMS's direction with respect to technology
decisions affecting the Services to the extent provided solely to VMS.
4.3 VMS Authorized Users.
(a) Designation By VMS. Cendant shall provide the Services, or portions
thereof, to such VMS Authorized Users as VMS may from time to time designate by
notice to Cendant.
(b) Performance of VMS Obligations. As VMS may from time to time designate
by notice to Cendant, VMS Authorized Users may perform certain of VMS's
obligations with respect to the Services, other than VMS's payment obligations
described in Article 3 and
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Schedule C. Notwithstanding any such designation, VMS shall remain responsible
for the performance of its obligations under this Agreement, and Cendant shall
have direct recourse to VMS if VMS's designees under this Section fail to
perform such obligations. Damages suffered by VMS Authorized Users as a result
of a breach by Cendant shall be treated as damages of VMS for purposes of this
Agreement.
(c) Responsibility of VMS for VMS Authorized Users. Nothing in this
Article shall relieve VMS of responsibility for its obligations under this
Agreement. VMS shall be responsible for its relationship with VMS Authorized
Users and for their use of the Systems. All usage of the Systems by VMS
Authorized Users under this Agreement shall, for the purpose of calculating
charges due under this Agreement, be deemed to be usage by VMS and Cendant will
bill VMS for all Services provided to VMS Authorized Users. VMS shall be
responsible to pay such charges whether or not it recovers payment from VMS
Authorized Users. Notwithstanding anything to the contrary in this Agreement,
VMS shall be free to offer to VMS Authorized Users the ability, subject to and
limited by VMS's rights and obligations under this Agreement, to use part or all
of the Systems on such terms (including payment) in VMS's sole discretion.
4.4 VMS Responsibilities. In addition to VMS's responsibilities as set forth
elsewhere in this Agreement, whether general or specific, VMS shall be
responsible for performing the following:
(a) VMS shall designate, as of the Effective Date, one individual to whom
all Cendant communications concerning this Agreement may be addressed (the "VMS
Project Executive") and one alternate when the individual designated as the VMS
Project Executive is not available. VMS shall have the right to change the
designation of the individuals who will act as the VMS Project Executive and the
alternate upon prior written notice to Cendant.
(b) VMS shall cooperate with Cendant by, among other things, making
available, as reasonably requested by Cendant, management decisions,
information, approvals and acceptances so that Cendant may accomplish its
obligations and responsibilities under this Agreement.
(c) VMS may establish and thereafter revise appropriate priorities for the
Services, including projects that relate to VMS only. To the extent it does so,
it shall communicate the same to Cendant. VMS recognizes that changes in such
priorities may result in reordering of other priorities to provide the Services
or an increased cost. Cendant shall advise VMS if VMS's proposed establishment
or revision of priorities may result in such reordering or increased cost.
(d) With respect to VMS Data, Cendant shall not be responsible to VMS for
inaccuracies entered into the Systems by VMS and/or any VMS Authorized User.
(e) Cendant may accept as correct, accurate and reliable, without any
further inquiry, all information, data, documents and other records of VMS
delivered, supplied or made available to Cendant hereunder.
VMS agrees that to the extent its failure to meet its obligations set forth in
this Section adversely affects the ability of Cendant to perform any of
Cendant's obligations under this Agreement, Cendant shall be relieved of the
obligations so adversely affected to the extent
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(i) Cendant's nonperformance results from VMS's failure to perform its
responsibilities and (ii) Cendant provides VMS with written notice of such
nonperformance and a reasonable opportunity to correct such nonperformance.
4.5 Use of Subcontractors.
(a) Subject to Subsection (e) hereof, Cendant shall have the right to
subcontract any portion of the Services hereunder to third party contractor(s),
provided, however, that prior to entering into a subcontract with a third party
for services or products that are material to a function provided solely to VMS
or to VMS and an Affiliate of VMS, Cendant shall give VMS reasonable prior
notice, including the identity of the subcontractor and the scope and nature of
the subcontract. If VMS disapproves of the proposed subcontractor, Cendant may
not subcontract that portion of the Services unless VMS has been given a
reasonable opportunity to find a suitable replacement and has failed in its
efforts to do so. The Parties agree the project shall be suspended until either
VMS finds a suitable replacement or the Cendant proposed subcontractor shall
provide such services.
(b) VMS may not use consultants, subcontractors or other third parties to
provide any portion of the Services; provided, however, VMS may, subject to the
terms of this Agreement, use such consultants, subcontractors or other third
parties to develop software or systems which do not directly or indirectly
interface with or affect the Systems, except to accept and utilize VMS Data from
the Systems ("Third Party Development"). Third Party Development shall be either
VMS Owned Software or VMS Third Party Software.
(c) Cendant shall cooperate with VMS consultants, subcontractors and third
party representatives permitted pursuant to this Agreement as reasonably
requested by VMS. VMS shall cooperate with Cendant's authorized consultants,
subcontractors and third party representatives as reasonably requested by
Cendant.
(d) Each Party shall ensure that its consultants, subcontractors and third
party representatives execute a confidentiality agreement that requires the
subcontractor to comply with the confidentiality obligations set forth herein.
Each Party shall provide the other with copies of each such confidentiality
agreement if requested.
(e) Each Party shall remain responsible and hold the other Party harmless
for performance of obligations subcontracted to its subcontractors.
4.6 Reports and Meetings.
(a) General. Subject to this Article, the Parties shall mutually agree
upon periodic meetings to discuss Cendant's Services and the operation of the
Data Center, as such items relate to the Services, and shall mutually agree on
the form of periodic reports from Cendant relating to such items, with each
Party to assume its own expenses related to such meetings.
(b) Reports. Reports shall include a monthly performance report delivered
to VMS within fifteen (15) days after the end of each month, in a form mutually
established by the Parties, describing Cendant's performance of the Services in
the preceding month, including performance with respect to Performance
Standards, status of projects, status of problem resolution efforts, and status
of changes and planned changes for Equipment and/or Software.
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(c) Meetings. Meetings shall include meetings with the Account Team for
VMS (or specific members thereof) as reasonably requested by VMS to discuss the
Services.
4.7 VMS Audit Rights.
(a) Access. Upon reasonable prior written notice, Cendant shall provide to
VMS auditors (including internal audit staff) and other representatives as VMS
may from time to time designate in writing, access at all reasonable times to
the part of any facility at which Cendant is providing the Services, to Cendant
personnel providing the Services, and to data and records relating to the
Services for the purpose of performing audits and inspections of Cendant, to
verify the accuracy of Cendant's charges to VMS, provided that any such audits
may not be requested more frequently than once a year. VMS shall bear the
expense of any such audit. Notwithstanding the foregoing, nothing herein
contained shall prohibit VMS from conducting its internal audit activities as
conducted by it as of the Effective Date of this Agreement.
(b) Cooperation. Cendant shall provide to such auditors such assistance,
as they reasonably require, including installing and operating audit software.
The cost of all services rendered by Cendant in connection with any such audit,
and any computer time to operate such audit software, shall be charged as a cost
herein. VMS's auditors and other representatives shall comply with applicable
security requirements in effect at the Data Center or any other Cendant
facility.
(c) Fees. If, as a result of such audit, VMS determines that Cendant has
charged VMS amounts in excess of the charges to be remitted in accordance with
Article 3, VMS shall notify Cendant of the amount of such overcharge and Cendant
shall provide a credit to VMS for the amount of such overcharge. In the event of
a dispute over the result of any such audit, the amount so disputed shall be
deposited by the party to be charged with an escrow agent acceptable to both
parties and pursuant to an escrow agreement acceptable to both parties and such
escrow agent until such time as the dispute is resolved.
ARTICLE 5. PERFORMANCE STANDARDS
5.1 Performance Standards in General.
(a) Cendant shall at a minimum perform the Services in accordance with the
performance standards described in Schedule B (the "Performance Standards").
(b) Cendant shall use commercially reasonable efforts to remedy any
Performance Standards failure.
(1) Such efforts shall include promptly (i) investigating the causes
of the problem and discussing investigation results with VMS, (ii) undertaking
to correct the problem and its underlying cause and to begin meeting the
Performance Standards, and (iii) advising VMS of the status of remedial efforts.
(2) In the event Performance Standards relating to the Data Center
are not met over a particular year of the Term, in addition to the other
remedies VMS may have under this Agreement, VMS may (i) create a plan, jointly
with Cendant, to improve the performance of the Data Center; or (ii) if the
failure to meet the Performance Standards
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occurs during two consecutive years of the Term, have an independent third party
mutually agreeable to the Parties review the situation and propose solutions,
which shall be implemented as promptly as practicable, provided both Parties
agree to such solutions.
5.2 Periodic Review. Commencing upon the Effective Date, and at least annually
thereafter, the Parties shall review the Performance Standards and shall make
adjustments and additions to them as mutually agreed upon by the Parties as
appropriate, to reflect changes in technology and service platforms, changes in
the Services or in use, including a material increase in VMS's use of the Data
Center or enhancements, modifications, additions or replacements in the
Services.
5.3 Measurement and Monitoring Tools. Cendant shall implement for VMS
measurement and monitoring tools and procedures required to measure for each
appropriate time period Cendant's performance of the Services against the
applicable Performance Standards in accordance with Schedule B, and shall
provide VMS with the reports required under Schedule B. To the extent that VMS
requests any measurement and monitoring tools additional to those in place as of
the Effective Date of this Agreement or implemented by Cendant for the benefit
of its customers generally, the cost of such tools shall be borne by VMS.
ARTICLE 6. RESPONSIBILITY FOR RESOURCES
6.1 Software License.
Cendant Software.
(a) All Cendant Software is, or shall be, and shall remain, the exclusive
property of Cendant or its third party licensor(s), as applicable, and VMS shall
have no rights or interests in or to the Cendant Software, except as set forth
in this Article. VMS acknowledges that Cendant and the assigns of Cendant shall
have the right to obtain and hold in their own corporate name any intellectual
property rights in and to Cendant Software. VMS agrees to execute any documents
or to take any other actions as may be necessary, or as Cendant may request in
order to obtain usage rights, to acknowledge and/or confirm the licenses
described above and the rights of Cendant to any such licensed product.
(b) If VMS engages a third party to develop any third party development as
permitted hereunder, Cendant shall provide to such third party information
regarding the Systems in order for such Third Party Development to interface
with the Systems sufficiently to retrieve required VMS Data and shall grant to
such third party a limited, non-exclusive, non-transferable, temporary right
during the Term to use such information provided by Cendant for the sole benefit
of VMS and for the sole purpose of performing such work during the Term of such
third party's engagement by VMS. Such rights Cendant may grant pursuant to this
Article are subject to compliance with the requirements of Article 4.5(d).
6.2 International Considerations.
(a) Certain Software and technical data to be provided, and certain
transactions contemplated, under this Agreement may be subject to export
controls under the laws and
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regulations of the United States and other countries. No Party shall export or
re-export any such items or any direct product thereof or undertake any
transaction in violation of any such laws or regulations. VMS shall be
responsible for obtaining any such export control authorizations to the extent
applicable to VMS and/or VMS Authorized Users. Cendant shall be responsible for
obtaining any such export control authorizations to the extent applicable to
Cendant.
(b) Each Party shall be responsible for its compliance with all laws and
regulations relating to data protection and privacy and/or transferred data flow
as may be applicable to its use of the Systems for its own benefit.
6.3 Hardware. Cendant shall have control or charge of, and shall be responsible
for, the means, methods, techniques, sequences or procedures of construction,
fabrication, procurement, shipment, delivery or installation, in connection with
all Equipment required for the Services. To that end, Cendant shall, in its sole
discretion, from time to time during the Term, upgrade and/or replace Equipment
used in connection with the Systems in an effort to address hardware
obsolescence or the need for increased capacity. VMS shall be advised of all
Equipment upgrades and the costs therefor.
6.4 VMS Third Party Software. Prior to the Effective Date, the Parties will
verify that VMS has provided Cendant with access to and a copy of all VMS Third
Party Software (including source code, object code, system documentation and
related work product to the extent permitted by the underlying license and
necessary for the Services) for Cendant to operate for VMS's benefit.
(a) Cendant shall manage and utilize VMS Third Party Software for the
purpose of providing Services to VMS, and shall comply with all reasonable and
customary use restrictions and obligations of nondisclosure imposed on VMS by
any license for such VMS Third Party Software to the extent made known to
Cendant.
(b) All charges, if any, under the licenses for such VMS Third Party
Software, including, but not limited to royalties, license fees, access fees or
user fees, shall be the sole responsibility of VMS. Upon termination of this
Agreement, VMS shall be solely responsible for all subsequent charges, if any,
under the licenses for VMS Third Party Software. Notwithstanding the foregoing,
any charges incurred in connections with obtaining access for Cendant to any of
the VMS Third Party Software listed on Schedule D as of the Effective Date shall
be paid by VMS.
(c) Except as otherwise requested or approved by VMS, Cendant shall cease
all use of VMS Third Party Software upon termination of this Agreement, except
as necessary for Cendant to provide termination assistance.
ARTICLE 7. SAFEGUARDING OF DATA: CONFIDENTIALITY
7.1 VMS Data. VMS Data shall be and shall remain the property of VMS. Upon (i)
VMS's request, or (ii) the termination of this Agreement for any reason and at
VMS's expense, such VMS Data or other VMS Confidential Information shall either
be promptly returned to VMS by Cendant in the form in which maintained by
Cendant (or in such other form reasonably requested by VMS to the extent VMS
pays for the expense thereof) or, if VMS so elects, shall be destroyed. VMS
Data shall not be utilized by Cendant for any
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purpose other than rendering the Services to VMS under this Agreement, computing
charges to VMS, or as required by law, regulation, or order of a court or
regulatory agency or other authority having jurisdiction therefor.
Notwithstanding the foregoing, during the Term of this Agreement, Cendant and
its affiliates will have the right to use the VMS Data that has not been
precluded pursuant to a separate client listing, which shall be updated by VMS
on an as needed basis.
7.2 Safeguarding of VMS Data. Cendant shall maintain reasonable safeguards
against the destruction, loss or alteration of VMS Data in the possession of
Cendant which are no less rigorous than those maintained by Cendant for its own
information of a similar nature. VMS at its sole cost and expense, shall have
the right to establish additional backup security for data, and to keep in its
possession backup VMS Data and files thereof; provided, however, that Cendant
shall have access to such backup data and data files as reasonably required by
Cendant for the provision of Services hereunder.
7.3 Confidentiality.
(a) Confidential Information.
(1) Cendant and VMS each acknowledge to the other that it possesses
and will continue to possess information that has been developed or received by
it and that has commercial value in its business or that of its customers and is
not in the public domain.
(2) Except as otherwise specifically agreed herein or elsewhere in
writing by the Parties, "Confidential Information" shall mean all information of
a Party acquired by the other Party, that is marked confidential, restricted,
proprietary or with a similar designation.
(3) In the case of Cendant, Confidential Information also shall
include, subject to the provisions of this Article and whether or not marked as
described above and except to the extent such information is owned by VMS or
constitutes VMS Confidential Information under this Agreement, the Systems, any
other Software provided to VMS by or through Cendant to the extent treated as
confidential by Cendant, all user and system documentation developed by or for
Cendant that is related to any of the foregoing.
(4) In the case of VMS, Confidential Information also shall include,
subject to the provisions of this Article and whether or not marked as described
above and except to the extent such information is owned by Cendant or
constitutes Cendant Confidential Information under this Agreement, VMS Owned
Software and all business information of VMS and VMS Authorized Users regarding
planning, pricing, results and operations and VMS Data.
(b) Obligations.
(1) To prevent disclosing to any other entity the Confidential
Information of the other party, VMS and Cendant shall each use at least the same
degree of care as it employs to avoid unauthorized disclosure, publication or
dissemination of its own information of a similar nature.
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(2) Neither Cendant nor VMS shall (i) make any use of the
Confidential Information of the other except as contemplated by this Agreement,
(ii) acquire any right in or assert any lien against the Confidential
Information of the other except as expressly provided hereunder, or (iii) refuse
for any reason (including a default or material breach of this Agreement by the
other Party) to return the other Party's Confidential Information (including all
copies thereof) promptly to it if requested to do so.
(3) Upon termination of this Agreement, each Party shall (except as
otherwise provided in this Agreement) return or destroy and certify to the
destruction of, as the owner may direct, all materials in whatever medium that
embody the owner's Confidential Information or any information derived
therefrom, including all copies thereof.
(4) The Parties shall take reasonable steps to ensure that their
employees and employees of third parties providing services, equipment and/or
software comply with these confidentiality provisions.
(c) Exclusions.
(1) This Article 7.3 shall not apply to any information which the
recipient demonstrates (i) at the time of disclosure to it was in the public
domain; (ii) after disclosure to it became part of the public domain through no
fault of the receiving Party; (iii) was in the possession of the receiving Party
at the time of disclosure to it, without confidentiality restriction; (iv) after
disclosure to it, was received from a third party who had a right to disclose
such information to it free of any confidentiality obligation; or (v) was
independently developed by the receiving Party, without reference to
Confidential Information of the furnishing Party.
(2) A Party shall not be considered to have breached its obligations
under this Article for disclosing Confidential Information to the extent such
disclosure is required to satisfy any legal requirement of a competent
government body provided that, immediately upon receiving any such request or
demand and to the extent it may legally do so, such Party advises the other
Party promptly and prior to making such disclosure, so that the other Party may
interpose an objection to such disclosure or take such other action as it deems
appropriate to protect the Confidential Information.
(3) Cendant's receipt of Confidential Information from VMS under
this Agreement, shall not limit or restrict assignment or reassignment of
Cendant employees within Cendant or between Cendant and its Affiliates, subject
to the following: (i) such employees shall remain bound by the confidentiality
provisions of this Agreement and (ii) Cendant shall use good faith efforts to
implement VMS's reasonable recommendations on policies for maintaining the
confidentiality of VMS's Confidential Information.
(d) No Implied Rights. Nothing contained in this Article shall be
construed as obligating a Party to disclose its Confidential Information to the
other Party, or as granting to or conferring on a Party, expressly or by
implication, any right or license to the Confidential Information of the other
Party, except as expressly provided herein.
(e) Party's Own Information. Nothing in this Article shall be deemed to
restrict the disclosure or use that a Party may make of its own information,
except as expressly provided herein.
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ARTICLE 8. INDEMNITIES
8.1 Cendant Indemnities. Except to the extent of VMS' negligence or willful
misconduct, Cendant shall indemnify, defend and hold harmless VMS, its
Affiliates, and their officers, directors, employees, agents, successors, and
assigns, in accordance with the indemnification procedures herein, from any
losses, liabilities and damages and related costs and expenses (including
reasonable attorneys' fees) arising from or in connection with any of the
following:
(a) Cendant's failure to observe or perform any duties or obligations to
be observed or performed by Cendant under (i) Cendant Third Party Software
license agreements or service contracts or (ii) any VMS Third Party Software
license agreement a copy of which was transmitted to Cendant prior to the first
alleged failure, except in each case failures consented to by VMS in writing;
(b) Any claims of infringement of any U.S. patent, trade secret, copyright
or other proprietary rights, alleged to have occurred (i) because of use of the
Systems by VMS or VMS Authorized Users (excluding any claims based on VMS
Software), or (ii) as a result of Cendant's activities under this Agreement,
except for such activities for which VMS indemnifies Cendant under this Article;
(c) Cendant's breach of its obligations with respect to VMS's Confidential
Information;
(d) Cendant's breach of its obligations under this Agreement; or
(e) Cendant's negligence or willful misconduct in performing its
obligations under this Agreement.
8.2 VMS Indemnities. Except to the extent of Cendant's negligence or willful
misconduct, VMS shall indemnify, defend and hold harmless Cendant, its
Affiliates, and their officers, directors, employees, agents, successors and
assigns, in accordance with the indemnification procedures herein, from any
losses, liabilities and damages and related costs and expenses (including
reasonable attorneys' fees) arising from or in connection with any of the
following;
(a) VMS's failure to observe or perform any duties or obligations to be
observed or performed (i) prior to the Effective Date by VMS under the VMS Third
Party Software license agreements and (ii) after the Effective Date by VMS or
Cendant under any VMS Third Party Software license agreement not disclosed to
Cendant prior to such failure;
(b) Any claims of infringement of any U.S. patent, trade secret, copyright
or other proprietary rights, alleged to have occurred as a result of (i)
Software provided to Cendant by VMS or (ii) VMS's activities under this
Agreement, including modifications made to the Systems by VMS and/or its
Affiliates;
(c) Any claims made directly by VMS Authorized Users against Cendant
relating to their use of the Systems (without limitation to VMS's rights to make
such claims), and any claims by third parties arising out of or relating to
misuse of the Systems or VMS Third Party Software by VMS Authorized Users;
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(d) VMS's breach of its obligations with respect to Cendant's Confidential
Information;
(e) Violations by VMS Authorized Users of any of the obligations of VMS
under this Agreement to the extent VMS would be liable under this Agreement; or
(f) Any claims made by an employee or consultant of VMS against Cendant
arising out of or related to Cendant's monitoring, surveilling, investigating,
testing or accessing such employee or consultant's computer activity through use
of an identification number, code or password, at VMS's request provided such
activity is conducted in accordance with VMS's procedures and guidelines which
have been provided to Cendant by VMS.
8.3 Infringement. Except to the extent that VMS has expressly agreed to the use
of such item notwithstanding such risk, if any item used by Cendant to provide
the Services, including any portion of the Systems or of projects developed for
VMS, but not including any item provided by VMS or VMS Third Party Software,
becomes, or in Cendant's reasonable opinion is likely to become, a basis for an
injunction precluding Cendant from providing Services for VMS, then in addition
to indemnifying VMS as provided in this Article, at Cendant's sole cost, expense
and option, Cendant shall forthwith: (i) secure the right to continue using the
item or (ii) replace or modify the item to make it non-infringing, provided that
any such replacement or modification will not degrade the performance or quality
of the Services. If an infringing item is so provided by VMS then all
indemnifying costs shall be borne by VMS.
8.4 Additional Indemnities. The Parties shall indemnify, defend and hold
harmless one another, and their Affiliates, officers, directors, employees,
agents, successors, and assigns, in accordance with the procedures described in
this Agreement, from any and all losses and threatened losses arising from or in
connection with any of the following:
(a) the death or bodily injury of any agent, employee, customer, business
invitee, or business visitor or other person to the extent that it is caused by
the tortious conduct of the indemnifying Party;
(b) the damage, loss or destruction of any real or tangible personal
property to the extent that it is caused by the tortious conduct of the
indemnifying Party; and
(c) any claim, demand, charge, action, cause of action, or other
proceeding asserted against the indemnitee but to the extent that it results
from an act or omission of the indemnifying Party in its capacity as an employer
of the person asserting the claim.
8.5 Indemnification Procedures. With respect to third party claims subject to
the indemnities in this Article, the following procedures shall apply:
(a) The indemnitee shall promptly after acquiring knowledge thereof notify
the indemnifying Party. The indemnitee shall give the indemnifying Party full
opportunity to control the response thereto and the defense thereof including
settlement, provided that the indemnitee shall have the right to approve any
settlement or any decision not to defend. The indemnitee's failure to promptly
give notice shall affect the indemnifying
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Party's obligation to indemnify the indemnitee only to the extent the
indemnifying Party's rights are materially prejudiced thereby. The indemnitee
may participate, at its own expense, in any defense and any settlement directly
or through counsel of its choice.
(b) If the indemnifying Party elects not to defend, the indemnitee shall
have the right to defend or settle the claim as it may deem appropriate, at the
cost and expense of the indemnifying Party, which shall promptly reimburse the
indemnitee for all such costs, expenses and settlement amounts.
8.6 Exclusive Remedy. The indemnification rights of each indemnified Party
pursuant to Articles 8.1, 8.2 and/or 8.4 shall be the exclusive remedy of such
indemnified Party against the indemnifying Party with respect to the claims to
which such indemnification relates.
8.7 Subrogation. In the event that an indemnifying Party shall be obligated to
indemnify an indemnitee pursuant to foregoing indemnities, the indemnifying
Party, shall, upon payment of such indemnity in full, be subrogated to all
rights of the indemnitee with respect to the claims to which such
indemnification relates.
ARTICLE 9. REPRESENTATIONS, WARRANTIES AND COVENANTS
9.1 Cendant represents covenants and warrants that:
(a) Cendant warrants that any Services provided herein shall be performed
in a timely and professional manner by qualified personnel and that such
Services shall conform to the standards generally observed in the industry for
similar services. Cendant shall, at its expense, promptly correct any defects,
errors or non-conformities by supplying VMS with such corrective codes and
making such additions, modification, replacement or adjustment as may be
necessary to keep the Systems operating in conformity with the warranties
herein.
(b) The Cendant Proprietary Software does not and will not, and the
Services will not, infringe upon the proprietary rights of any third party
(except such infringements as may result from modifications by VMS or VMS
Agents).
(c) Prior to using any software or equipment to provide the Services,
Cendant shall verify that such software or equipment (a) has been properly
installed, (b) is operating in accordance with its specifications and (c) is
performing in a reliable manner.
(d) Cendant shall maintain the Systems so that they operate in accordance
with their specifications, including (a) maintaining the machines in good
operating condition, subject to normal wear and tear (b) undertaking repairs and
preventive maintenance on the machines in accordance with the applicable
machine's manufacturer's recommendations and performing software maintenance in
accordance with the applicable software vendor's documentation and
recommendations.
9.2 Authorization. Each Party represents and warrants to the other that:
(a) It has the requisite corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated by this Agreement; and
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(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by the Board of Directors of each Party, and will not constitute (i)
a violation of any judgment, order, or decree, (ii) a default under any contract
by which it or any of its assets are bound (except to the extent excluded or
otherwise contemplated hereby) or (iii) an event that would, with notice or
lapse of time, or both, constitute such a default. Each Party shall provide the
other with a certification evidencing the Board of Directors approval.
9.3 Viruses. Each Party shall use its best efforts to ensure that no viruses or
similar items ("Viruses") are introduced into any element of the Software and/or
Systems. If a Virus is introduced into any such element by other than a Party,
its employees, agents or contractors, the other Party shall use its best efforts
to assist the Party in reducing the effect of the Virus and, if the Virus causes
a loss of operational efficiency or data, to assist such Party to the same
extent to mitigate and restore such losses as quickly as feasible. If a Virus is
introduced into any such element by a Party, its employees, agents or
contractors, such Party, at its own expense, shall use its best efforts to
assist the other in reducing the effect of the Virus and, if the Virus causes a
loss of operational efficiency or data, to assist the Party to the same extent
to mitigate and restore such losses as quickly as feasible.
9.4 Disabling Code. Without the prior written consent of the other Party,
neither Party shall insert into the Systems any code that would disable or
otherwise shut down all or any portion of the Services. Neither Party shall
invoke any disabling code embodied in the Systems or the VMS Software at any
time, including upon expiration or termination of this Agreement, for any
reason, without the other's prior written consent.
9.5 Pass-Through Warranties. Cendant shall pass through to VMS, to the extent
possible, all available warranties including extended applicable Original
Equipment Manufacturer, Year 2000 warranties (if any) and additional warranties
for the hardware and agrees to acknowledge all pre-existing warranties for all
VMS hardware for which Cendant provides maintenance. Cendant is responsible for
maintenance of all information required to make claims on such warranties. New
Original Equipment Manufacturer equipment, parts and consumables shall be
utilized by Cendant for warranty repair or replacement throughout the life of
the warranty. Cendant shall file all warranty claims. Cendant shall provide
reasonable assistance in enforcing all such warranties, provided that, VMS
reimburses Cendant's costs and expenses.
9.6 DISCLAIMER. EXCEPT AS SPECIFIED HEREIN, NEITHER VMS NOR CENDANT MAKES ANY
OTHER WARRANTIES WITH RESPECT TO THE SERVICES OR THE SYSTEMS AND EACH EXPLICITLY
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A SPECIFIC PURPOSE.
ARTICLE 10. LIMITATION ON LIABILITY
10.1 Limitation on Liability.
(a) IN NO EVENT SHALL A PARTY BE LIABLE FOR ANY LOSS OF BUSINESS, COST
SAVINGS (ACTUAL OR PROJECTED, IT BEING UNDERSTOOD THAT A CLAIM FOR ACTUAL
EXPENDITURES WILL NOT BE EXCLUDED AS A CLAIM FOR COST SAVINGS),
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PROFITS, OR OTHER INDIRECT DAMAGES, SPECIAL DAMAGES, CONSEQUENTIAL DAMAGES OR
PUNITIVE DAMAGES, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES.
(b) IN NO EVENT SHALL CENDANT OR ANY OTHER ENTITY BE LIABLE FOR ANY LOSS,
DAMAGE OR EXPENSE RESULTING FROM OR ARISING OUT OF (i) ANY DELAY, FAILURE OR
INADEQUACY OF THE SYSTEMS OR ANY MODIFIED VERSION THEREOF, OR OF THE DATA CENTER
OR ANY PART THEREOF INCLUDING THE EQUIPMENT; (ii) ANY FAILURE OF OR DELAY IN
DEVELOPMENT, DELIVERY, INSTALLATION, OR MAINTENANCE BY CENDANT OR ANY OTHER
ENTITY OR (iii) ANY FAILURE OF THE SYSTEMS OR ANY MODIFIED VERSION THEREOF, TO
FUNCTION OR PERFORM AS CONTEMPLATED HEREUNDER, ALL FOR ANY REASON WHATSOEVER,
EXCEPT TO THE EXTENT ARISING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
CENDANT.
(c) NO CAUSE OR CLAIM MAY BE ASSERTED AGAINST EITHER PARTY MORE THAN TWO
YEARS AFTER IT HAS ACCRUED.
10.2 Force Majeure.
(a) Neither Party shall be liable for any failure or delay in the
performance of its obligations under this Agreement if and to the extent such
failure or delay is caused, directly or indirectly, by fire, flood, earthquake,
elements of nature or acts of God, acts of war, terrorism, riots, civil
disorders, rebellions or revolutions in any country, strikes, lockouts, or labor
difficulties (legal or illegal) or any other cause beyond the reasonable control
of such Party, including failures or fluctuations in electrical power, heat,
light, air conditioning or telecommunications equipment, and such failure shall
not be deemed a default under this Agreement or grounds for termination hereof.
(b) In such event the non-performing Party will be excused from further
performance or observance of the obligation(s) so affected for as long as such
circumstances prevail and such Party continues to use its best efforts to
recommence performance or observance whenever and to whatever extent possible
without delay. A Party so delayed in performance shall immediately notify the
other Party to whom performance is due by telephone (to be confirmed in writing
within two days of the inception of such delay) and describe at a reasonable
level of detail the circumstances causing such delay.
(c) If any of the above enumerated circumstances substantially delay
performance of the Services, then at VMS's option:
(1) if such delay extends for more than three consecutive days, VMS
may procure such Services from an alternate source for so long as the delay in
performance shall continue;
(2) if such delay extends for more than seven consecutive days, VMS
may terminate any portion of this Agreement so affected on ten (10) days'
written notice to Cendant, and the charges payable under this Agreement shall be
equitably adjusted to reflect those terminated Services;
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(3) if such delay extends more than twenty-one (21) consecutive
days, VMS may terminate this Agreement on thirty (30) days written notice to
Cendant.
ARTICLE 11. INSURANCE AND RISK OF LOSS
11.1 Cendant Insurance. Cendant shall provide and maintain during the Term at
least the insurance described in this Article.
(a) Commercial general liability coverage with a combined single limit of
$3,000,000 per occurrence, the first $1,000,000 of which may be self retained by
Cendant. Coverage shall be broad form, and shall include coverage for personal
injury and completed operations. VMS shall be endorsed as an additional insured
with respect to Cendant's operations under this Agreement.
(b) All risk property coverage, in an amount equal to the replacement cost
of all real and personal property (including all equipment and media) of VMS
under Cendant's care, custody and control, including flood and earthquake
coverage when available, boiler and machinery coverage, and extra expense
coverage. VMS shall be named as a loss payee as its interests appear.
(c) All insurance shall be obtained from a carrier maintaining an A.M.
Best rating of "A" or higher.
(1) A certificate of insurance evidencing each of the coverages
under this Article shall be delivered to VMS as soon as possible after the
Effective Date.
(2) Such certificate shall:
(i) name VMS as an additional insured or loss payee where
provided above; and
(ii) contain an agreement by the insurance company(ies)
issuing the policy(ies) that such insurance shall respond as primary insurance
to any insurance carried by VMS, and that such insurance will not be canceled,
terminated or modified without at least thirty (30) days prior written notice to
VMS.
(3) Upon the renewal of any policy or policies required by this
Article, a new certificate of the renewal of such insurance conforming to the
above requirements shall be delivered to VMS.
11.2 VMS Insurance. VMS shall provide and maintain during the Term commercial
general liability coverage with a combined single limit of not less than
$3,000,000 per occurrence, the first $1,000,000 of which may be self retained by
VMS. Coverage shall be applicable to VMS's operations under this Agreement.
11.3 Risk of Loss. Except as otherwise provided under this Agreement, each Party
shall be responsible for risk of loss of, and damage to, any Equipment or
Software in its possession or under its control.
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ARTICLE 12. TERM AND TERMINATION
The Term of this Agreement will begin on the Effective Date and will remain in
effect for an initial period of thirty (30) months and shall be automatically
extended thereafter unless terminated by either party at any time after the
eighteenth month by providing one (1) year's written notice.
12.1 Termination for Cause.
(a) By VMS. VMS may, by giving written notice to Cendant, terminate this
Agreement for cause as of a date specified in the notice of termination, in the
event that:
(1) Subject to this Article, Cendant breaches any of its material
duties or obligations under this Agreement, and such breach is not substantially
cured within ninety (90) days of notice of breach by VMS to Cendant;
(2) With respect to a breach (other than a payment default) that
Cendant demonstrates to VMS's reasonable satisfaction cannot with due diligence
be cured within ninety (90) days of notice thereof, but can be cured within 180
days, Cendant fails to (A) proceed promptly and diligently to correct the
breach, (B) develop within thirty (30) days of notice of breach a complete plan
for curing the breach or (C) cure the breach within 180 days of notice of breach
to Cendant;
(3) Cendant breaches any of its material duties or obligations under
this Agreement, and such breach cannot be cured within 180 days of notice of
breach to Cendant.
(4) If there is a change of control of Cendant whereby Cendant is
acquired by a direct competitor of VMS, which is involved in a fleet management
business, then VMS may terminate this Agreement upon 180 days notice to Cendant.
(b) By Cendant. Cendant may, by giving written notice to VMS, terminate
this Agreement for cause as of a date specified in the notice of termination, in
the event that:
(1) Except as provided in Section 12.1(b)(2) hereof, VMS fails to
pay any undisputed amount when due, or disputed amount within ten (10) days
after the resolution of the dispute, to Cendant hereunder and (i) such failure
has not been cured within ten (10) business days following notice of such
failure from Cendant, and (ii) a similar default has occurred within the six
months prior to such default;
(2) VMS breaches its obligations under Article 3 and such breach is
not substantially cured within thirty (30) days of notice of breach to VMS; and
(3) VMS willfully discloses any material component or element of the
source or object code of the Systems in breach of its obligations of
confidentiality set forth in this Agreement, and such breach is not
substantially cured within thirty (30) days of notice of breach to VMS.
12.2 Cendant Termination for Cessation of Business. Cendant shall have the
right; in the event Cendant determines to cease providing Services to all
customers, to terminate this Agreement at any time upon at least twelve (12)
months prior written notice to VMS.
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12.3 Termination for Insolvency. In the event that either Party hereto becomes
or is declared insolvent or bankrupt, is the subject of any proceedings relating
to its liquidation, insolvency or for the appointment of a receiver or similar
officer for it, makes an assignment for the benefit of all or substantially all
of its creditors, or enters into an agreement for the composition, extension, or
readjustment of all or substantially all of its obligations, then the other
Party hereto may, by giving written notice thereof to such Party, terminate this
Agreement as of a date specified in such notice of termination.
12.4 Extension of Termination Effective Date. VMS may extend at any time the
effective date of a termination it has exercised one or more times by giving
notice of same, provided that the total of all such extensions shall not exceed
180 days following the original effective date of termination.
12.5 Termination Assistance.
(a) Commencing upon any notice of termination (including notice based upon
breach or default by VMS), and continuing through the effective date of
termination (as such date may be extended pursuant to Article 12.4), Cendant
shall provide to VMS, or at VMS's request to VMS's designee, the termination
assistance set forth herein. All termination assistance provided by Cendant
shall be charged to VMS at Cendant's costs as set forth in Schedules C and F.
(b) This Article 12.5(b) shall survive termination of this Agreement.
Subject to Article 12.6(c), for a period of twelve (12) months following the
effective date of termination under this Agreement, Cendant shall provide at
VMS's request, to VMS or VMS's designee, any or all of the Services being
performed by Cendant prior to such effective date, including any transition
assistance. To the extent Cendant is to perform Services under this Article
12.5(b), the provisions of this Agreement shall be applicable as such provisions
would have been applicable to such Services prior to the effective date of such
termination, except that the compensation to be paid by VMS to Cendant therefor
shall be as set forth in Schedules C and F.
(c) If this Agreement is terminated by Cendant for breach by, or
insolvency of, VMS, then as a condition to Cendant's obligation to provide
termination assistance before and/or after termination, VMS shall first pay to
Cendant all undisputed amounts then outstanding to Cendant and shall thereafter,
on the first day of each month, pay to Cendant an amount equal to Cendant's
reasonable estimate of the total amount payable to Cendant for termination
assistance for that month, which amount shall be communicated in writing by
Cendant to VMS not later than ten (10) days prior to the first day of the month.
At the end of each month, the amounts paid under such estimate shall be compared
with the amounts due and owing under this Agreement and VMS shall be credited or
invoiced for the difference as appropriate.
12.6 Unrecovered Allowable Costs. Upon any termination of this Agreement by
Cendant pursuant to Article 12.1(b), VMS shall be obligated to pay, in addition
to all other amounts otherwise payable by it at such time, all Unrecovered
Allowable Costs existing at the time of termination. Such costs shall include,
but not be limited to, unfulfilled lease terms, services contracts, maintenance
contracts and/or de-installation costs. Cendant shall provide evidence of such
Unrecovered Allowable Costs to VMS upon VMS written request.
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ARTICLE 13. DISPUTE RESOLUTION
13.1 Dispute Resolution. Any dispute, claim or controversy arising out of or
relating to this Agreement or the breach, termination or validity hereof
("Dispute") shall be resolved as provided in this Article, with each Party
bearing its own costs.
(a) VMS or Cendant (each a "Party") may commence proceedings hereunder by
delivering a written notice to the other Party providing a reasonable
description of the Dispute to the other (the "Demand").
(b) Within ten (10) days following receipt by a Party of a Demand, the
Dispute shall be referred to representatives of the parties for resolution. Such
representative of each party shall have no direct operational responsibility for
the matters contemplated by this Agreement (the "Representatives"). The
Representatives shall promptly meet in a good faith effort to resolve the
Dispute. If the Representatives do not agree upon a resolution within thirty
(30) calendar days after receipt by a Party of a Demand, each of VMS and Cendant
shall be free to exercise the remedies available to them under Article 13.1(c).
(c) The Parties hereby agree to submit all Disputes not resolved by
negotiation pursuant to Article 13.1(b) for resolution by arbitration under the
terms hereof, which arbitration shall be final, conclusive and binding upon the
parties, their successors and assigns. Except as expressly provided otherwise in
this Agreement, the arbitration shall be conducted in New York, New York by
three arbitrators (the "Panel") in accordance with the JAMS/Endispute
Comprehensive Arbitration Rules and Procedures then in effect as amended herein.
The arbitration shall be governed by the United States Arbitration Act, 9
U.S.C., Article 1, et seq. Notwithstanding the foregoing (i) each Party shall
have the right to examine the books and records of the other Party that are
reasonably related to the Dispute; (ii) each Party shall provide to the other,
reasonably in advance of any hearing, copies of all documents which a Party
intends to present in such hearing; (iii) each party shall be allowed to conduct
reasonable discovery through written requests for information, document
requests, requests for stipulation of fact, and depositions, the nature and
extent of which discovery needs of the Parties and the desirability of making
discovery expeditious and cost effective. The Panel shall complete all hearings
not later than ninety (90) days after its appointment. The award shall be in
writing and shall specify the facts and law on which it is based. The
arbitrators shall not be empowered to award to any party any consequential
damages, lost profits or punitive damages in connection with any Dispute and
each party hereby irrevocably waives any right to recover such damages. Judgment
upon any award may be entered in any count having jurisdiction thereof.
(d) In the case of a Dispute, prior drafts of this Agreement shall not be
used to interpret the provisions of this Agreement.
13.2 Continued Performance. Each Party agrees to continue performing its
obligations under this Agreement in good faith while any dispute is being
resolved, without prejudice to each Party's right to terminate this Agreement.
13.3 Governing Law; Jurisdiction. This Agreement and performance under it shall
be governed by and construed in accordance with the laws of the State of New
York, without reference to principles of conflicts of laws.
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ARTICLE 14. GENERAL
14.1 Binding Nature; No Assignment. This Agreement shall be binding on the
Parties hereto and their respective successors and assigns to the extent
assignment is permitted hereunder. Neither Party may, nor shall it have the
power to, assign this Agreement without the prior consent of the other.
Notwithstanding the foregoing, either Party may assign its rights and
obligations under this Agreement without the approval of the other Party (i) to
any entity which acquires all or substantially all of the assets of such Party
or (ii) to any successor in a merger or acquisition of a Party which entity
assumes all of such Party's obligations or (iii) to any entity which is an
Affiliate of such Party, provided that such assignment shall not relieve the
Party of any of its obligations under this Agreement.
14.2 Timeliness. The Parties shall perform their obligations under this
Agreement in a timely manner, subject to the other provisions of this Agreement.
14.3 Right to Perform Services for Others. VMS recognizes that Cendant personnel
providing Services to VMS under this Agreement may perform services similar to
the Services from time to time for other customers; provided, however, that such
personnel shall remain bound by the confidentiality provisions of this
Agreement, and shall not disclose VMS Confidential Information except as
provided in this Agreement.
14.4 Entire Agreement; Amendment. This Agreement, including any Schedules
referred to herein and attached hereto, each of which is incorporated herein for
all purposes, constitutes the entire agreement between the Parties with respect
to the subject matter hereof and supersedes all prior agreements, whether
written or oral, with respect to the subject matter contained in this Agreement.
No change, waiver, or discharge hereof shall be valid unless in writing and
signed by an authorized representative of the Party against which such charge,
waiver, or discharge is sought to be enforced.
14.5 Counterparts. This Agreement may be executed in several counterparts, all
of which taken together shall constitute one single agreement between the
Parties. This Agreement will have no effect, and shall not be binding upon
either Party, until executed and delivered by both and in the absence of such
execution and delivery it shall not constitute a preliminary agreement or
commitment to agree.
14.6 Headings. The article and section headings and the table of contents used
herein are for reference and convenience only and shall not enter into the
interpretation hereof.
14.7 Non-Hiring. Each party agrees that, during the Term of this Agreement and
for a period of one (1) year thereafter, neither such party nor any of its
affiliates will directly or indirectly solicit, encourage or request any
employee of the other party (the "Employer") to work or perform services for
such party or any of such affiliates or any contractor for any of them (other
than pursuant to this Agreement and solely in such employee's capacity as an
employee and on behalf of the Employer) or to leave the employ of the Employer.
Without limiting any rights or remedies the Employer may have for breach of the
foregoing obligation, the Employer shall be entitled (without the necessity of
posting any bond or establishing the inadequacy of damages as a remedy) to an
injunction prohibiting such breach.
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14.8 Notices. All notices under this Agreement shall be in writing and shall be
deemed duly given (i) when delivered by hand, (ii) one (1) day after being given
to an express overnight courier with a reliable system for tracking delivery,
(iii) when sent by confirmed facsimile with a copy sent by another means
specified in this Article 14.10, or (iv) six (6) days after the day of mailing,
when mailed by United States mail, registered or certified mail, return receipt
requested, postage prepaid, and addressed as follows:
In the case of Cendant: With a copy to
Cendant Corporation Cendant Corporation
6 Sylvan Way 6 Sylvan Way
Parsippany, NJ 07054 Parsippany, NJ 07054
Attn: SVP and Corporate Counsel Attn: Chief Information Officer
In the case of VMS: With a Copy to:
PHH Vehicle Management Services, LLC PHH Vehicle Management Services, LLC
307 International Circle 307 International Circle
Hunt Valley, MD 21030 Hunt Valley, MD 21030
Attn: Chief Information Officer Attn: Vice president
Mail Code - AZ General Counsel-Mail Code - CP
A Party may from time to time change its address or designee for notification
purposes by giving the other prior written notice of the new address or designee
and the date upon which it will become effective, which in any event shall be no
sooner than five days from receipt of notice.
14.9 Severability. In the event that any provision of this Agreement conflicts
with the law under which this Agreement is to be construed or if any such
provision is held invalid by a court with jurisdiction over the Parties, such
provision shall be deemed to be restated to reflect as nearly as possible the
original intentions of the Parties in accordance with applicable law. The
remainder of this Agreement shall remain in full force and effect.
14.10 Consents and Approvals.
(a) Except where expressly provided as being in the sole discretion of a
Party, where agreement, approval, acceptance, consent, or similar action by
either Party is required under this Agreement, such action shall not be
unreasonably delayed or withheld.
(b) An approval or consent given by a Party under this Agreement shall not
relieve the other Party from responsibility for complying with the requirements
of this Agreement, nor shall it be construed as a waiver of any rights under
this Agreement, except as and to the extent otherwise expressly provided in such
approval or consent.
14.11 No Waiver of Default.
(a) A delay or omission by either Party hereto to exercise any right or
power under this Agreement shall not be construed to be a waiver thereof. A
waiver by either of the Parties of any of the covenants to be performed by the
other or any breach thereof shall be in writing and shall not be construed to be
a waiver of any succeeding breach thereof or of any other covenant herein
contained.
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(b) Except as expressly limited by this Agreement, all remedies provided
for in this Agreement shall be cumulative and in addition to and not in lieu of
any other remedies available to either Party at law, in equity or otherwise.
14.12 Media Releases.
(a) All media releases and public announcements made by either Party
relating to this Agreement or the subject matter of this Agreement, but
excluding (i) technical or service type announcements, (ii) system bulletins
intended by a Party solely for internal distribution, (iii) bulletins made
solely within and related to a vehicle leasing system's operation and (iv)
bulletins designed to meet legal or regulatory requirements beyond the
reasonable control of the disclosing Party, shall be coordinated with and
approved by the other Party in writing prior to any release.
(b) Notwithstanding the foregoing, Cendant may list VMS as a customer and
VMS may list Cendant as a service provider, and either Party may describe in
general terms in proposals or other marketing materials the services provided
under this Agreement that are provided by Cendant to VMS through the Systems.
14.13 Survival. The Parties agree that the provisions of this Agreement which by
their terms clearly contemplates continued performance after such termination or
expiration shall survive the termination or expiration of this Agreement for any
reason.
14.14 No Third Party Beneficiaries. This Agreement shall be deemed to create
rights solely in VMS and Cendant. This Agreement shall not be deemed to create
any rights in third parties, including suppliers and customers of a Party, or
VMS Authorized Users, or to create any obligations of a Party hereunder to any
such third parties.
INTENTIONALLY LEFT BLANK BY BOTH PARTIES
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14.15 Compliance with Laws and Regulations. Each Party shall perform its
obligations under this Agreement in a manner that complies with applicable laws,
regulations, ordinances and codes, including identifying and procuring required
permits, certificates, approvals and inspections. If a charge of non-compliance
by a Party with any such laws, regulations, ordinances or codes occurs, such
Party shall promptly notify the other Party of such charges in writing.
IN WITNESS WHEREOF, VMS and Cendant have each caused this Agreement to be signed
and delivered by its duly authorized representative, all as of the date first
set forth above.
PHH VEHICLE MANAGEMENT CENDANT CORPORATION
SERVICES, LLC
By: /s/ Kevin M. Sheehan By: /s/ James E. Buchman
---------------------------- ----------------------------------
Name: Kevin M. Sheehan Name: James E. Buchman
-------------------------- -------------------------------
Title: Title: Vice Chairman, General Counsel
--------------------------- and Assistant Secretary
-------------------------------
Dated: Dated:
-------------------------- --------------------------------
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Exhibit 10.21
Corporate Services Transition Agreement
THIS AGREEMENT is made and entered into this 30th day of June 1999,
(hereinafter referred to as "Effective Date") by and between Cendant Operations,
Inc., a Delaware corporation, with its principal place of business at 9 West
57th Street, New York, New York 10019 (together with any subsidiaries and
affiliates of Cendant, "Cendant"), and Avis Fleet Leasing and Management
Corporation, a Texas corporation with its principal place of business at 900 Old
Country Road, Garden City, New York 11530 ("Avis Fleet"). Cendant and Avis Fleet
are hereinafter referred to jointly as the "Parties" and individually as
"Party".
WITNESSETH:
WHEREAS, PHH Corporation, an affiliate of Cendant ("PHH"), PHH Holdings
Corporation, a subsidiary of PHH ("PHH Holdings"), Avis Rent A Car, Inc. and
Avis Fleet have entered into an Agreement and Plan of Merger and Reorganization
dated as of May 22, 1999 (the "Merger Agreement") pursuant to which PHH and PHH
Holdings are transferring and assigning to Avis Fleet PHH's fleet and fuel card
businesses (the "Transferred Businesses") in a merger of PHH Holdings and Avis
Fleet (the "Merger"), in exchange for the assumption by Avis Fleet of certain
liabilities and obligations associated with the Transferred Businesses and the
issuance by Avis Fleet to PHH of shares of Avis Fleet preferred stock on such
terms and conditions as are contained therein; and
WHEREAS, the Merger Agreement provides that Cendant and Avis Fleet shall
enter into an agreement relating to certain transition services to be provided
by Cendant to Avis Fleet with respect to the Transferred Businesses and this
Agreement is entered into in order to fulfill that provision.
NOW, THEREFORE, in consideration of the mutual and reciprocal agreements
and promises hereinafter set forth and for other good and valuable
consideration, the Parties agree as follows.
ARTICLE I
SERVICES
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1.01 Provision of Services. Subject to the terms and conditions of this
Agreement, Cendant agrees to provide to Avis Fleet and Avis Fleet agrees to
purchase from Cendant those services described in Exhibit A attached hereto on
the terms set forth on Exhibit A, and those Other Services described in Section
1.02 which Cendant specifically agrees to provide to Avis Fleet upon the terms
agreed upon by the parties in an amendment to Exhibit A (collectively referred
to herein as "Services").
1.02 Miscellaneous Services. From time to time, Avis Fleet may find it desirable
to request, in addition to the Services described in Exhibit A, additional
services to be made available to Avis Fleet by Cendant (hereinafter referred to
as "Other Services"). It is understood and agreed, however, that Cendant is
under no obligation to provide Avis Fleet with any such Other Services. Upon
Avis Fleet's written request for such Other Services, the Parties shall commence
negotiations in good faith in order to arrange for the delivery thereof and
compensation therefor and terms upon which such other Services shall be
provided. The Parties' obligations with respect to providing any such Other
Services shall only become effective upon execution of an amendment to Exhibit A
signed by an officer of each party.
1.03 Nature, Volume and Scope of Services. (a) Cendant will provide Services on
terms which are similar in nature, volume and scope to those which Cendant
provided to the Transferred Businesses immediately prior to the Merger.
(b) Notwithstanding any other provisions of this Agreement, Cendant shall
not be required to provide to Avis Fleet any of the Services agreed to be
provided hereunder to the extent doing so would unreasonably or materially
interfere with the performance of services for Cendant and any business unit or
function of Cendant or otherwise cause an unreasonable or material burden to
Cendant and any business unit or function of Cendant. The parties hereby agree
that no services specifically detailed on Exhibit A to this Agreement are
unreasonable or a material burden to Cendant.
1.04 Subcontracting of Services. Avis Fleet understands that prior to the date
of this Agreement, Cendant may have subcontracted with third parties to provide
services in connection with all or any portion of the Services to be provided
hereunder. Cendant reserves the right to continue to subcontract with third
parties to provide the Services or to enter into new subcontract relationships
for any Service described in Exhibit A. Unless otherwise provided in Exhibit A,
the fees and expenses of such subcontractors used in connection with Services
provided under this Agreement will be charged to Avis Fleet at actual cost
without markup.
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1.05 Avis Fleet Acknowledgment and Representation. Avis Fleet understands that
the Services provided hereunder are transitional in nature and are furnished by
Cendant solely for the purpose of accommodating the transfer of the Transferred
Businesses from Cendant to Avis Fleet. Avis Fleet understands that Cendant is
not in the business of providing Services to third parties and has no long-term
interest in continuing this Agreement. Avis Fleet agrees to make a prompt
transition to its own internal organization or other third party suppliers for
the provision of the Services.
ARTICLE II
TERM AND RENEWAL
2.01 Term of Agreement. Unless otherwise stated in the Exhibit relating to a
specific Service, the term of this Agreement shall commence on June 30, 1999 and
shall expire on December 31, 1999 unless earlier terminated by the Parties as
provided herein.
2.02 Term of Services and Renewal of Services. The term of each Service
identified in Exhibit A shall commence on June 30, 1999 and expire on December
31, 1999 unless earlier terminated as provided herein or specifically provided
otherwise in Exhibit A. The Parties may, upon mutual written agreement, extend
the term of any or all of the Services for additional, successive six (6) month
terms. Unless specifically provided otherwise in Exhibit A, in the event Avis
Fleet desires to renew any Service, Avis Fleet shall provide Cendant with
written notice ("Notice of Service Renewal") sixty (60) days in advance of the
expiration of the Service term, or any renewal term. The Notice of Service
Renewal shall specify which Service(s) Avis Fleet is interested in renewing,
with a description of any requested changes and the terms upon which such
services shall be provided during such renewal term from those terms that are
then described in Exhibit A. Cendant shall respond in writing to Avis Fleet
within fifteen (15) business days following receipt of such Notice of Service
Renewal, and indicate what Service(s), if any, Cendant will agree to provide
during such renewal term and under what terms and conditions such Service(s)
shall be provided. Upon mutual agreement of the Parties, Exhibit A of this
Agreement shall be amended in writing to effect such renewal of Services.
ARTICLE III
COMPENSATION
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3.01 Compensation. Avis Fleet shall pay Cendant compensation for Services based
on the fees and expenses set forth in Exhibit A, or any amendments to Exhibit A,
for each Service. If no fee is specified for a particular Service, the cost of
such Service to Avis Fleet shall be based on the total cost to Cendant of
providing such Service. "Total cost" shall be defined as direct and/or indirect
costs incurred by Cendant as a result of supplying Services to Avis Fleet and
shall be calculated as follows: (depending on which of the following
calculations is most readily determinable for the Service provided): i) usage by
Avis Fleet; ii) Cendant allocations based upon Cendant's standard accounting
practices; or iii) Cendant management estimates of Services provided to Avis
Fleet.
Unless otherwise provided in Exhibit A, the following expenses are included in
the compensation for Services included in Exhibit A:
(i) In the case of employee services provided in connection with the
provision of any Services hereunder, the portion of any employees' salaries and
benefits accrued by Cendant for the period of time during which such employee
services are provided based on the amount of time reasonably estimated by
Cendant that such employees devoted to providing any such employee services to
Avis Fleet.
(ii) For expenses of Cendant employees traveling away from home and
overnight on behalf of Avis Fleet, the actual costs of transportation, meals and
lodging. (Airfare is to be the most economical rate available, but never more
costly than regular carrier coach rate.)
(iii) For long distance telephone calls, facsimile, and telegrams
placed in connection with Services provided under this Agreement, the actual
cost incurred by Cendant.
(iv) For printing, reproduction and postage charges and overnight
courier incurred in connection with Services provided under this Agreement, the
actual cost incurred by Cendant.
(v) For computer services incurred directly in connection with
Services provided under this Agreement, the actual cost incurred by Cendant.
(vi) For supplies, service parts and other materials purchased by
Cendant to perform Services under this Agreement, the actual cost incurred by
Cendant.
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(vii) For automobile mileage charges incurred in connection with
Services provided under this Agreement, the rate of thirty-one cents ($.31) per
mile.
(viii) For equipment leased from third parties in connection with
Services provided under this Agreement, the actual cost incurred by Cendant.
(ix) In addition to, and not in lieu of the foregoing, Avis Fleet
will reimburse Cendant for the "Direct Cost" of providing employee benefits
pursuant to Exhibit A hereto. The "Direct Cost" of providing such employee
benefits to the Employees shall be determined as follows: (A) for all employee
benefits which are "welfare benefits" as defined in Section 3 of ERISA, the
greater of (i) the per-employee estimated and budgeted premium or
premium-equivalent cost applicable to all Cendant employees covered under such
type of coverage and (ii) if such benefits are "self-insured" by Cendant, the
actual costs realized by Cendant in respect of each Employee under such type of
coverage, after giving effect to Cendant's actual losses by virtue of its acting
as a "self-insurer" and (B) for 401(k) company contributions under the Cendant
Corporation Employee Savings Plan, including discretionary company contributions
earned in respect of calendar year 1999 but actually contributed during calendar
year 2000, an amount equal to the contributions actually made by Cendant. Avis
Fleet will also make any other payments or reimbursements set forth in Exhibit
A.
(x) For third party administrative and consulting services incurred
by Cendant in respect of employee benefit plans covering Avis Fleet employees
pursuant to this Agreement, a pro rata portion of the fees charged to Cendant by
such third parties.
3.02 Billing and Payment Terms. Amounts due under this Agreement will be billed
and paid for in the following manner: Statements will be rendered to Avis Fleet
on a monthly basis (and in reasonable detail as reasonably requested by Avis
Fleet) for all Services delivered during the preceding month, and each such
statement shall be payable within thirty (30) days after the date of the
statement. Statements not paid within such thirty (30) day period shall
accumulate interest at the annual rate of ten percent (10%) per annum.
ARTICLE IV
INTERRUPTION OF SERVICES
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Cendant will endeavor to provide uninterrupted Services through the term of this
Agreement and any renewal term agreed upon by the parties. In the event,
however, Cendant or its suppliers are wholly or partially prevented from
providing a Service or Services or if Services are interrupted or suspended, in
either case by reason of any Force Majeure event set forth in Section 13.01, or
Cendant shall deem it necessary to suspend delivery of a Service hereunder for
purposes of inspection, maintenance, repair, or replacement of equipment parts
or structures, Cendant shall not be obligated to deliver such Service during
such periods, provided that Cendant has given, when feasible, reasonable written
notice of the interruption within a reasonable period of time, explaining the
reason, purpose and likely duration therefor, and provided further, that with
respect to Cendant scheduled interruptions or maintenance, Cendant shall have
provided, when feasible, reasonable advance written notice thereof. If such
interruption of Services has a significant negative impact on Avis Fleet's
business operation and Cendant cannot readily reinstate the Service involved,
Cendant will use reasonable efforts to assist Avis Fleet in securing alternative
services to minimize such negative impact on Avis Fleet.
ARTICLE V
PERSONNEL
5.01 Supervision and Compensation. Cendant shall select, employ, pay, supervise,
direct and discharge all Cendant personnel providing Services hereunder. Subject
to Section 3.01, Cendant shall be solely responsible for the payment of all
benefits and any other direct and indirect compensation for Cendant personnel
assigned to perform services under this Agreement, as well as be responsible for
their worker's compensation insurance, employment taxes, and other employer
liabilities relating to such personnel as required by law to be provided.
Cendant shall be an independent contractor in connection with the performance of
Services hereunder and none of Cendant's employees performing services in
connection therewith shall be deemed employees of Avis Fleet.
5.02 Staffing of Personnel. Cendant shall be solely responsible for assigning
personnel to perform the Services, which personnel will be instructed by Cendant
to perform the Services in a timely, efficient and workmanlike manner.
5.03 Standard of Care. Notwithstanding anything to the contrary contained in
this Agreement, it is understood and agreed that Cendant is not in the business
of
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providing Services to third parties and that the standard of care to which
Cendant and any Cendant employees or agents performing Services hereunder shall
be accountable for shall be the standard of care used by Cendant in furnishing
these Services to its own internal organization and affiliates, and under no
circumstances shall Cendant or its employees or agents be held accountable for a
greater standard of care or one that is appropriate for a party in the business
of furnishing similar services.
ARTICLE VI
INGRESS AND EGRESS
Cendant shall at all times during the term of this Agreement have the right of
ingress to and egress from the facilities and premises of Avis Fleet for any
purposes connected with the delivery of Services hereunder or the exercise of
any right under this Agreement or the performance of any obligations required by
this Agreement, subject to reasonable safety and security policies and practices
implemented by Avis Fleet.
ARTICLE VII
CONFIDENTIALITY
7.01 Confidential Information. As used in this Agreement, Cendant Confidential
Information and Avis Fleet Confidential Information are defined as follows:
A. "Cendant Confidential Information" means information known by Avis
Fleet on the date of this Agreement and related to Cendant's business interests,
or disclosed confidentially by Cendant to Avis Fleet prior to or after the
Effective Date under the terms and for purposes of this Agreement except for:
(i) information which is or becomes publicly available through no
act of Avis Fleet, from and after the date of public availability;
(ii) information disclosed to Avis Fleet by a third party, provided
(a) under the circumstances of disclosure Avis Fleet does not have a duty of
non-disclosure owed to such third party, (b) the third party's disclosure is not
violative of a duty on non-disclosure owed to another, including Cendant, and
(c) the disclosure by the third party is not otherwise unlawful;
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(iii) information developed by Avis Fleet independent of any
confidential Cendant information which is known by Avis Fleet on the Effective
Date and/or disclosed by Cendant under this Agreement; and
(iv) information which is developed solely by a business which is
being transferred to Avis Fleet.
B. "Avis Fleet Confidential Information" means information known by
Cendant on the Effective Date and reasonably understood by Cendant to be
confidential and related to Avis Fleet's present or future business interests,
or disclosed confidentially by Avis Fleet to Cendant under the terms and for
purposes of this Agreement except for:
(ii) information which is or becomes publicly available through no
act of Cendant, from and after the date of public availability;
(ii) information disclosed to Cendant by a third party, provided (a)
under the circumstances of disclosure Cendant does not have a duty of
non-disclosure owed to such third party, (b) the third party's disclosure is not
violative of a duty of non-disclosure owed to another, including Avis Fleet, and
(c) the disclosure by the third party is not otherwise unlawful;
(iii) information developed by Cendant independent of any
confidential Avis Fleet information which is known by Cendant on the Effective
Date and/or disclosed by Avis Fleet thereafter;
(iv) information which is inherently disclosed in marketing of a
product by Cendant in the usual course of business and within the scope of the
rights granted; and
(v) information which is developed by a business which remains with
Cendant on the Effective Date.
C. Cendant and Avis Fleet each shall not disclose to any other person or
use except for purposes of the Agreement any business information which is Avis
Fleet Confidential Information or Cendant Confidential Information,
respectively. The foregoing restrictions shall expire with respect to business
information which is Avis Fleet Confidential Information and Cendant
Confidential Information two (2) years after the date of disclosure of such
information, unless and to the extent the
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Parties agree to a longer period for the foregoing restrictions with respect to
specific categories of business information which is Avis Fleet Confidential
Information and/or Cendant Confidential Information, in which case the foregoing
restrictions shall expire with respect to such information on the expiration of
such longer period. The date of disclosure in the case of business information
which is either Cendant Confidential Information known by Avis Fleet or Avis
Fleet Confidential Information known by Cendant on the Effective Date shall be
considered to be the Effective Date.
D. Each Party shall protect Confidential Information hereunder by using
the same degree of care, but no less than a reasonable degree of care, to
prevent the unauthorized disclosure of the other Party's Confidential
Information as the Party uses to protect its own confidential information of a
like nature.
E. Each Party shall insure that its Affiliates, sublicensees and other
transferees agree to be bound by the same restriction on use and disclosure of
Confidential Information as bind the Party in advance of the disclosure of
Confidential Information to them.
ARTICLE VIII
DISCLAIMER AND LIMITATION OF LIABILITY
8.01 Disclaimer of Warranties/Limitation of Direct Damages. EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, CENDANT MAKES NO REPRESENTATIONS OR WARRANTIES
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES TO BE PROVIDED
UNDER THIS AGREEMENT. In the event of any performance or non-performance under
this Agreement which results in direct damages to Avis Fleet, Cendant's maximum,
cumulative and sole liability to Avis Fleet for such direct damages shall be an
amount up to the fee paid by Avis Fleet to Cendant (as of the date of the
performance or non-performance giving rise to the damage) during the term for
the specific Service set forth in Section 2.02 which resulted in direct damages
to Avis Fleet and shall only be payable by Cendant if such loss results from the
willful misconduct or gross negligence on the part of Cendant or any officer,
director or employee of Cendant. Avis Fleet acknowledges that such payment
constitutes fair and reasonable compensation for any direct damages. Notice of
any claim for direct damages must be made within one year of the date of
termination or expiration of the Service which gave rise to the claim and such
claim must specify the damage amount claimed and a description of the action and
the service giving rise to the claim. In no circumstances
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shall Cendant be liable to Avis Fleet in connection with the provision of
subcontracted services.
8.02 Limitation of Consequential Damages. EXCEPT AS PROVIDED IN ARTICLE IX,
NEITHER PARTY SHALL UNDER ANY CIRCUMSTANCES BE LIABLE TO THE OTHER PARTY FOR ANY
SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES (INCLUDING BUT NOT
LIMITED TO LOSS OF PROFITS OR REVENUE) RESULTING OR ARISING FROM THIS AGREEMENT,
ANY PERFORMANCE OR NONPERFORMANCE UNDER THIS AGREEMENT OR TERMINATION OF THIS
AGREEMENT. THIS LIMITATION APPLIES REGARDLESS OF WHETHER THE DAMAGES OR OTHER
RELIEF ARE SOUGHT BASED ON BREACH OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE,
STRICT LIABILITY IN TORT, OR ANY OTHER LEGAL OR EQUITABLE THEORY.
ARTICLE IX
INDEMNIFICATION
9.01 Avis Fleet agrees to indemnify, defend and hold harmless Cendant, its
directors, officers, employees, affiliates, agents and representatives from any
and all third party claims, actions, demands, judgments, losses, costs,
expenses, damages and liabilities (including but not limited to attorneys fees
and other expenses of litigation) arising out of or connected with the Services
supplied under this Agreement or in any way related to this Agreement,
regardless of the legal theory asserted; provided, however, that Avis Fleet
shall have no obligation to indemnify pursuant to Section 9.01 for any claims
arising out of the gross negligence or willful misconduct of Cendant or any of
its employees. This indemnity applies to claims, actions and demands for which
Cendant may be, or may be claimed to be, partially or solely liable. The parties
agree that the indemnities stated in Section 9.01 and 9.02 should be construed
and applied in favor of indemnification. The parties agree that the indemnities
will not apply to claims between the parties arising out of or connected to this
Agreement.
9.02 Avis Fleet shall reimburse Cendant and indemnify, defend and hold harmless
Cendant, its directors, officers, employees, agents, and representatives from
any and all claims, actions, demands, judgments, losses, costs, expenses,
damages, and liabilities (including but not limited to attorneys fees and
expenses of litigation), arising from or related to any Avis Fleet act or
omission connected with the provision
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of any Service by Cendant in the performance of this Agreement or caused by any
Avis Fleet product or information provided to Cendant in connection with the
Services being provided by Cendant or by any employee of Avis Fleet.
9.03 If Cendant intends to claim indemnification under Section 9.01 or 9.02,
Cendant will promptly notify Avis Fleet in writing of any claim, action, or
demand for which Cendant intends to claim indemnification. In addition, Cendant
will promptly notify Avis Fleet in writing if Cendant elects to waive its right
to have Avis Fleet defend the claim, action, or demand. If Cendant does not
waive its right to have Avis Fleet defend the claim, action, or demand, Cendant
agrees that Avis Fleet will control the defense of the claim, action, or demand.
Cendant will cooperate fully with Avis Fleet and its legal representatives in
the investigation and defense of any claim, action, or demand covered by this
indemnification. Cendant will permit Avis Fleet to settle any claim, action, or
demand and agrees that Avis Fleet will control the settlement, provided, however
that such settlement does not adversely affect Cendant's rights under this
Agreement or impose any obligations on Cendant in addition to those stated in
this Agreement. Avis Fleet, in the defense of any claims, actions or demands in
which Cendant is a party, will not consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term the giving
by the claimant or plaintiff to Cendant of a release from all liability with
respect to the claim, action, or demand. No such claim, action, or demand will
be settled by Cendant without the prior written consent of Avis Fleet.
9.04 The parties hereby agree that Avis Fleet is a fiduciary in respect of the
Employees to the extent any of the employee benefits are subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and further agree
that Cendant is not a fiduciary (within the meaning of ERISA) in respect of the
Employees.
ARTICLE X
RECORDS AND INSPECTION RIGHTS
10.01 Records. Cendant agrees to maintain accurate records arising from or
related to any Service(s) provided hereunder, including but not limited to
accounting records and documentation produced in connection with the rendering
of any Service(s).
ARTICLE XI
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TERMINATION
11.01 Termination by Either Party. This Agreement, or any Service provided
hereunder, may be terminated by either Party upon written notice to the other
Party if:
A. The other Party fails to perform or otherwise breaches an obligation
under this Agreement; provided, however, that such Party failing to perform or
otherwise breaching shall have thirty (30) days from the date notice of
intention to terminate is received to cure the failure to perform or breach of
an obligation, at which time this Agreement or Service shall terminate if the
failure or breach has not been cured to the reasonable satisfaction of the other
Party; or
B. The other Party makes a general assignment for the benefit of
creditors, becomes insolvent, a receiver is appointed, or a court approves
reorganization or arrangement proceedings; or
C. Performance of this Agreement or any Service to be provided hereunder
has been rendered impossible or impracticable for a period of three (3)
consecutive months by reason of the occurrence of any of the events described in
Section 13.01 or if any other event occurs which can be reasonably determined to
permanently prevent the performance of this Agreement or any Service; or
D. During any agreed upon renewal term, if either Party so desires at any
time, upon sixty (60) days advance written notice of intention to terminate to
the other Party, except with respect to those Services identified in Exhibit A
which specifically require either a shorter or longer period of notice, in which
case the notice period shall be as set forth in Exhibit A with respect to such
Service.
11.02 Termination Notices. Any termination notice delivered by either Party
shall specify in detail the Service or Services to be terminated and the
effective date of termination.
11.03 Consequences of Termination. In the event this Agreement or any Service is
terminated for any reason:
A. Upon request, each Party shall return to the other Party all tangible
personal property and records owned by the other Party in their possession as of
the termination date;
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B. Avis Fleet will be responsible to Cendant for reasonable and proper
termination charges which will include all reasonable cancellation costs
incurred by Cendant or costs for materials and equipment reasonably acquired in
connection with the provision of such Service if this Agreement or any Service
described in Exhibit A is terminated by Avis Fleet without cause or by Cendant
with cause. Invoices for such charges shall be prepared in reasonable detail by
Cendant and payment shall be due thirty (30) days from the date thereof.
C. Avis Fleet shall remain liable for payment to Cendant for Services
furnished prior to the effective date of termination.
ARTICLE XII
DISPUTE RESOLUTION
12.01 Mediation and Binding Arbitration. If a dispute, controversy or claim
arises between Cendant and Avis Fleet arising out of or relating to the
interpretation or breach or validity of this Agreement or Exhibit A hereto
("Dispute"), Cendant and Avis Fleet agree to use the following procedures, as
the exclusive method of resolving the Dispute.
12.02 Initiation. A Party seeking to initiate the dispute resolution procedures
shall give written notice to the other Party, describing briefly the nature of
the dispute and the relief sought. The parties shall use their best efforts to
hold a meeting within 10 days of the receipt of such notice, to be attended by
individuals with decision-making authority regarding the Dispute, who shall
attempt in good faith to negotiate a resolution of the dispute.
12.03 Submission to Mediation. If, at the conclusion of such meeting or after at
least 30 days have elapsed from the receipt of notice under Section 12.02, the
Parties have not succeeded in negotiating a resolution of the dispute, either
party may submit the dispute to mediation in accordance with the Center for
Public Resources ("CPR") Mediation Procedure, then in effect except as modified
herein. The mediation shall be held in New York, New York. The costs of the
mediator shall be borne equally by the parties.
12.04 Selection of Mediator. The Parties will jointly appoint a mutually
acceptable mediator, seeking assistance in such regard from the CPR or another
mutually agreed-upon organization if they are unable to agree upon such
appointment within 20 days
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from the receipt by a party of a notice from the other party referring the
Dispute to mediation in which case the mediator shall be selected in accordance
with the CPR Mediation Procedure.
12.05 Mediation and Arbitration. The Parties agree to participate in good faith
in the mediation for a period of 30 days or such longer period as they may
mutually agree following the initial mediation session. If the Parties are not
successful in resolving the dispute through mediation by the end of such period,
then either party may submit the matter to binding arbitration in accordance
with the CPR Rules for Non-Administered Arbitration of Business Disputes then in
effect, except as modified herein, by a sole arbitrator, selected in accordance
with the provisions of Section 12.06 hereof. The arbitration proceeding shall be
held in New York, shall be governed by the Federal Arbitration Act, 9 U.S.C. S 1
et seq. The award shall be final and binding on the parties, and judgment upon
the award rendered by the arbitrator may be entered by any court having
jurisdiction thereof.
12.06 Selection of Arbitrator. The Parties shall have 10 days from the end of
the mediation period to agree upon a mutually acceptable neutral person not
affiliated with either of the Parties to act as arbitrator. If no arbitrator has
been selected within such time, either party may request the CPR or another
mutually agreed-upon organization to supply within 10 days a list of potential
arbitrators with qualifications as specified by the Parties. Within five days of
receipt of the list, the Parties shall independently rank the proposed
candidates, shall simultaneously exchange rankings, and shall be deemed to have
selected as the arbitrator the individual receiving the highest combined ranking
who is available to serve. If the procedure results in a tie, CPR may designate
either candidate as the arbitrator.
12.07 Cost of Arbitration. The costs of arbitration shall be apportioned between
Cendant and Avis Fleet as determined by the arbitrator in such manner as the
arbitrator deems reasonable taking into account the circumstances of the case,
the conduct of the Parties during the proceeding, and the result of the
arbitration.
12.08 Arbitration Period. Unless for good cause shown, any arbitration
proceeding shall be concluded in a maximum of one (1) year from written notice
from one Party to the other Party identifying a dispute subject to arbitration
under this Article and requesting arbitration after having participate in
negotiation and mediation under this Article.
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12.09 Treatment of Negotiations and Mediation. All negotiation and mediation
pursuant to this Article shall be treated as compromise and settlement
negotiations for purposes of Rule 408 of the Federal Rules of Evidence.
12.10 Confidentiality. All negotiation, mediation and arbitration proceedings
under this Article shall be treated as Confidential Information in accordance
with the provisions of Section 7.01. Any mediator or arbitrator shall be bound
by an agreement containing confidentiality provisions at least as restrictive as
those contained in Section 7.01.
12.11 Equitable Relief. Nothing herein shall preclude either Party from taking
whatever actions are necessary to prevent any immediate, irreparable harms to
its interests, including multiple breaches of this Agreement by the other Party.
Otherwise, these procedures are exclusive except for actions in and of
arbitration to enforce an interim or final award of the arbitration. Either
Party may seek specific enforcement of any arbitrator's decision under this
Section.
ARTICLE XIII
MISCELLANEOUS
13.01 Force Majeure. Neither Party shall be responsible for the delay in the
performance of any obligation hereunder due to labor disturbances, accidents,
fires, floods, wars, riots, rebellions, blockages, acts of governments,
governmental requirements and regulations, restrictions imposed by law or any
other similar conditions, beyond the reasonable control and without the fault or
negligence of such Party, and the time for performance by such Party shall be
extended by the period of such delay. Notwithstanding the foregoing, in no event
shall Avis Fleet be relieved of its payment obligations to Cendant for Services
delivered, regardless of cause.
13.02 Assignment. Except as set forth in Section 1.04, this Agreement may not be
assigned in whole or in part by either Party without the prior written consent
of the other Party. Any assignment, delegation or transfer of this Agreement or
any interest therein without written consent of the other Party is void and
cause for termination of this Agreement. Nothing in this Agreement shall be
construed to grant any person or entity not a party hereto any rights or powers
whatsoever, and no person or entity shall be a third party beneficiary of this
Agreement. Nothing in this section affects the ability of either party to
terminate this Agreement or any Service in accordance with the provisions of
this Agreement or Exhibit A.
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13.03 Relationship of the Parties. Neither Party is an agent of the other Party
and neither Party has any authority to bind the other Party, transact any
business in the other Party's name or on its behalf, or make any promises or
representations on behalf of the other Party unless provided for in Exhibit A or
agreed to in writing. Each Party will perform all of its respective obligations
under this Agreement as an independent contractor, and no joint venture,
partnership or other relationship shall be created or implied by this Agreement.
13.04 Governing Law. Any questions, claims, disputes or litigation arising from
or related to the making, performance and termination of this Agreement shall be
governed by the laws of New York without regard to the principles of conflicts
of law.
13.05 Entire Agreement. This Agreement and the Exhibits referred to in this
Agreement, which Exhibits are incorporated and made a part of this Agreement by
reference, constitute the entire agreement between Cendant and Avis Fleet
relating to services to be provided by Cendant to Avis Fleet and, with the
exception of the Merger Agreement and any related Agreements, there are no
further agreements or understandings, written or oral, between the Parties with
respect thereto.
13.06 Notices. Any notices, requests, demands or other communications required
by or made under this Agreement shall be in writing and shall be deemed to have
been duly given i) on the date of service if served personally on the Party to
whom notice is to be given, ii) on the day of transmission if sent via facsimile
transmission to the facsimile number given below, and telephonic confirmation of
receipt is obtained promptly after completion of transmission, iii) on the day
after delivery to Federal Express or similar overnight courier or the Express
Mail service maintained by the U.S. Postal Service or iv) on the fifth day after
mailing, if mailed to the Party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid and properly addressed, to the
Party as follows:
If to Cendant: To the person designated on Exhibit A as the Cendant contact for
a specific Service or to:
Eric J. Bock
Vice President, Legal
Cendant Corporation
9 West 57th Street, 37th Floor
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New York, NY 10019
FAX: (212) 413-1922
With a copy to:
Jeanne M. Murphy
Senior Vice President and Corporate Counsel
Cendant Corporation
6 Sylvan Way
Parsippany, NJ 07054
FAX: (973) 496-5331
If to Avis Fleet: To the person designated on Exhibit A as the Avis Fleet
contact for a specific Service or to:
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General Counsel
Avis Rent A Car, Inc.
World Headquarters
900 Old Country Road
Garden City, NY 11530
13.07 Paragraph Headings. The title and headings of various paragraphs of this
Agreement are inserted for convenience or reference only and shall not be used
in the construction or interpretation of any provisions of this Agreement.
13.08 Conflicting Provisions. In the event any provision of Exhibit A conflicts
with the provisions of this Agreement, the provisions of this Agreement shall be
controlling.
13.09 Survival of Provisions. The representations, warranties and covenants
contained herein shall survive the termination or expiration of this Agreement
to the full extent necessary to protect the Party in whose favor they run.
13.10 Waiver and Modification. No part of this Agreement or any of the Exhibits
may be amended, modified, supplemented or waived in any manner whatsoever
(including course of dealing or of performance) except by a written instrument
signed by authorized officers of the Parties. Any failure or delay by either
party in exercising any right or remedy in one or many instances will not
prohibit a Party from exercising it at a later time or from exercising any other
right or remedy.
[SIGNATURE PAGE TO FOLLOW]
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ACCEPTED AND AGREED TO:
AVIS FLEET LEASING AND
MANAGEMENT CORPORATION:
By: ___________________________
Name:
Title:
CENDANT OPERATIONS, INC.
By: ___________________________
Name:
Title:
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Exhibit 10.22
Corporate Services Transition Agreement
THIS AGREEMENT is made and entered into this 30th day of June 1999,
(hereinafter referred to as "Effective Date") by and between PHH Corporation, a
Maryland corporation, with is principal place of business at 6 Sylvan Way,
Parsippany, NJ 07054 (together with any subsidiaries and affiliates of PHH,
"PHH"), and Avis Fleet Leasing and Management Corporation, a Texas corporation
with its principal place of business at 900 Old Country Road, Garden City, New
York 11530 (together with any subsidiaries and affiliates of Avis Fleet, "Avis
Fleet"). Avis and the Transferred Businesses (as hereinafter defined) are
hereinafter referred to jointly as "Avis Fleet." PHH and Avis Fleet are
hereinafter referred to jointly as the "Parties" and individually as "Party."
WITNESSETH:
WHEREAS, PHH, PHH Holdings Corporation, a subsidiary of PHH ("PHH
Holdings"), Avis Rent A Car, Inc. and Avis Fleet have entered into an Agreement
and Plan of Merger and Reorganization dated as of May 22, 1999, as amended by
the Amendment to Agreement and Plan of Merger and Reorganization, dated as of
June 30, 1999 (as amended, the "Merger Agreement") pursuant to which PHH and PHH
Holdings are transferring and assigning to Avis PHH's fleet and fuel card
businesses (the "Transferred Businesses") in a merger of PHH Holdings and Avis
(the "Merger"), in exchange for the assumption by Avis of certain liabilities
and obligations associated with the Transferred Businesses and the issuance by
Avis to PHH of shares of Avis preferred stock on such terms and conditions as
are contained therein; and
WHEREAS, the Merger Agreement provides that PHH and Avis Fleet shall enter
into an agreement relating to certain transition services to be provided by Avis
Fleet to PHH in relation to PHH's mobility operations in the United Kingdom and
certain retained equipment leases and this Agreement is entered into in order to
fulfill that provision.
NOW, THEREFORE, in consideration of good and valuable consideration, the
Parties agree as follows:
ARTICLE I
SERVICES
1.01 Provision of Services. Subject to the terms and conditions of this
Agreement, Avis Fleet agrees to provide to PHH and PHH agrees to purchase from
Avis Fleet those services described in Exhibit A attached hereto on the terms
set forth on Exhibit A and those Other Services described in Section 1.02 which
Avis Fleet specifically agrees to provide to PHH upon the terms agreed upon by
the parties in an amendment to Exhibit A (collectively referred to herein as
"Services").
<PAGE>
1.02 Miscellaneous Services. From time to time, PHH may find it desirable to
request, in addition to the Services described in Exhibit A, additional services
to be made available to PHH by Avis Fleet (hereinafter referred to as "Other
Services"). It is understood and agreed, however, that Avis Fleet is under no
obligation to provide PHH with any such Other Services. Upon PHH's written
request for such Other Services, the Parties shall commence negotiations in good
faith in order to arrange for the delivery thereof and compensation therefor and
terms upon which such other Services shall be provided. The Parties' obligations
with respect to providing any such Other Services shall only become effective
upon execution of an Amendment to Exhibit A signed by an officer of each party.
1.03 Nature, Volume and Scope of Services. (a) Avis Fleet will provide Services
on terms which are similar in nature, volume and scope to those which PHH
provided to the Transferred Businesses immediately prior to the Merger.
(b) Notwithstanding any other provisions of this Agreement, Avis Fleet shall not
be required to provide to PHH any of the Services agreed to be provided
hereunder to the extent doing so would unreasonably or materially interfere with
the performance of services for Avis Fleet and any business unit or function of
Avis Fleet or otherwise cause an unreasonable or material burden to Avis Fleet.
The parties hereby agree that no services specifically detailed in Exhibit A to
this Agreement are unreasonable or a material burden to Avis Fleet.
1.04 Subcontracting of Services. PHH understands that prior to the date of this
Agreement, Avis Fleet may have subcontracted with third parties to provide
services in connection with all or any portion of the Services to be provided
hereunder. Avis Fleet reserves the right to continue to subcontract with third
parties to provide the Services or to enter into new subcontract relationships
for any Service described in Exhibit A. Unless otherwise provided in Exhibit A,
the fees and expenses of such subcontractors used in connection with Services
provided under this Agreement will be charged to PHH at actual cost without
markup.
1.05 PHH Acknowledgment and Representation. PHH understands that the Services
provided hereunder are transitional in nature, other than the Services of
Equipment Leases set forth on Exhibit A-2. PHH understands that Avis Fleet is
not in the business of providing Services to third parties, other than its
Services described in Exhibit A-2, and has no long-term interest in continuing
this Agreement. PHH agrees to make a prompt transition to its own internal
organization or other third party suppliers for the provision of the Services.
ARTICLE II
UK SERVICES
2.01 In the United Kingdom only the Articles of this Agreement shall apply
mutatis mutandis to the Services provided by Avis Fleet to PHH for the purposes
of PHH's continuing mobility businesses in the United Kingdom. In relation to
Article 13, the
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parties agree that an equivalent body to the Centre for Public Resources Model
ADR Procedure - Meditation of Business Disputes shall be used in connection with
any mediation in relation to any disputes arising out of the provision of the
Services under this Agreement in the United Kingdom.
ARTICLE III
TERM AND RENEWAL
3.01 Term of Agreement. Unless otherwise stated in the Exhibit relating to a
specific Service, the term of this Agreement shall commence on June 30, 1999 and
shall expire on December 31, 1999 unless earlier terminated by the Parties as
provided herein; provided that, the Services described in Exhibit A-2 shall
continue until the leases related to the Leased Equipment (as defined in Exhibit
A-2) have terminated.
3.02 Term of Services and Renewal of Services. The term of each Service
identified in Exhibit A shall commence on June 30, 1999 and expire on December
31, 1999 unless earlier terminated as provided herein or specifically provided
for otherwise in Exhibit A. The Parties may, upon mutual written agreement,
extend the term of any or all of the Services for additional, successive six (6)
month terms. Unless specifically provided for otherwise in Exhibit A, in the
event PHH desires to renew any Service, PHH shall provide Avis Fleet with
written notice ("Notice of Service Renewal") sixty (60) days in advance of the
expiration of the Service term, or any renewal term. The Notice of Service
Renewal shall specify which Service(s) PHH is interested in renewing, with a
description of any requested changes and the terms upon which such services
shall be provided during such renewal term from those terms that are then
described in Exhibit A. Avis Fleet shall respond in writing to PHH within
fifteen (15) business days following receipt of such Notice of Service Renewal,
and indicate what Service(s), if any, Avis Fleet will agree to provide during
such renewal term and under what terms and conditions such Service(s) shall be
provided. Upon mutual agreement of the Parties, Exhibit A of this Agreement
shall be amended in writing to effect such renewal of Services.
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ARTICLE IV
COMPENSATION
4.01 Compensation. PHH shall pay Avis compensation for Services based on the
fees and expenses set forth in Exhibit A, or any amendment to Exhibit A, for
each Service, or any amendments to Exhibit A. If no fee is specified for a
particular Service, the cost of such Service to PHH shall be based on the total
cost to Avis Fleet of providing such Service. "Total cost" shall be defined as
direct and/or indirect costs incurred by Avis Fleet as a result of supplying
Services to PHH and shall be calculated as follows: (depending on which of the
following calculations is most readily determinable for the Service provided):
(i) historical usage by PHH; or (ii) Avis Fleet allocations based upon Avis
Fleet's standard accounting practices; or (iii) Avis Fleet management estimates
of Services provided to PHH.
Unless otherwise provided in Exhibit A, the following expenses are included in
the compensation for Services included in Exhibit A:
(i) In the case of employee services provided in connection with the provision
of any Services hereunder, the portion of any employees' salaries and benefits
accrued by Avis Fleet for the period of time during which such employee services
are provided based on the amount of time reasonably estimated by Avis Fleet that
such employees devoted to providing any such employee services to PHH.
(ii) For expenses of Avis Fleet employees traveling away from home and overnight
on behalf of PHH, the actual costs of transportation, meals and lodging.
(Airfare is to be the most economical rate available, but never more costly than
regular carrier coach rate.)
(iii) For long distance telephone calls, facsimile, and telegrams placed in
connection with Services provided under this Agreement, the actual cost incurred
by Avis Fleet.
(iv) For printing, reproduction and postage charges and overnight courier
incurred in connection with Services provided under this Agreement, the actual
cost incurred by Avis Fleet.
(v) For supplies, service parts and other materials purchased by Avis Fleet to
perform Services under this Agreement, the actual cost incurred by Avis Fleet.
(vi) For equipment leased from third parties in connection with Services
provided under this Agreement, the actual cost incurred by Avis Fleet.
4.02 Billing and Payment Terms. Amounts due under this Agreement will be billed
and paid for in the following manner: Statements will be rendered to PHH on a
monthly basis and in reasonable detail as reasonably requested by PHH for all
Services delivered during the preceding month, and each such statement shall be
payable within thirty (30) days after the date of the statement. Statements not
paid within such thirty (30) day period shall accumulate interest at the annual
rate of ten percent (10%) per annum.
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ARTICLE V
INTERRUPTION OF SERVICES
5.01 Avis Fleet will endeavor to provide uninterrupted Services through the term
of this Agreement and any renewal term agreed upon by the parties. In the event,
however, Avis Fleet or its suppliers are wholly or partially prevented from
providing a Service or Services or if Services are interrupted or suspended, in
either case by reason of any Force Majeure event set forth in Section 13.01, or
Avis Fleet shall deem it necessary to suspend delivery of a Service hereunder
for purposes of inspection, maintenance, repair, or replacement of equipment
parts or structures, Avis Fleet shall not be obligated to deliver such Service
during such periods, provided that Avis Fleet has given, when feasible,
reasonable written notice of the interruption within a reasonable period of
time, explaining the reason, purpose and likely duration therefor, and provided
further, that with respect to Avis Fleet scheduled interruptions or maintenance,
Avis Fleet shall have provided, when feasible, reasonable advance written notice
thereof. If such interruption of Services has a significant negative impact on
PHH's business operation and Avis Fleet cannot readily reinstate the Service
involved, Avis Fleet will use reasonable efforts to assist PHH in securing
alternative services to minimize such negative impact on PHH.
ARTICLE VI
PERSONNEL
6.01 Supervision and Compensation. Avis Fleet shall select, employ, pay,
supervise, direct and discharge all Avis Fleet personnel providing Services
hereunder. Subject to Section 3.01, Avis Fleet shall be solely responsible for
the payment of all fringe benefits and any other direct and indirect
compensation for Avis Fleet personnel assigned to perform services under this
Agreement, as well as be responsible for their worker's compensation insurance,
employment taxes, and other employer liabilities relating to such personnel as
required by law to be provided. Avis Fleet shall be an independent contractor in
connection with the performance of Services hereunder and none of Avis Fleet's
employees performing services in connection therewith shall be deemed employees
of PHH.
6.02 Staffing of Personnel. Avis Fleet shall be solely responsible for assigning
personnel to perform the Services, which personnel will be instructed by Avis
Fleet to perform the Services in a timely, efficient and workmanlike manner.
6.03 Standard of Care. Notwithstanding anything to the contrary contained in
this Agreement, it is understood and agreed that Avis Fleet is not in the
business of providing Services to third parties and that the standard of care to
which Avis Fleet and any Avis Fleet employees or agents performing Services
hereunder shall be accountable for shall be the standard of care used by Avis
Fleet in furnishing these Services to its own internal organization and
affiliates, and under no circumstances shall Avis Fleet or its employees or
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agents be held accountable for a greater standard of care or one that is
appropriate for a party in the business of furnishing similar services.
ARTICLE VII
INGRESS AND EGRESS
Avis Fleet shall at all times during the term of this Agreement have the right
of ingress to and egress from the facilities and premises of PHH for any
purposes connected with the delivery of Services hereunder or the exercise of
any right under this Agreement or the performance of any obligations required by
this Agreement, subject to reasonable safety and security policies and practices
implemented by PHH.
ARTICLE VIII
CONFIDENTIALITY
8.01 Confidential Information. As used in this Agreement, PHH Confidential
Information and Avis Fleet Confidential Information are defined as follows:
A. "PHH Confidential Information" means information disclosed
confidentially by PHH to Avis Fleet under the terms and for purposes of this
Agreement after the Effective Date except for:
(i) information which is or becomes publicly available through no
act of Avis Fleet, from and after the date of public availability;
(ii) information disclosed to Avis Fleet by a third party, provided
(a) under the circumstances of disclosure Avis Fleet does not have a duty of
non-disclosure owed to such third party, (b) the third party's disclosure is not
violative of a duty on non-disclosure owed to another, including PHH, and (c)
the disclosure by the third party is not otherwise unlawful;
(iii) information developed by Avis Fleet independent of any
confidential PHH information which is known by Avis Fleet on the Effective Date
and/or disclosed by PHH under this Agreement; and
(iv) information which is developed solely by a business which is
being transferred to Avis Fleet.
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B. "Avis Fleet Confidential Information" means information disclosed
confidentially by Avis Fleet to PHH under the terms and for purposes of this
Agreement after the Effective Date except for:
(i) information which is or becomes publicly available through no
act of PHH, from and after the date of public availability;
(ii) information disclosed to PHH by a third party, provided (a)
under the circumstances of disclosure PHH does not have a duty of non-disclosure
owed to such third party, (b) the third party's disclosure is not violative of a
duty of non-disclosure owed to another, including Avis Fleet, and (c) the
disclosure by the third party is not otherwise unlawful;
(iii) information developed by PHH independent of any confidential
Avis Fleet information which is known by PHH on the Effective Date and/or
disclosed by Avis Fleet thereafter;
(iv) information which is inherently disclosed in marketing of a
product by PHH in the usual course of business and within the scope of the
rights granted; and
(v) information which is developed by a business which remains with
PHH on the Effective Date.
C. PHH and Avis Fleet each shall not disclose to any other person or use,
except for purposes of the Agreement, any business information which is Avis
Fleet Confidential Information or PHH Confidential Information, respectively.
The foregoing restrictions shall expire with respect to business information
which is Avis Fleet Confidential Information and PHH Confidential Information
two (2) years after the date of disclosure of such information, unless and to
the extent the Parties agree to a longer period for the foregoing restrictions
with respect to specific categories of business information which is Avis Fleet
Confidential Information and/or PHH Confidential Information, in which case the
foregoing restrictions shall expire with respect to such information on the
expiration of such longer period. The date of disclosure in the case of business
information which is either PHH Confidential Information known by Avis Fleet or
Avis Fleet Confidential Information known by PHH on the Effective Date shall be
considered to be the Effective Date.
D. Each Party shall protect Confidential Information hereunder by using
the same degree of care, but no less than a reasonable degree of care, to
prevent the unauthorized disclosure of the other Party's Confidential
Information as the Party uses to protect its own confidential information of a
like nature.
E. Each Party shall insure that its Affiliates, sublicensees and other
transferees agree to be bound by the same restriction on use and disclosure of
Confidential Information as bind the Party in advance of the disclosure of
Confidential Information to them.
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ARTICLE IX
DISCLAIMER AND LIMITATION OF LIABILITY
9.01 Disclaimer of Warranties/Limitation of Direct Damages. EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, AVIS FLEET MAKES NO REPRESENTATIONS OR WARRANTIES
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES TO BE PROVIDED
UNDER THIS AGREEMENT. In the event of any performance or non-performance under
this Agreement which results in direct damages to PHH, Avis Fleet's maximum,
cumulative and sole liability to PHH for such direct damages shall be an amount
up to the fee paid by PHH to Avis Fleet (as of the date of the performance or
non-performance giving rise to the damage) during the term for the specific
Service set forth in Section 2.02 which resulted in direct damages to PHH and
shall only be payable by Avis Fleet if such loss results from the willful
misconduct or gross negligence on the part of Avis Fleet or any officer,
director or employee of Avis Fleet. PHH acknowledges that such payment
constitutes fair and reasonable compensation for any direct damages. Notice of
any claim for direct damages must be made within one year of the date of
termination or expiration of the Service which gave rise to the claim and such
claim must specify the damage amount claimed and a description of the action and
the service giving rise to the claim. In no circumstances shall Avis Fleet be
liable to PHH in connection with the provision of subcontracted services.
9.02 Limitation of Consequential Damages. EXCEPT AS PROVIDED IN ARTICLE IX,
NEITHER PARTY SHALL UNDER ANY CIRCUMSTANCES BE LIABLE TO THE OTHER PARTY FOR ANY
SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES (INCLUDING BUT NOT
LIMITED TO LOSS OF PROFITS OR REVENUE) RESULTING OR ARISING FROM THIS AGREEMENT,
ANY PERFORMANCE OR NONPERFORMANCE UNDER THIS AGREEMENT OR TERMINATION OF THIS
AGREEMENT. THIS LIMITATION APPLIES REGARDLESS OF WHETHER THE DAMAGES OR OTHER
RELIEF ARE SOUGHT BASED ON BREACH OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE,
STRICT LIABILITY IN TORT, OR ANY OTHER LEGAL OR EQUITABLE THEORY.
ARTICLE X
INDEMNIFICATION
10.01 PHH agrees to indemnify, defend and hold harmless Avis Fleet, its
directors, officers, employees, affiliates, agents and representatives from any
and all claims, actions, demands, judgments, losses, costs, expenses, damages
and liabilities (including but not limited to attorneys fees and other expenses
of litigation) arising out of or connected with the Services supplied under this
Agreement or in any way related to this Agreement, regardless of the legal
theory asserted, provided, however, that PHH shall have no
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obligation to indemnify pursuant to Section 10.01 for any claims arising out of
the gross negligence or willful misconduct of Avis Fleet or any of its
employees. This indemnity applies to claims, actions and demands for which Avis
Fleet may be, or may be claimed to be, partially or solely liable. The parties
agree that the indemnities stated in Section 9.01 and 9.02 should be construed
and applied in favor of indemnification. The parties agree that the indemnities
will not apply to claims between the parties arising out of or connected to this
Agreement.
10.02 PHH shall reimburse Avis Fleet and indemnify, defend and hold harmless
Avis Fleet, its directors, officers, employees, agents, and representatives from
any and all claims, actions, demands, judgments, losses, costs, expenses,
damages, and liabilities (including but not limited to attorneys fees and
expenses of litigation), arising from or related to any PHH act or omission
connected with the provision of any Service by Avis Fleet in the performance of
this Agreement or caused by any PHH product or information provided to Avis
Fleet in connection with the Services being provided by Avis Fleet or by any
employee of PHH.
10.03 If Avis Fleet intends to claim indemnification under Section 9.01 or 9.02,
Avis Fleet will promptly notify PHH in writing of any claim, action, or demand
for which Avis Fleet intends to claim indemnification. In addition, Avis Fleet
will promptly notify PHH in writing if Avis Fleet elects to waive its right to
have PHH defend the claim, action, or demand. If Avis Fleet does not waive its
right to have PHH defend the claim, action, or demand, Avis Fleet agrees that
PHH will control the defense of the claim, action, or demand. Avis Fleet will
cooperate fully with PHH and its legal representatives in the investigation and
defense of any claim, action, or demand covered by this indemnification. Avis
Fleet will permit PHH to settle any claim, action, or demand and agrees that PHH
will control the settlement, provided, however that such settlement does not
adversely affect Avis Fleet's rights under this Agreement or impose any
obligations on Avis Fleet in addition to those stated in this Agreement. PHH, in
the defense of any claims, actions or demands in which Avis Fleet is a party,
will not consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term the giving by the claimant or
plaintiff to Avis Fleet of a release from all liability with respect to the
claim, action, or demand. No such claim, action, or demand will be settled by
Avis Fleet without the prior written consent of PHH.
ARTICLE XI
RECORDS AND INSPECTION RIGHTS
11.01 Records. Avis Fleet agrees to maintain accurate records arising from or
related to any Service(s) provided hereunder, including but not limited to
accounting records and documentation produced in connection with the rendering
of any Service(s).
ARTICLE XII
TERMINATION
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12.01 Termination by Either Party. This Agreement, or any Service provided
hereunder, may be terminated by either Party upon written notice to the other
Party if:
A. The other Party fails to perform or otherwise breaches an obligation
under this Agreement provided, however, that such Party failing to perform or
otherwise breaching shall have thirty (30) days from the date notice of
intention to terminate is received to cure the failure to perform or breach of
an obligation, at which time this Agreement or Service shall terminate if the
failure or breach has not been cured to the reasonable satisfaction of the other
Party; or
B. The other Party makes a general assignment for the benefit of
creditors, becomes insolvent, a receiver is appointed, or a court approves
reorganization or arrangement proceedings; or
C. Performance of this Agreement or any Service to be provided hereunder
has been rendered impossible or impracticable for a period of three (3)
consecutive months by reason of the occurrence of any of the events described in
Section 13.01 or if any other event occurs which can be reasonably determined to
permanently prevent the performance of this Agreement or any Service; or
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D. During any agreed upon renewal term, if either Party so desires at any
time, upon sixty (60) days advance written notice of intention to terminate to
the other Party, except with respect to those Services identified in Exhibit A
which specifically require either a shorter or longer period of notice, in which
case the notice period shall be as set forth in Exhibit A with respect to such
Service.
12.02 Termination Notices. Any termination notice delivered by either Party
shall specify in detail the Service or Services to be terminated and the
effective date of termination.
12.03 Consequences of Termination. In the event this Agreement or any Service is
terminated for any reason:
A. Upon request, each Party shall return to the other Party all tangible
personal property and records owned by the other Party in their possession as of
the termination date;
B. PHH will be responsible to Avis Fleet for reasonable and proper
termination charges which will include all reasonable cancellation costs
incurred by Avis Fleet or costs for materials and equipment reasonably acquired
in connection with the provision of such Service if this Agreement or any
Service described in Exhibit A is terminated by PHH without cause or by Avis
Fleet with cause. Invoices for such charges shall be prepared in reasonable
detail by Avis Fleet and payment shall be due thirty (30) days from the date
thereof.
C. PHH shall remain liable for payment to Avis Fleet for Services
furnished prior to the effective date of termination.
ARTICLE XIII
DISPUTE RESOLUTION
13.01 Mediation and Binding Arbitration. (a) U.S. Services. If a dispute,
controversy or claim arises between Avis Fleet and PHH arising out of or
relating to the interpretation or breach or validity of this Agreement or
Exhibit A hereto ("Dispute"), Avis Fleet and PHH agree to use the procedures
outlined in this Article XIII, as the exclusive method of resolving the Dispute.
(b) U.K. Services. Avis Fleet and PHH shall use the Centre for Dispute
Resolution in London in connection with any mediation or arbitration in relation
to any disputes arising under this Agreement and the parties hereby agree to the
jurisdiction of that body and agree to abide by any decision made by it.
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13.02 Initiation. A Party seeking to initiate the dispute resolution procedures
shall give written notice to the other Party, describing briefly the nature of
the dispute and the relief sought. The parties shall use their best efforts to
hold a meeting within 10 days of the receipt of such notice, to be attended by
individuals with decision-making authority regarding the Dispute, who shall
attempt in good faith to negotiate a resolution of the dispute.
13.03 Submission to Mediation. (a) U.S. Services. If, at the conclusion of such
meeting, or after at least 30 days have elapsed from the receipt of notice under
Section 12.02, the parties have not succeeded in negotiating a resolution of the
dispute, either party may submit the dispute to mediation in accordance with the
Center for Public Resources ("CPR") Mediation Procedure, then in effect except
as modified herein. The mediation shall be held in New York, New York. The costs
of the mediator shall be borne equally by the parties.
(b) U.K. Services. If, at the conclusion of such meeting, or after at least 30
days have elapsed from the receipt of notice under Section 12.02, the parties
have not succeeded in negotiating a resolution of the dispute, either party may
submit the dispute to the Centre for Dispute Resolution in London. The costs of
such dispute resolution are to be borne equally by the parties.
13.04 Selection of Mediator. The Parties will jointly appoint a mutually
acceptable mediator, seeking assistance in such regard from the CPR or another
mutually agreed-upon organization if they are unable to agree upon such
appointment with 20 days from the receipt by a party of a notice from the other
party referring the Dispute to mediation in which case the mediator shall be
selected in accordance with the CPR Mediation Procedure.
13.05 Mediation and Arbitration. The Parties agree to participate in good faith
in the mediation for a period of 30 days or such longer period as they may
mutually agree following the initial mediation session. If the Parties are not
successful in resolving the dispute through mediation by the end of such period,
then either party may submit the matter to binding arbitration in accordance
with the CPR Rules for Non-Administered Arbitration of Business Disputes then in
effect, except as modified herein, by a sole arbitrator, selected in accordance
with the provisions of Section 12.06 hereof. The arbitration proceeding shall be
held in New York, shall be governed by the Federal Arbitration Act, 9 U.S.C. S 1
et seq. The award shall be final and binding on the parties, and judgment upon
the award rendered by the arbitrator may be entered by any court having
jurisdiction thereof.
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13.06 Selection of Arbitrator. The Parties shall have 10 days from the end of
the mediation period to agree upon a mutually acceptable neutral person not
affiliated with either of the Parties to act as arbitrator. If no arbitrator has
been selected within such time, either party may request the CPR or another
mutually agreed-upon organization to supply within 10 days a list of potential
arbitrators with qualifications as specified by the Parties. Within five days of
receipt of the list, the Parties shall independently rank the proposed
candidates, shall simultaneously exchange rankings, and shall be deemed to have
selected as the arbitrator the individual receiving the highest combined ranking
who is available to serve. If the procedure results in a tie, CPR may designate
either candidate as the arbitrator.
13.07 Cost of Arbitration. The costs of arbitration shall be apportioned between
Avis Fleet and PHH as determined by the arbitrator in such manner as the
arbitrator deems reasonable taking into account the circumstances of the case,
the conduct of the Parties during the proceeding, and the result of the
arbitration.
13.08 Arbitration Period. Unless for good cause shown, any arbitration
proceeding shall be concluded in a maximum of one (1) year from written notice
from one Party to the other Party identifying a dispute subject to arbitration
under this Article and requesting arbitration after having participated in
negotiation and mediation under this Article.
13.09 Treatment of Negotiations and Mediation. All negotiation and mediation
pursuant to this Article shall be treated as compromise and settlement
negotiations for purposes of Rule 408 of the Federal Rules of Evidence.
13.10 Confidentiality. All negotiation, mediation and arbitration proceedings
under this Article shall be treated as Confidential Information in accordance
with the provisions of Section 7.01. Any mediator or arbitrator shall be bound
by an agreement containing confidentiality provisions at least as restrictive as
those contained in Section 7.01.
13.11 Equitable Relief. Nothing herein shall preclude either Party from taking
whatever actions are necessary to prevent any immediate, irreparable harms to
its interests, including multiple breaches of this Agreement by the other Party.
Otherwise, these procedures are exclusive except for actions in and of
arbitration to enforce an interim or final award of the arbitration. Either
Party may seek specific enforcement of any arbitrator's decision under this
Section.
ARTICLE XIV
MISCELLANEOUS
14.01 Force Majeure. Neither Party shall be responsible for the delay in the
performance of any obligation hereunder due to labor disturbances, accidents,
fires, floods, wars, riots, rebellions, blockages, acts of governments,
governmental requirements and regulations, restrictions imposed by law or any
other similar conditions, beyond the reasonable control and without the fault or
negligence of such Party, and the time for performance by such
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Party shall be extended by the period of such delay. Notwithstanding the
foregoing, in no event shall PHH be relieved of its payment obligations to Avis
Fleet for Services delivered, regardless of cause.
14.02 Assignment. Except as set forth in Section 1.04, this Agreement may not be
assigned in whole or in part by either Party without the prior written consent
of the other Party. Any assignment, delegation or transfer of this Agreement or
any interest therein without written consent of the other Party is void and
cause for termination of this Agreement. Nothing in this Agreement shall be
construed to grant any person or entity not a party hereto any rights or powers
whatsoever, and no person or entity shall be a third party beneficiary of this
Agreement. Nothing in this section affects the ability of either party to
terminate this Agreement or any Service in accordance with the provisions of
this Agreement or Exhibit A.
14.03 Relationship of the Parties. Neither Party is an agent of the other Party
and neither Party has any authority to bind the other Party, transact any
business in the other Party's name or on its behalf, or make any promises or
representations on behalf of the other Party unless provided for in Exhibit A or
agreed to in writing. Each Party will perform all of its respective obligations
under this Agreement as an independent contractor, and no joint venture,
partnership or other relationship shall be created or implied by this Agreement.
14.04 Governing Law. Any questions, claims, disputes or litigation arising from
or related to the making, performance and termination of this Agreement shall be
governed by the laws of New York without regard to the principles of conflicts
of law; provided that the parties may, by mutual agreement, agree to submit to
UK legal principles if an arbitration proceeding is undertaken in the United
Kingdom pursuant to ss. 13.01(b).
14.05 Entire Agreement. This Agreement and the Exhibits referred to in this
Agreement, which Exhibits are incorporated and made a part of this Agreement by
reference, constitute the entire agreement between Avis Fleet and PHH relating
to services to be provided by Avis Fleet to PHH and, with the exception of the
Merger Agreement and any related Agreements, there are no further agreements or
understandings, written or oral, between the Parties with respect thereto.
14.06 Notices. Any notices, request, demands or other communications required by
or made under this Agreement shall be in writing and shall be deemed to have
been duly given i) on the date of service if served personally on the Party to
whom notice is to be given, ii) on the day of transmission if sent via facsimile
transmission to the facsimile number given below, and telephonic confirmation of
receipt is obtained promptly after completion of transmission, iii) on the day
after delivery to Federal Express or similar overnight courier or the Express
Mail service maintained by the U.S. Postal Service or iv) on the fifth day after
mailing, if mailed to the Party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid and properly addressed, to the
Party as follows:
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If to PHH: To the person designated on Exhibit A as the PHH contact for a
specific Service or to:
Eric J. Bock
Vice President, Legal
PHH Corporation
9 West 57th Street, 37th Floor
New York, NY 10019
with a copy to:
Jeanne M. Murphy
SVP and Corporate Counsel
Cendant Corporation
6 Sylvan Way
Parsippany, NJ 07054
FAX: (973) 498-5331
If to Avis Fleet: To the person designated on Exhibit A as the Avis Fleet
contact for a specific Service or to:
General Counsel
Avis Rent A Car, Inc.
World Headquarters
900 Old Country Road
Garden City, NY 11530
14.07 Paragraph Headings. The title and headings of various paragraphs of this
Agreement are inserted for convenience or reference only and shall not be used
in the construction or interpretation of any provisions of this Agreement.
14.08 Conflicting Provisions. In the event any provision of Exhibit A conflicts
with the provisions of this Agreement, the provisions of this Agreement shall be
controlling.
14.09 Survival of Provisions. The representations, warranties and covenants
contained herein shall survive the termination or expiration of this Agreement
to the full extent necessary to protect the Party in whose favor they run.
14.10 Waiver and Modification. No part of this Agreement or any of the Exhibits
may be amended, modified, supplemented or waived in any manner whatsoever
(including course of dealing or of performance) except by a written instrument
signed by authorized officers of the Parties. Any failure or delay by either
party in exercising any right or remedy in one or many instances will not
prohibit a Party from exercising it at a later time or from exercising any other
right or remedy.
[SIGNATURE PAGE FOLLOWS]
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ACCEPTED AND AGREED TO:
AVIS FLEET LEASING AND
MANAGEMENT CORPORATION:
By: ___________________________
Name:
Title:
PHH CORPORATION
By: ___________________________
Name:
Title:
<PAGE>
Exhibit 10.23
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of June 30, 1999, by and among Avis
Rent A Car, Inc., a Delaware corporation ("the Company"), Avis Fleet Leasing and
Management Corporation, a Texas corporation and a wholly owned subsidiary of the
Company ("Acquiror Sub"), PHH Corporation, a Maryland corporation ("Parent"),
and PHH Holdings Corporation, a Texas corporation and a wholly owned subsidiary
of Parent ("Holdings").
WHEREAS, the Company, Acquiror Sub, Parent and Holdings are parties to the
Agreement and Plan of Merger and Reorganization (the "Merger Agreement"), dated
as of May 22, 1999, as amended by the Amendment to the Agreement and Plan of
Merger and Reorganization, dated as of June 30, 1999, providing for the merger
of the Company and Holdings (the "Merger") pursuant to the Texas Business
Corporation Act, on the terms and subject to the conditions set forth therein;
and
WHEREAS, upon consummation of the Merger, Parent is acquiring 7,200,000
shares of the series A cumulative participating redeemable convertible preferred
stock, par value $0.01 per share (the "Series A Preferred Stock"), of Acquiror
Sub, which shares constitute 100% of the issued and outstanding shares of Series
A Preferred Stock; and
WHEREAS, the Series A Preferred Stock is convertible, under the
circumstances set forth in the Certificate of Designations of the Powers,
Preferences and Special Rights of the Series A Preferred Stock filed with the
Secretary of State of the State of Texas on June 29, 1999, into shares of class
B common stock, par value .01 per share, of the Company (the "Class B Common
Stock");
WHEREAS, until the fifth anniversary of the date of issuance thereof,
Acquiror Sub may pay dividends on the Series A Preferred Stock in shares of
series B cumulative PIK preferred stock, par value $.01 per share, of Acquiror
Sub ("Series B Preferred Stock");
WHEREAS, the Series B Preferred Stock is convertible, under the
circumstances set forth in the Certificate of Designations of the Powers,
Preferences and
<PAGE>
Special Rights of the Series B Preferred Stock filed with the Secretary of State
of the State of Texas on __________, 1999, into shares of Class B Common Stock;
WHEREAS, upon the transfer, sale or disposition for value to any person
other than Cendant Corporation, a Delaware corporation and the parent
corporation of Parent ("Cendant"), or any Affiliate of Cendant, each share of
Class B Common Stock shall be exchanged automatically for a share of common
stock, par value $.01 per share, of the Company (the "Common Stock");
WHEREAS, in the event that Holder owns less than twenty percent (20%) of
the total voting power of the outstanding shares of voting stock of the Company,
each share of Class B Common Stock shall be exchangeable, at the option of
Holder, for one share of Common Stock;
WHEREAS, the Common Stock is publically traded on the New York Stock
Exchange;
WHEREAS, as a condition to closing under the Merger Agreement, the
Company, Acquiror Sub, Parent and Holdings are entering into this Agreement to
provide certain registration rights with respect to the shares of Common Stock
issuable to Parent, all in accordance with the terms and conditions set forth
herein; and
WHEREAS, the Board of Directors of the Company has authorized the officers
of the Company to execute and deliver this Agreement in the name and on behalf
of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and as a condition to closing under the Merger Agreement, the
parties to this Agreement hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the following meanings:
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Holder" means (i) Parent from and after the time at which it becomes
entitled to receive shares of Class B Common Stock upon a conversion of shares
of Series A
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Preferred Stock or Series B Preferred Stock and (ii) any other person that owns
Class B Common Stock or Registrable Securities, including their respective
successors and assigns who acquire such securities, directly or indirectly, from
Parent or such other person. For purposes of this Agreement, the Company may
deem and treat the registered holder of a Registrable Security as the Holder and
absolute owner thereof, and the Company shall not be affected by any notice to
the contrary.
"Registrable Securities" means (a) the Common Stock issuable upon ex
change of any shares of Class B Common Stock hereafter owned by Parent, (b) any
Common Stock acquired by Parent, Cendant, Holdings or any other Affiliate of
Parent in the open market at a time when Parent, Cendant, Holdings or any other
Affiliate of Parent is deemed to be an Affiliate (as such term is defined under
Rule 144 under the Securities Act) of the Company, and (c) any securities issued
or issuable in respect of the Common Stock referred to in clauses (a) and (b)
above, by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, reclassification, merger or
consolidation, and any other securities issued pursuant to any other pro rata
distribution with respect to such Common Stock. For purposes of this Agreement,
a Registrable Security ceases to be a Registrable Security when (x) it has been
effectively registered under the Securities Act and sold or distributed to the
public in accordance with an effective registration statement covering it (and
has not been reacquired in the manner described in clause (b) above), or (y) it
is sold or distributed to the public pursuant to Rule 144 (or any successor or
similar provision) under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
2. Demand Registration.
(a) Subject to Section 5 hereof, if at any time any Holder shall request
the Company in writing to register under the Securities Act all or a part of the
Registrable Securities held by such Holder (a "Demand Registration"), the
Company shall use all reasonable efforts to cause to be filed and declared
effective as soon as reasonably practicable (but in no event later than the 45th
day after such Holder's request is made) a registration statement, on such
appropriate form as the Company in its discretion shall determine, providing for
the sale of all such Registrable Securities by such Holder. The Company agrees
to use its best efforts to keep any such
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registration statement continuously effective and usable for resale of
Registrable Securities for so long as the Holder whose Registrable Securities
are included therein shall request. The Company shall be obligated to file
registration statements pursuant to this Section 2(a) until all Registrable
Securities have ceased to be Registrable Securities. Each registration statement
filed pursuant to this Section 2(a) is hereinafter referred to as a "Demand
Registration Statement."
(b) The Company agrees (i) not to effect any public or private sale,
distribution or purchase of any of its securities which are the same as or
similar to the Registrable Securities, including a sale pursuant to Regulation D
under the Securities Act, during the 15-day period prior to, and during the
45-day period beginning on, the closing date of each underwritten offering under
any Demand Registration Statement, and (ii) to use reasonable best efforts to
cause each holder of its securities purchased from the Company, at any time on
or after the date of this Agreement (other than in a registered public offering)
to agree not to effect any public sale or distribution of any such securities
during such period, including a sale pursuant to Rule 144 under the Securities
Act.
(c) The Company may postpone for a reasonable period of time, not to
exceed 30 days, the filing or the effectiveness of any Demand Registration
Statement if the Board of Directors of the Company in good faith determines that
(A) such registration might have a material adverse effect on any plan or
proposal by the Company with respect to any financing, acquisition,
recapitalization, reorganization or other material transaction, or (B) the
Company is in possession of material non-public information that, if publicly
disclosed, could result in a material disruption of a major corporate
development or transaction then pending or in progress or in other material
adverse consequences to the Company.
(d) If at any time any Holder of Registrable Securities to be covered by a
Demand Registration Statement desires to sell Registrable Securities in an
underwritten offering, such Holder shall have the right to select any
nationally recognized investment banking firm(s) to administer the offering,
subject to the approval of the Company, which approval shall not be unreasonably
withheld, and the Company shall enter into underwriting agreements with the
underwriter(s) of such offering, which agreements shall contain such
representations and warranties by the Company, and such other terms, conditions
and indemnities as are at the time customarily contained in underwriting
agreements for similar offerings.
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3. Incidental Registration. Subject to Section 5 hereof and the other
terms and conditions set forth in this Section 3, if the Company proposes at any
time to register any shares of Common Stock (the "Initially Proposed Shares")
under the Securities Act for sale, whether or not for its own account, pursuant
to an underwritten offering, the Company will promptly give written notice to
the Holders of its intention to effect such registration (such notice to
specify, among other things, the proposed offering price, the kind and number of
securities proposed to be registered and the distribution arrangements,
including identification of the underwriter(s)), and the Holders shall be
entitled to include in such registration statement, as a part of such
underwritten offering, such number of shares (the "Holder Shares") to be sold
for the account of the Holders (on the same terms and conditions as the
Initially Proposed Shares) as shall be specified in a request in writing
delivered to the Company within 15 days after the date upon which the Company
gave the aforementioned notice.
The Company's obligations to include Holder Shares in a registration
statement pursuant to this Section 3 is subject to each of the following
limitations, conditions and qualifications:
(i) If, at any time after giving written notice of its intention
to effect a registration of any of its shares of Common Stock
and prior to the effective date of any registration statement
filed in connection with such registration, the Company shall
deter mine for any reason not to register all of such shares,
the Company may, at its election, give written notice of such
determination to the Holders and thereupon it shall be
relieved of its obligation to use any efforts to register any
Holder Shares in connection with such aborted registration.
(ii) If, in the opinion of the managing underwriter(s) of such
offering, the distribution of all or a specified portion of
the Holder Shares would materially interfere with the
registration and sale, in accordance with the intended method
thereof, of the Initially Proposed Shares, then the number of
Holder Shares to be included in such registration statement
shall be reduced to such number, if any, that, in the opinion
of such managing underwriter(s), can be included without such
interference. If, as a result of the cutback provisions of
the preceding sentence, the Holders are not entitled to
include all of the Holder Shares in such registration, such
Holders may elect to
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<PAGE>
withdraw their request to include Holder Shares in such
registration (a "Withdrawal Election").
If the Company shall so request in writing, each Holder agrees not to
effect any public or private sale or distribution of any Registrable Securities
(other than the Holder Shares) during the 15-day period prior to and during the
45-day period beginning on, the closing date of any underwritten public offering
of shares of Common Stock made for the Company's own account.
4. Registration Procedures.
(a) Whenever the Company is required to use all reasonable efforts to
effect the registration of any Registrable Securities under the Securities Act
pursuant to the terms and conditions of Section 2(a) or 3 (such Registrable
Securities being hereinafter referred to as "Subject Shares"), the Company will
use all reasonable efforts to effect the registration and sale of the Subject
Shares in accordance with the intended method of disposition thereof. Without
limiting the generality of the foregoing, the Company will as soon as
practicable:
(i) prepare and file with the SEC a registration statement with
respect to the Subject Shares in form and substance
satisfactory to the Holders of the Subject Shares, and use all
reason able efforts to cause such registration statement to
become effective as soon as possible;
(ii) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such
registration statement effective for the applicable period and
to comply with the provisions of the Securities Act with
respect to the disposition of all Subject Shares and other
securities covered by such registration statement;
(iii) furnish the Holders covered by such registration statement,
without charge, such number of conformed copies of such
registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such
number of copies of the prospectus included in such
registration statement (including each preliminary
prospectus), such
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<PAGE>
documents incorporated by reference in such registration
statement or prospectus, and such other documents, as such
Holders may reasonably request;
(iv) use all reasonable efforts to register or qualify the Subject
Shares covered by such registration statement under the
securities or blue sky laws of such jurisdictions as the
managing underwriter(s) shall reasonably recommend, and do any
and all other acts and things which may be reasonably
necessary or advisable to enable the Holders to consummate the
disposition in such jurisdictions of the Subject Shares
covered by such registration statement, except that the
Company shall not for any such purpose be required to (A)
qualify generally to do business as a foreign corporation in
any jurisdiction wherein it is not so qualified, (B) subject
itself to taxation in any jurisdiction wherein it is not so
subject, or (C) consent to general service of process in any
such jurisdiction or otherwise take any action that would
subject it to the general jurisdiction of the courts of any
jurisdiction in which it is not so subject;
(v) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC;
(vi) furnish, at the Company's expense, unlegended certificates
representing ownership of the securities being sold in such
denominations as shall be requested and instruct the transfer
agent to release any stop transfer orders with respect to the
Subject Shares being sold;
(vii) notify each Holder at any time when a prospectus relating to
the Subject Shares is required to be delivered under the
Securities Act of the happening of any event as a result of
which the prospectus included in such Registration Statement
contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein
(in the case of the prospectus or any preliminary prospectus,
in light of the circumstances under which they were made) not
misleading, and the company will, as promptly as practicable
thereafter, prepare and file with the SEC and furnish a
supple-
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ment or amendment to such prospectus so that, as thereafter
delivered to the purchasers of Subject Shares such prospectus
will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(viii) enter into customary agreements (including an underwriting
agreement in customary form in the case of an underwritten
offering) and make such representations and warranties to the
sellers and underwriter(s) as in form and substance and scope
are customarily made by issuers to underwriters in
underwritten offerings and take such other actions as the
Holders or the managing underwriter(s) or agent, if any,
reasonably require in order to expedite or facilitate the
disposition of such Subject Shares;
(ix) make available for inspection by the Holders, any underwriter
or agent participating in any disposition pursuant to such
Registration Statement, and any attorney, accountant or other
similar professional advisor retained by any such Holders or
underwriter (collectively the "Inspectors"), all pertinent
financial and other records, pertinent corporate documents and
properties of the Company (collectively, the "Records"), as
shall be reasonably necessary to enable them to exercise their
due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information
reasonably requested by any such Inspector in connection with
such Registration Statement. The Holders agree that Records
and other information which the Company determines, in good
faith, to be confidential and of which determination the
Inspectors are so notified shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in
the Registration Statement, (ii) the release of such Records
is ordered pursuant to a subpoena, court order or regulatory
or agency request or (iii) the information in such Records has
been generally disseminated to the public. Each Holder agrees
that it will, upon learning that disclosure of such Record is
sought in a court of competent jurisdiction or by a
governmental agency, give
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notice to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure
of the Records deemed confidential;
(x) obtain for delivery to the Company, the underwriter(s) or
their agent, with copies to the Holders, a "cold comfort"
letter from the Company's independent public accountants in
customary form and covering such matters of the type
customarily covered by "cold comfort" letters as the Holders
or the managing underwriter(s) reasonably request;
(xi) obtain for delivery to the Holders and the underwriter(s) or
their agent an opinion or opinions from counsel for the
Company in customary form and reasonably satisfactory to the
Holder, underwriters or agents and their counsel;
(xii) make available to its security holders earnings statements,
which need not be audited, satisfying the provisions of
Section 11(a) of the Securities Act no later than 90 days
after the end of the 12-month period beginning with the first
month of the Company's first quarter commencing after the
effective date of the Registration Statement, which earnings
statements shall cover said 12-month period;
(xiii) make every reasonable effort to prevent the issuance of any
stop order suspending the effectiveness of the registration
statement or of any order preventing or suspending the
effectiveness of such registration statement at the earliest
possible moment;
(xiv) cause the Subject Shares to be registered with or approved by
such other governmental agencies or authorities within the
United States as may be necessary to enable the sellers
thereof or the underwriters(s), if any, to consummate the
disposition of such Subject Shares;
(xv) cooperate with the Holders and the managing underwriter(s), if
any, or any other interested party (including any interested
broker-dealer) in making any filings or submission required to
9
<PAGE>
be made, and the furnishing of all appropriate information in
connection therewith, with the National Association of
Securities Dealers, Inc. ("NASD");
(xvi) cause its subsidiaries to take action necessary to effect the
registration of the Subject Shares contemplated hereby,
including filing any required financial information;
(xvii) effect the listing of the Subject Shares on the New York Stock
Exchange or such other national securities exchange or
over-the-counter market on which shares of the Common Stock
shall then be listed; and
(xviii) take all other steps necessary to effect the registration of
the Subject Shares contemplated hereby.
(b) The Holders shall provide (in writing and signed by the Holders and
stated to be specifically for use in the related registration statement,
preliminary prospectus, prospectus or other document incident thereto) all such
information and materials and take all such action as may be required in order
to permit the Company to comply with all applicable requirements of the SEC and
any applicable state securities laws and to obtain any desired acceleration of
the effective date of any registration statement prepared and filed by the
Company pursuant to this Agreement.
(c) The Holders shall, if requested by the Company or the managing
underwriter(s) in connection with any proposed registration and distribution
pursuant to this Agreement, (i) agree to sell the Subject Shares on the basis
provided in any underwriting arrangements entered into in connection therewith
and (ii) complete and execute all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents customary in similar
offerings.
(d) Upon receipt of any notice from the Company that the Company has
become aware that the prospectus (including any preliminary prospectus) included
in any registration statement filed pursuant to Section 2(a) or 3, as then in
effect, contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, the Holders shall forthwith discontinue disposition of
Subject Shares pursuant to the registration statement covering the same until
the Holders' receipt of copies of a
10
<PAGE>
supplemented or amended prospectus and, if so directed by the Company, deliver
to the Company (at the Company's expense) all copies other than permanent file
copies then in the Holder's possession, of the prospectus covering the Subject
Shares that was in effect prior to such amendment or supplement.
(e) The Holders shall pay all out-of-pocket expenses incurred in
connection with any Demand Registration Statements filed pursuant to Section
2(a) of this Agreement, including, without limitation, all SEC and blue sky
registration and filing fees (including NASD fees), printing expenses, transfer
agents and registrars' fees, underwriting discounts, commissions and expenses
attributable to securities sold for the account of the Holders pursuant to such
registration statement, fees and disbursements of the Company's counsel and
accountants and fees and disbursements of experts used by the Company in
connection with such registration statement. The Company shall pay any such
out-of-pocket expenses incurred in connection with any registration statement
filed pursuant to Section 3 of this Agreement, except that the Holders shall pay
all underwriting discounts, commissions and expenses attributable to the Subject
Shares sold pursuant to any such registration statement.
(f) In connection with any sale of Subject Shares that are registered
pursuant to this Agreement, the Company and the Holders shall enter into an
agreement providing for indemnification of the Holders by the Company, and
indemnification of the Company by the Holders, on terms customary for such
agreements at that time (it being understood that any disputes arising as to
what is customary shall be resolved by counsel to the underwriters).
5. Indemnification.
(a) Indemnification by the Company. The Company will, without limitation
as to time, indemnify and hold harmless, to the fullest extent permitted by law,
each Holder of Registrable Securities registered pursuant to this Agreement, the
officers, directors, agents and employees of each of them, each person who
controls such Holder (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, agents and
employees of any such controlling person, from and against all reasonable and
documented losses, claims, damages, liabilities, costs (including without
limitation the costs of investigation and attorneys' fees) and expenses
(collectively, "Losses'), as incurred, arising out of or based upon any untrue
or alleged untrue statement of a material fact contained in any registration
statement, prospectus or form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or based upon
11
<PAGE>
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are based solely upon information furnished in
writing to the Company by such Holder expressly for use therein.
(b) Indemnification by Holders of Registrable Securities. In connection
with any registration statement in which a Holder is participating, such Holder
will furnish to the Company in writing such information as the Company
reasonably requests for use in connection with any registration statement or
prospectus and will indemnify, to the fullest extent permitted by law, the
Company, its officers, directors, agents and employees, each person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act) and the officers, directors, agents and employees of any
such controlling person, from and against all Losses, as incurred, arising out
of or based upon any untrue or alleged untrue statement of a material fact
contained in any registration statement, prospectus or form of prospectus or in
any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, to the extent, but only to the extent, that any such
statement or omission is contained in any information furnished in writing to
the Company by such Holder expressly for use therein and was relied upon by the
Company in the preparation thereof. In no event will the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the
proceeds (net of payment of all expenses) received by such Holder upon the sale
of the Registrable Securities giving rise to such indemnification obligations.
(c) Conduct of Indemnification Proceedings. If any person shall become
entitled to indemnity hereunder (an "indemnified party"), such indemnified party
shall give prompt notice to the party from which such indemnity is sought (the
"indemnifying party") of any claim or of the commencement of any action or
proceeding with respect to which such indemnified party seeks indemnification or
contribution pursuant hereto; provided, however, that the failure to so notify
the indemnifying party will not relieve the indemnifying party from any
obligation or liability except to the extent that the indemnifying party has
been prejudiced materially by such failure. All reasonable and documented fees
and expenses (including any fees and expenses incurred in connection with
investigating or preparing to defend such action or proceeding) will be paid to
the indemnified party, as incurred, within five calendar days of written notice
thereof to the indemnifying party (regard less of whether it is ultimately
determined that an indemnified party is not entitled to
12
<PAGE>
indemnification hereunder). The indemnifying party will not consent to entry of
any judgment or enter into any settlement or otherwise seek to terminate any
action or proceeding in which any indemnified party is or could be a party and
as to which indemnification or contribution could be sought by such indemnified
party under this Section 5, unless such judgment, settlement or other
termination includes as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release, in form and substance
satisfactory to the indemnified party, from all liability in respect of such
claim or litigation for which such indemnified party would be entitled to
indemnification hereunder.
(d) Contribution. If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under Section 5(a) or 5(b) hereof in respect
of any Losses or is insufficient to hold such indemnified party harmless, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, will, jointly and severally, contribute to the amount paid or payable by
such indemnified party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties,
on the one hand, and such indemnified party, on the other hand, in connection
with the actions, statement or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party or indemnifying parties, on the one hand, and such
indemnified party, on the other hand, will be determined by reference to, among
other things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or related to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses will be deemed to include any reasonable and documented legal or
other fees or expenses incurred by such party in connection with any action or
proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), an indemnifying party that
is a selling Holder will not be required to contribute any amount in excess of
the amount by which the total price at which the Registrable Securities sold by
such indemnifying party and distributed to the public were offered to the public
exceed the amount of any damages which such indemnifying party has otherwise
been required to pay by reason of such untrue or
13
<PAGE>
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
The indemnity, contribution and expense reimbursement obligations
contained in this Section 5 will be in addition to any liability that the
indemnifying party or parties may otherwise have to the indemnified party or
parties. The provisions of this Section 5 will survive so long as Registrable
Securities remain outstanding, notwithstanding any transfer of the Registrable
Securities by any Holder thereof or any termination of this Agreement.
6. Notices. Any notice or other communication required or permitted given
hereunder shall be in writing and shall be effective (a) upon hand delivery or
delivery by fax at the address or number designated below (if delivered on a
business day during normal business hours where such notice is to be received),
or the first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the third business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever shall first occur. The addresses for such communications
shall be:
If to the Company or Acquiror Sub, to:
Avis Rent A Car, Inc.
900 Old Country Road
Garden City, New York 11530
Attn: Karen Sclafani, Esq.
Fax: (516) 222-6922
14
<PAGE>
If to Parent or Holdings, to:
PHH Corporation
c/o Cendant Corporation
9 West 57th Street
37th Floor
New York, NY 10019
Attn: General Counsel
Fax: (212) 413-1922
If to any other Holder, to such name at such address as such
Holder shall have indicated in a written notice delivered to
the other parties to this Agreement.
Any party hereto may from time to time change its address for notices under this
Section 6 by giving at least 10 days' notice of such changes to the other
parties hereto.
7. Waivers. No waiver by any party of any default with respect to any
provision, condition or requirement hereof shall be deemed to be a continuing
waiver in the future thereof or a waiver of any other provision, condition or
requirement hereof; nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right accruing to
it thereafter.
8. Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
9. Successors and Assigns; Amendments. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns,
including, without limitation, and without the need for an express assignment,
each subsequent Holder of any Registrable Securities. Except as provided in this
Section 9, neither the Company nor any Holder shall assign this Agreement or any
rights hereunder without the prior written consent of the other parties hereto.
The assignment by a party of this Agreement or any rights hereunder shall not
affect the obligations of such party hereunder. This Agreement may not be
amended except by a written instrument executed by the parties hereto.
15
<PAGE>
10. No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
11. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware without
regard to the principles of conflicts of laws.
12. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto in respect of the subject matter hereof and supersedes all prior
agreements and understandings between the parties with respect to the subject
matter hereof.
13. Execution. This Agreement may be executed in two or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.
[SIGNATURE PAGE FOLLOWS]
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date hereof.
AVIS RENT A CAR, INC.
By:__________________________________
Name:
Title:
AVIS FLEET LEASING AND
MANAGEMENT CORPORATION
By:__________________________________
Name:
Title:
PHH CORPORATION
By:__________________________________
Name:
Title:
PHH HOLDINGS CORPORATION
By:__________________________________
Name:
Title:
17
<PAGE>
Exhibit 10.24
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT, dated as of June 30, 1999 (the
"Agreement"), among Avis Rent A Car, Inc., a Delaware corporation ("Acquiror"),
Avis Fleet Leasing and Management Corporation, a Texas corporation ("Acquiror
Sub") and a wholly owned subsidiary of Acquiror, PHH Corporation, a Maryland
corporation ("Parent"), and PHH Holdings Corporation, a Texas corporation
("Holdings") and a wholly owned subsidiary of Parent.
W I T N E S S E T H
WHEREAS, Acquiror, Acquiror Sub, Parent and Holdings are parties to
the Agreement and Plan of Merger and Reorganization (the "Merger Agreement"),
dated as of May 22, 1999, as amended by the Amendment to the Agreement and Plan
of Merger and Reorganization, dated as of June 30, 1999, providing for the
merger of Acquiror Sub and Holdings (the "Merger") pursuant to the Texas
Business Corporation Act (the "TBCA"), on the terms and subject to the
conditions set forth therein (capitalized terms not otherwise defined herein
shall have the respective meanings assigned to such terms in the Merger
Agreement);
WHEREAS, upon consummation of the Merger, Acquiror Sub shall acquire
the vehicle fleet management and fuel card businesses of Holdings (collectively,
the "Business");
WHEREAS, Parent, Holdings and/or their respective Affiliates (as
hereinafter defined) have experience in the vehicle fleet management and fuel
card businesses; and
WHEREAS, as a condition to closing under the Merger Agreement,
Parent and Holdings agreed to execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth and for other good and valuable consideration, receipt of
which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Non-Competition. In consideration of the Merger
Consideration being delivered by Acquiror and Acquiror Sub to Parent and
Holdings on the date hereof, Parent and Holdings agree that for a period
commencing at the Effective Time and ending on the fifth anniversary of the
Effective Time, Parent and Holdings shall not, and shall cause each of their
respective affiliates not to, directly or indirectly, engage in or own any
interest in any business that engages in the vehicle fleet management or fuel
card businesses or markets any products or services that directly compete with
the Business, as presently conducted by the Transferred Companies (a
"Competitive Business"); provided, however, that it shall not be a violation of
this Agreement for Parent, Holdings or their respective affiliates to
<PAGE>
(i) acquire, own or invest in securities representing less than five percent
(5%) of the outstanding voting power of the securities of a publicly traded
company; or (ii) develop and/or market any products or services that are either
marketed by Parent, Holdings or their respective affiliates (other than the
Transferred Companies) on the date hereof or are incidental to or derived from
products or services marketed by Parent, Holdings or their respective affiliates
(other than the Transferred Companies) on the date hereof; provided, however,
that any such incidental or derived products or services that are developed
and/or marketed by Parent, Holdings or their respective affiliates shall be so
developed and marketed indirectly through an outsourcing arrangement and, in
connection therewith, Parent, Holdings or such affiliate shall provide to
Acquiror Sub a right of first refusal to provide such product or service.
Notwithstanding the foregoing, nothing in this Agreement shall in any way (x)
prohibit Holdings, Parent or any of their affiliates from acquiring a
Competitive Business as part of an acquisition, by joint venture, merger or
other business combination, of the assets of, or a controlling interest in,
another Person (a "Target Business") if the revenue derived by the Target
Business from the Competitive Business in the fiscal year preceding such
acquisition constituted less than 15% of the total net revenues of the Target
Business; or (y) be deemed to apply to any preexisting Competitive Business of a
Person (or any of its subsidiaries) that acquires control of Cendant
Corporation, a Delaware corporation ("Cendant"), or one of its subsidiaries or
that acquires all or substantially all of the assets of Cendant or one of its
subsidiaries or merges with Cendant in a "merger of equals".
Section 2. Non-Solicitation of Employees. In consideration of the
Merger Consideration being delivered by Acquiror and Acquiror Sub to Parent and
Holdings, Parent and Holdings agree that for a period commencing at the
Effective Time and ending on the second anniversary of the Effective Time,
Parent, Holdings and their respective affiliates shall not solicit for
employment any Person who is currently an employee of the Transferred Companies
or induce or encourage any such Person to leave such Transferred Company's
employ, or to become employed by any Person other than such Transferred Company,
provided, however, that the foregoing shall not prohibit Holdings, Parent or any
of their affiliates from employing any such person who initiates contact with
Holdings, Parent or any of their affiliates regarding employment or who
initiates contact with Holdings, Parent or any of their affiliates in response
to any advertisement to the public in general or by a recruiter concerning
available positions and without any direct solicitation by or encouragement from
Holdings, Parent or any of their affiliates.
Section 3. Severability. It is the desire and intent of the parties
to this Agreement that the provisions of this Agreement shall be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. If any particular provisions or
portion of this Agreement shall be adjudicated to be invalid or unenforceable,
this Agreement shall be deemed amended to delete therefrom such provision or
portion adjudicated to be invalid or unenforceable, such amendment to apply only
with respect to the operation of such Agreement in the particular jurisdiction
in which such adjudication is made.
2
<PAGE>
Section 4. Headings. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of any provisions hereof.
Section 5. Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and there are not restrictions, promises,
representations, warranties, covenants, conditions or undertakings with respect
to the subject matter hereof, other than those expressly set forth or referred
to herein. This Agreement supersedes all prior agreements and understandings
between the parties hereto with respect to the subject matter hereof.
Section 6. Notices. All notices and other communications hereunder
shall be in writing and shall be delivered personally or by next-day courier or
telecopied with confirmation of receipt, to the parties at the addresses
specified below (or at such address for a party as shall be specified by like
notice; provided that notices of change of address shall be effective only upon
receipt thereof). Any such notice shall be effective upon receipt, if personally
delivered or telecopied, or one day after delivery to a courier for next-day
delivery.
If to Parent or Holdings:
PHH Corporation
6 Sylvan Way
Parsippany, New Jersey 07054
Telecopy: (973) 496-5355
Attention: General Counsel
Copies to:
Cendant Corporation
9 West 57th Street
37th Floor
New York, New York 10019
Telecopy: (212) 413-1922
Attention: General Counsel
and
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
Wilmington, Delaware 19801
Telecopy: (302) 651-3001
Attention: Patricia Moran Chuff, Esq.
If to Acquiror or Acquiror Sub:
Avis Rent A Car, Inc.
3
<PAGE>
900 Old Country Road
Garden City, New York 11530
Telecopy: (516) 222-6922
Attention: Karen Sclafani, Esq.
Copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 354-8113
Attention: Sean Geary, Esq.
Section 7. Governing Law. The substantive laws of the State of New
York shall govern the interpretation, validity and performance of the terms of
this Agreement, regardless of the law that might be applied under applicable
principles of conflicts of laws.
Section 8. Waiver. Either party may waive compliance by the other
party of any of the provisions of this Agreement. Any waiver (express or
implied) of any default or breach of this Agreement shall not constitute a
waiver of any other or subsequent default or breach. Any waiver must be in
writing and must be signed by the party waiving any provision hereof.
Section 9. Affiliates. As used herein, "Affiliate" shall mean, with
respect to any Person, any other Person that directly or indirectly, through one
or more intermediaries, controls, or is controlled by, or is under common
control with, such Person; provided, however, that the term "Affiliate" shall
not include, with respect to any Person, any public corporation in which such
Person owns securities representing less than 50% of the outstanding voting
power.
Section 10. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed
an original but all of which shall constitute one and the same
Agreement.
[SIGNATURE PAGES FOLLOW]
4
<PAGE>
IN WITNESS WHEREOF, the undersigned hereby agree to be bound by the
terms and provisions of this Non-Competition Agreement as of the date first
above written.
AVIS RENT A CAR, INC.
By: __________________________
Name:
Title:
AVIS FLEET LEASING AND MANAGEMENT
CORPORATION
By: __________________________
Name:
Title:
PHH CORPORATION
By: __________________________
Name:
Title:
PHH HOLDINGS CORPORATION
By: __________________________
Name:
Title:
<PAGE>
Exhibit 10.25
STOCKHOLDERS' AGREEMENT
This STOCKHOLDERS' AGREEMENT ("Agreement"), dated as of June 30,
1999, is by and among Avis Rent A Car, Inc., a Delaware corporation
("Acquiror"), Avis Fleet Leasing and Management Corporation, a Texas corporation
and a wholly owned subsidiary of Acquiror (the "Company") and PHH Corporation, a
Maryland corporation ("Parent").
W I T N E S S E T H
WHEREAS, Acquiror, the Company, Parent and PHH Holdings Corporation,
a Texas corporation and a wholly owned subsidiary of Parent ("Holdings"), are
parties to the Agreement and Plan of Merger and Reorganization (the "Merger
Agreement"), dated as of May 22, 1999, as amended by the Amend ment to the
Agreement and Plan of Merger and Reorganization, dated as of June 30, 1999,
providing for the merger of the Company and Holdings (the "Merger") pursuant to
the Texas Business Corporation Act (the "TBCA"), on the terms and subject to the
conditions set forth therein; and
WHEREAS, upon consummation of the Merger, Parent is acquiring
7,200,000 shares of the Series A Cumulative Participating Redeemable Convertible
Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"), of
the Company, which shares constitute 100% of the issued and outstanding shares
of Series A Preferred Stock; and
WHEREAS, the powers, preferences, rights and limitations of the
Series A Preferred Stock are set forth in the Certificate of Designations of the
Powers, Preferences and Special Rights of the Series A Preferred Stock (the
"Series A Certificate") filed with the Secretary of State of the State of Texas
on June 29, 1999 (capitalized terms used and not otherwise defined herein shall
have the meanings ascribed to such terms in the Series A Certificate); and
WHEREAS, certain dividends on the Series A Preferred Stock are
payable in shares of Series B Cumulative PIK Preferred Stock, par value $0.01
per share (the "Series B Preferred Stock"), of the Company; and
WHEREAS, the powers, preferences, rights and limitations of the
Series B Preferred Stock are set forth in the Certificate of Designations of the
Powers, Preferences and Special Rights of the Series B Preferred Stock (the
"Series B Certificate," and together with the Series A Certificate, the
"Certificates") filed with the Secretary of State of the State of Texas on June
29, 1999; and
WHEREAS, shares of Series A Preferred Stock and Series B Preferred
Stock are convertible into shares of Acquiror Common Stock (as hereinafter
defined) pursuant to the terms of their respective Certificates; and
WHEREAS, as a condition to closing under the Merger Agreement, the
Company, Acquiror and Parent are entering into this Agreement to govern certain
rights and obligations of
<PAGE>
the parties relating to the Shares (as hereinafter defined), all in accordance
with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties agree as follows:
Certain Definitions
For purposes of this Agreement, the following terms shall have the
following meanings:
(a) The term "Acquiror Common Stock" shall mean the common stock,
par value $0.01 per share, of Acquiror and any other common stock of Acquiror
issued upon recapitalization or reclassification of, or exchange for, the
Acquiror Common Stock.
(b) The term "Class B Common Stock" shall mean the non-voting class
B common stock, par value $0.01 per share, of Acquiror to be issued upon
conversion of the Shares, subject to the Class B Shareholder Approval (as
defined in Section 2.04(b) hereof).
(c) The term "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(d) The term "Shares" shall mean the 7,200,000 shares of Series A
Preferred Stock acquired by Parent upon consummation of the Merger on the date
hereof, and any shares of Series A Preferred Stock or Series B Preferred Stock
acquired by Parent after the date of this Agreement.
(e) The term "Transfer" shall mean any voluntary or involuntary
sale, assignment, transfer, pledge or other disposal of any Shares.
ARTICLE II
Representations and Warranties and Covenants of Acquiror
Section 2.01 Common Equity and Paid In Capital. Acquiror hereby
represents and warrants to Parent that, as of the date hereof, Acquiror has
caused the Company to have an aggregate of not less than $360,000,001 of common
equity and paid-in capital.
Section 2.02 Authorization of Acquiror Common Stock. The shares of
Acquiror Common Stock to be issued upon exchange of shares of Class B Common
Stock have been duly authorized and, upon such exchange, such shares of Acquiror
Common Stock will be validly issued, fully paid and nonassessable, free of
preemptive rights, with no personal liability attaching to the ownership
thereof. The transactions contemplated by the Merger Agreement, which include
the issuance of shares of the Class B Common Stock upon the conversion of the
Shares, have been duly authorized by the board of directors of Acquiror and,
upon such conversion,
-2-
<PAGE>
subject to receipt of the Class B Stockholder Approval (as hereinafter defined),
such shares of Class B Common Stock will be duly authorized, validly issued,
fully paid and non-assessable, free of preemptive rights, with no personal
liability attaching to the ownership thereof.
Section 2.03 Covenants Regarding Capital.
(a) Acquiror covenants to Parent that Acquiror shall at all times
prior to the second anniversary of the date hereof cause the Company to have an
aggregate of not less than $360,000,001 of common equity and paid-in capital.
(b) Until the second anniversary of the date of this Agreement,
Acquiror shall cause the Company to deliver to Parent (i) as soon as practicable
after the end of each fiscal year of the Company, but in no event later than 90
days thereafter, an unaudited balance sheet of the Company as of the end of the
fiscal year then ended, and (ii) as soon as practicable after the end of each
quarterly period of each fiscal year of the Company, but in no event later than
45 days thereafter, an unaudited balance sheet of the Company as of the end of
the quarterly period then ended, in each case, accompanied by a certificate of
the Chief Financial Officer of the Company, in form and substance reasonably
satisfactory to Parent, certifying that Acquiror is in compliance with the
requirement set forth in the immediately preceding sentence.
Section 2.04 Covenants Regarding Conversion, Exchange and
Registration Rights.
(a) Acquiror covenants to Parent that Acquiror shall honor and
comply with the provisions of each of the Certificates with respect to, and take
any actions necessary to effectuate, (i) the conversion of the Shares into Class
B Common Stock and (ii) the exchange of the Class B Common Stock into Acquiror
Common Stock, in each case, in accordance with the terms of the applicable
Certificate.
(b) In furtherance of the foregoing, Acquiror shall take all actions
required to (i) authorize the creation of the Class B Common Stock and amend its
Amended and Restated Certificate of Incorporation (the "Charter") in the manner
set forth in Exhibit A hereto, including, without limitation, obtaining any
approval of such actions by Acquiror's stockholders as may be required under the
Charter and the Delaware General Corporate Law (the "Class B Stockholder
Approval") and (ii) obtain approval of Acquiror's stockholders to the issuance
of Acquiror Common Stock and Class B Common Stock to Parent or an affiliate
thereof, pursuant to the New York Stock Exchange Shareholder Approval Policy
(the "NYSE Approval"). In furtherance of the foregoing, Acquiror shall, in
connection with its 2000 annual meeting of stockholders (which shall be held no
later than June 30, 2000), solicit proxies with respect thereto, and include
therein proposals to obtain the NYSE Approval and the Class B Stockholder
Approval, and shall recommend approval of such proposals to Acquiror's
stockholders.
(c) Acquiror has duly authorized and reserved for issuance the
shares of Acquiror Common Stock issuable upon exchange of the Class B Common
Stock; and Acquiror covenants to Parent that such shares of Acquiror Common
Stock shall remain duly authorized and
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<PAGE>
reserved for issuance at all times during which such shares could be issued
under the terms of the Class B Common Stock.
(d) In the event that the Shares are to be automatically converted
into shares of Class B Common Stock pursuant to the terms of the respective
Certificates and the provisions of the Certificates providing for such automatic
conversion are unenforceable against the Company for any reason, Acquiror agrees
to take all actions necessary to cause all outstanding Shares to be exchanged
for the number of shares of Class B Common Stock into which such Shares would
have been converted pursuant to the terms of the Certificates had such automatic
provisions been enforceable against the Company.
(e) Acquiror covenants not to effect any Transaction (as defined in
the Certificates) unless, prior to, or at the time of, the consummation thereof,
the successor corporation (if other than Acquiror) shall assume, by written
instrument mailed to each record holder of Shares at the addresses of each as
shown on the books of the Company maintained by the Secretary of the Company,
the obligation to deliver to such holder such cash and such securities to which,
in accordance with the provisions set forth in Section 7 of the applicable
Certificate, such holder is entitled, and such successor entity shall have
mailed to each record holder of Shares at the addresses of each as shown on the
books of the Company maintained by the Secretary of the Company, an opinion of
outside counsel for such successor entity stating that such assumption agreement
is a valid, binding and enforceable agreement of such successor entity (subject
to customary exceptions).
ARTICLE III
Covenants of Parent
Section 3.01 Covenant Regarding Voting Shares of Acquiror Common
Stock. Parent covenants that it shall cause Cendant Car Rental, Inc. (or any
transferee of the shares of Acquiror Common Stock held by Cendant Car Rental,
Inc.) to vote all shares of Acquiror Common Stock held by it in favor of the
NYSE Approval and the Class B Shareholder Approval.
Section 3.02 Covenant Regarding Sales of the Series A Preferred
Stock. Parent covenants that it shall provide Acquiror with not less than 10
days' prior written notice of any proposed sale, in a single transaction or a
series of related transactions, by Parent or its affiliates of all or
substantially all of the shares of (a) Series A Preferred Stock and (b) Class B
Common Stock that were issued upon the conversion of the Series A Preferred
Stock, that are beneficially owned collectively by Parent and its affiliates.
ARTICLE IV
Miscellaneous
Section 4.01 Legends. Parent agrees that substantially the following
legend shall be placed on the certificates representing any Shares owned by it:
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<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF ("TRANSFERRED") EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF THE
STOCKHOLDERS' AGREEMENT DATED AS OF JUNE 30, 1999, A COPY OF SUCH
STOCKHOLDERS' AGREEMENT IS ON FILE WITH THE SECRETARY OF AVIS FLEET
LEASING AND MANAGEMENT CORPORATION AND IS AVAILABLE WITHOUT CHARGE UPON
WRITTEN RE QUEST THEREFOR. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE
OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF THE
AFORESAID AGREEMENT.
From and after the date of this Agreement, any reference in any legend on any
certificate representing any Shares to the Stockholders' Agreement shall be
deemed for all purposes to refer to this Agreement.
Section 4.02 Specific Performance. Each of Parent, the Company and
Acquiror acknowledges and agrees that in the event of any breach of this
Agreement, the non-breaching party or parties would be irreparably harmed and
could not be made whole by monetary damages. Each of Parent, the Company and
Acquiror hereby agrees that in addition to any other remedy to which they may be
entitled at law or in equity, they shall be entitled to compel specific
performance of this Agreement in any action instituted in any court of the
United States or any state thereof having subject matter jurisdiction for such
action.
Section 4.03 Heading. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of any provisions hereof.
Section 4.04 Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and there are no restrictions, promises,
representations, warranties, covenants, conditions or undertakings with respect
to the subject matter hereof, other than those expressly set forth or referred
to herein. This Agreement supersedes all prior agreements and understandings
between the parties hereto with respect to the subject matter hereof.
Section 4.05 Notices. All notices and other communications hereunder
shall be in writing and shall be delivered personally or by next-day courier or
telecopied with confirmation of receipt, to the parties at the addresses
specified below (or at such other address for a party as shall be specified by
like notice; provided that notices of change of address shall be effective only
upon receipt thereof). Any such notice shall be effective upon receipt, if
personally delivered or telecopied, or one day after delivery to a courier for
next-day delivery.
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<PAGE>
If to Acquiror or the Company, to:
Avis Rent A Car, Inc.
900 Old Country Road
Garden City, New York 11530
Telecopy: (516) 222-6922
Attention: Karen Sclafani, Esq.
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 354-8113
Attention: Sean Geary, Esq.
If to Parent, to:
PHH Corporation
c/o Cendant Corporation
9 West 57th Street
37th Floor
New York, NY 10019
Facsimile: (212) 413-1922
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
Wilmington, Delaware 19801
Facsimile: (302) 651-3001
Attention: Patricia Moran Chuff, Esquire
Section 4.06 Applicable Law. The substantive laws of the State of
New York shall govern the interpretation, validity and performance of the terms
of this Agreement, regardless of the law that might be applied under applicable
principles of conflicts of laws. THE PARTIES HERETO WAIVE THEIR RIGHT TO A JURY
TRIAL WITH RESPECT TO DISPUTES HEREUNDER; ALL SUCH DISPUTES SHALL BE SETTLED BY
BINDING ARBITRATION PURSUANT TO THE RULES OF THE AMERICAN ARBITRATION
ASSOCIATION IN NEW YORK, NEW YORK AND THE ORDER OF SUCH ARBITRATORS SHALL BE
FINAL AND BINDING ON ALL PARTIES HERETO AND MAY BE ENTERED AS A JUDGMENT IN A
COURT HAVING JURISDICTION OVER THE PARTIES.
Section 4.07 Severability. The invalidity, illegality or
unenforceability of one or more of the provisions of this Agreement in any
jurisdiction shall not affect the validity, legality or enforceability of the
remainder of this Agreement in such jurisdiction or the validity, legality or
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<PAGE>
enforceability of this Agreement, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.
Section 4.08 Successors; Assigns. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and their
respective heirs, successors and assigns, including, without limitation, any
Person to which Parent shall Transfer the Shares or the shares of Class B Common
Stock issued upon conversion of the Shares.
Section 4.09 Amendments. This Agreement may not be amended, modified
or supplemented unless such modification is in writing and signed by Acquiror
and Parent.
Section 4.10 Waiver. Any waiver (express or implied) of any default
or breach of this Agreement shall not constitute a waiver of any other or
subsequent default or breach.
Section 4.11 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same Agreement.
Section 4.12 Termination. Unless earlier terminated, this Agreement
shall terminate on the earliest of: (a) the date upon which all of the Shares
are redeemed by the Company; and (b) the tenth anniversary of the date hereof,
provided that Section 3.02 shall continue in effect so long as Parent and/or any
affiliate of Parent beneficially owns Shares or shares of Class B Common Stock
issued upon the conversion of the Shares.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the undersigned hereby agree to be bound by the
terms and provisions of this Agreement as of the date first above written.
AVIS FLEET LEASING AND
MANAGEMENT CORPORATION
By:_____________________________
Name:
Title:
AVIS RENT A CAR, INC.
By:______________________________
Name:
Title:
PHH CORPORATION
By:______________________________
Name:
Title:
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<PAGE>
EX-10.26
TRADEMARK LICENSE AGREEMENT
TRADEMARK LICENSE AGREEMENT ("Agreement") made as of the 30th day of
June, 1999, between PHH Holdings Corporation, a Texas corporation ("Licensor"),
and Avis Fleet Leasing and Management Corporation, a Texas corporation
("Licensee") and a subsidiary of Avis Rent A Car, Inc., a Delaware corporation
("Acquiror").
WITNESSETH:
WHEREAS, PHH Corporation, a Maryland corporation ("Parent"),
Licensor, Acquiror and Licensee entered into an Agreement and Plan of Merger and
Reorganization, dated as of May 22, 1999 (the "Merger Agreement"), as amended by
the Amendment to the Agreement and Plan of Merger and Reorganization, dated as
of June 30, 1999, providing for the merger of Licensor and Licensee in
accordance with the Texas Business Corporation Act;
WHEREAS, Licensor is the owner of the trademarks, trade names, logos
and services marks set forth in Schedule I hereto (the "Licensed Marks");
WHEREAS, Licensee desires to obtain from Licensor the right and
license to use the Licensed Marks in commerce in connection with the Business
(as defined herein); and
WHEREAS, pursuant to the Merger Agreement, Licensor agreed to enter
into this Agreement to grant to Licensee the right and license to use the
Licensed Marks in connection with the Business.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined in
this Agreement shall have the meanings set forth for such terms in the Merger
Agreement.
1.1 "Business" shall mean the vehicle management and fuel
card businesses of Licensee and/or Licensor.
1.2 "Claims" shall have the meaning set forth in Section
13(a) herein.
<PAGE>
1.3 "Commencement Date" shall mean the effective date of
this Agreement, as first set forth above.
1.4 "Licensed Marks" shall mean the trade names, trademarks,
logos and service marks set forth in Schedule I hereto.
2. Grant of License.
(a) Licensor hereby grants to Licensee, and to each of its
subsidiaries, a perpetual, worldwide, royalty-free, exclusive right and license
to use the Licensed Marks in connection with the Business and the marketing,
promotion and sale thereof. For the purposes of clarification, the exclusivity
granted hereunder shall be limited to vehicle management and fuel card products
and services and the marketing, promotion and sale thereof.
(b) Notwithstanding the foregoing, Licensor retains the right
to use and to permit others to use the Licensed Marks in connection with any and
all products and services other than vehicle management and fuel card products
and services.
3. Duration. This license shall commence as of the Commencement Date
and shall be perpetual, unless terminated earlier in accordance with the
provisions of this Agreement.
4. Assignment; Sublicensing.
(a) Assignment. Either party shall be free to assign any or
all of its rights and obligations hereunder to any Person; provided that such
Person shall be bound by the terms and provisions hereof.
(b) Sublicensing. Licensee shall be free to sublicense any of
its rights in the Licensed Marks to any Person, provided that: (i) Licensee
shall impose on such Person obligations with respect to the Licensed Marks that
are no less stringent than those required of Licensee hereunder; (ii) Licensor
shall be a third party beneficiary of the sublicensee's obligations thereunder
with direct rights of enforcement of such obligations; and (iii) upon any
termination of this Agreement, any sublicense granted by Licensee shall
terminate immediately and automatically.
5. Ownership of the Licensed Marks.
(a) Licensee acknowledges that Licensor is the owner of the
Licensed Marks, that use of the Licensed Marks by Licensee shall not create in
Licensee's favor any ownership interest therein, and that all goodwill arising
out of Licensee's use of the Licensed Marks shall inure to the benefit of
Licensor.
<PAGE>
(b) Licensee hereby assigns to Licensor any rights to the
Licensed Marks which may, by operation of law or otherwise, vest in Licensee as
a consequence of Licensee's activities hereunder, and any goodwill arising
therefrom.
6. Quality Control.
(a) Licensee acknowledges that the Licensed Marks have
established extremely valuable goodwill and are well recognized in the minds of
the relevant class of customers, and Licensee agrees that the products
distributed and services performed by Licensee under the Licensed Marks shall
equal or exceed the standard of quality heretofore established and maintained by
Licensor and its affiliates in the operation of the Business. Licensor
acknowledges and agrees that the manner in which Licensor and its affiliates
conducted the operation of the Business immediately prior to the Commencement
Date of this Agreement satisfies this requisite standard of quality.
(b) Licensee shall, upon Licensor's request, (i) make
available to Licensor for inspection specimens demonstrating Licensee's use of
the Licensed Marks and (ii) permit Licensor to inspect, not more than once every
six consecutive months and then during regular business hours and on reasonable
notice, the premises and facilities where the products will be sold or stored
and services provided under the Licensed Marks.
(c) If the quality of any products or services offered by
Licensee under the Licensed Marks fails to meet the standard of quality set
forth in Section 6(a) hereof, then Licensor shall so notify Licensee in writing,
specifying, in reasonable detail, the reason for such disapproval. Licensee will
have thirty (30) days to cure the deficiency and, if such deficiency is not
cured with respect to such products and/or services to Licensor's reasonable
satisfaction, Licensee will not sell or deliver such products and/or services
under the Licensed Marks until the deficiency is cured to Licensor's reasonable
satisfaction.
7. Use of the Licensed Marks.
(a) Licensee agrees to comply with all laws and regulations
relating to the use of the Licensed Marks, including, but not limited to, those
laws and regulations which require Licensee to indicate that it is a Licensee of
the Licensed Marks, that Licensor owns the Licensed Marks, and/or that Licensee
is the source of the products and/or services sold thereunder. Licensee agrees
to apply statutory notice of trademark registration, where desirable.
(b) Licensee shall comply with all applicable international,
federal, state and local laws and regulations, and obtain all foreign and
domestic government approvals, pertaining to the publication, sale,
distribution, provision, advertising and promotion of any products and/or
services under the Licensed Marks.
<PAGE>
(c) Licensee shall not, by any act or omission, tarnish,
disparage, degrade or injure the reputation of the Licensed Marks or Licensor,
and the goodwill associated therewith. Licensee shall not use any Licensed Mark
except as authorized hereunder and will not use any mark confusingly similar to
any Licensed Mark.
8. Termination.
(a) If either party commits a material breach of its
obligations under this Agreement, the non-defaulting party may terminate this
Agreement on thirty (30) days' written notice; provided that such notice of
termination shall be of no further force or effect if (i) the default is cured
by the defaulting party to the reasonable satisfaction of the non-defaulting
party within thirty (30) days after receipt of such notice, or (ii) the
defaulting party is taking all reasonably feasible steps to cure a default
which, by its nature, cannot be cured within said thirty (30) day period and the
default is cured to the reasonable satisfaction of the non-defaulting party
within ninety (90) days or such shorter period as is reasonably necessary to
cure such default.
(b) Licensee may terminate this Agreement at any time on
thirty (30) days' written notice to Licensor.
(c) Licensor may terminate this Agreement on thirty days'
written notice to Licensee in the event that Licensee has failed to use the
Licensed Marks for a continuous period of two years or has confirmed in writing
that it no longer intends to use the Licensed Marks.
9. Effect of Termination.
(a) Upon the termination of this Agreement, Licensee shall (i)
cease all use of the Licensed Marks as of the effective date of the termination,
except as permitted during the Sell-Off Period pursuant to subsection (ii)
below, and (ii) within ninety (90) days of the effective date of termination
("Sell-Off Period"), sell off and/or destroy any products and other materials
bearing the Licensed Marks which are in Licensee's inventory or control. After
the Sell-Off Period, Licensee shall make no further use of any nature of the
Licensed Marks.
(b) Licensee hereby agrees that, upon the termination of this
Agreement, it will be deemed to have assigned to Licensor any right, equity,
goodwill, title or other rights in and to the Licensed Marks which may have been
vested in Licensee during the term of this Agreement. Licensee agrees to execute
any instruments reasonably requested by Licensor to accomplish the foregoing.
Any such assignment shall be without consideration, other than the mutual
covenants and considerations set forth in this Agreement.
<PAGE>
(c) Termination of this Agreement for any reason shall not
affect (i) those obligations which have accrued as of the date of termination
and (ii) those obligations which, from the context thereof, are intended to
survive termination of this Agreement.
10. Infringement.
(a) Licensee shall promptly notify Licensor of any
infringement, unauthorized use, or dilution of the Licensed Marks which may come
to Licensee's attention. Licensor shall have the sole initial right to determine
whether or not any action shall be taken with respect to such infringement,
unauthorized use, or dilution, and the nature of the action to be taken.
Licensee agrees to cooperate in any reasonable manner with Licensor in the
conduct of such litigation, at Licensor's expense. Any recovery obtained by
Licensor as a result of any such action brought under this Section 10(a) shall
belong to Licensor.
(b) In the event that Licensor determines that litigation or
other legal action should not be commenced or otherwise fails, after a
reasonable period of time, to take reasonable action to stop such infringement,
unauthorized use or dilution, Licensee may, upon Licensor's written consent
(which consent shall not be unreasonably withheld), do so in its own name, and
Licensor will cooperate in any reasonable manner with Licensee in the conduct of
such litigation or other legal action, at Licensee's expense. Any recovery
obtained by Licensee as a result of any such action brought under this Section
10(b) shall belong to Licensee.
(c) In the event that a third party commences an infringement
or other legal action against Licensee as a result of its use of the Licensed
Marks, Licensee shall promptly notify Licensor in writing of such action.
Licensor may, in its sole discretion, join and control the defense of such
action at Licensor's expense, and Licensee shall cooperate in such defense as
requested by Licensor, at Licensor's expense.
(d) Notwithstanding anything to the contrary in this Section
10 or anywhere else herein, in no event shall Licensor have the right, without
the prior written consent of Licensee, to enter into a settlement with any third
party whereby Licensor grants any rights to, or in any way authorizes the use
of, the Licensed Marks in connection with vehicle management and fuel card
products and services.
11. Representations, Warranties and Covenants of Licensor. Licensor
represents and warrants to Licensee as follows:
(a) Licensor owns the Licensed Marks and has the right and
authority to grant the licenses and rights it grants hereunder upon the terms
and conditions provided herein; and
<PAGE>
(b) The use of the Licensed Marks as permitted herein does not
constitute an unauthorized use or misappropriation of any Intellectual Property
Right or any other property or proprietary right of any Person.
(c) Licensor shall use all reasonable efforts to maintain and
keep valid and current such existing and subsequently issued registrations of
Licensed Marks, in such territories as are reasonably requested by Licensee, and
shall not take or omit to take any action which could damage the Licensed Marks
or the goodwill therein.
(d) At Licensee's reasonable request, Licensor shall (i) at
Licensee's cost and expense, timely file trademark applications for, and
diligently pursue the registration of, the Licensed Marks in those countries in
which the Licensed Marks are not currently registered and in which Licensee
conducts or shall conduct the Business or (ii) permit Licensee, with Licensor's
cooperation and written consent, and at Licensee's cost and expense, to timely
file trademark applications for, and diligently pursue the registration of, the
Licensed Marks in Licensor's name in those countries in which the Licensed Marks
are not currently registered and in which Licensee conducts or shall conduct the
Business, and Licensor shall assist and cooperate with Licensee in such
endeavor.
12. Indemnification.
(a) Licensee shall defend, indemnify, and hold Licensor and
its officers, directors, employees, shareholders and affiliates harmless from
and against (i) any third-party claim, demand, suit, loss, liability, or damage,
including, but not limited to, any amounts paid in settlement thereof and
reasonable attorney fees (collectively, "Claims") arising out of or based upon a
material breach of Licensee's representations, warranties or covenants
hereunder, and (ii) any third-party Claim relating to Intellectual Property
Rights arising out of or based upon the operation of the Business or the
products or services offered or sold by Licensee or any subsidiary or permitted
sublicensee thereof, except for such Claims which are based on or derived from
the use of the Licensed Marks, as expressly authorized hereunder.
(b) Licensor shall defend, indemnify, and hold Licensee and
its officers, directors, employees, shareholders and affiliates harmless from
and against any third-party Claim arising out of or based upon (i) a material
breach of Licensor's representations, warranties or covenants hereunder, and
(ii) Licensee's use of the Licensed Marks, as expressly authorized hereunder.
(c) Each party shall give the other prompt notice of any Claim
for which indemnification is sought; shall provide the indemnifying party with
complete control over the defense of such Claim; and shall provide all
reasonable assistance in connection with the defense of such Claim. Neither
party shall be entitled to indemnification for Claims to the extent attributable
to such party's gross negligence or willful misconduct.
<PAGE>
13. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given, upon receipt, if mailed
by registered or certified mail, postage prepaid, return receipt requested,
overnight delivery, confirmed facsimile transmission or hand delivered, as
follows:
(a) If to Licensor, to:
PHH Holdings Corporation
6 Sylvan Way
Parsippany, New Jersey 07054
Attention: General Counsel
Facsimile No.: (973) 496-5355
(b) If to Licensee, to:
Avis Fleet Leasing and Management Corporation
900 Old Country Road
Garden City, New York 11530
Attention: Karen Sclafani, Esq.
Facsimile No.: (516) 222-6922
or to such other address as the party to whom notice is given may have
previously furnished to the other party in writing in accordance herewith.
14. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York, without
giving effect to the principles of conflict of laws thereof. The parties consent
to the exclusive jurisdiction of the federal courts of the United States sitting
in the Southern District of New York and the courts of the State of New York
sitting in the County of New York (and any court to which an appeal therefrom
may be taken) for purposes of all legal proceedings arising out of or relating
to this Agreement, and the parties hereby waive all defenses of improper venue
or that the forum is inconvenient in the Southern District of New York and New
York State courts in the County of New York.
15. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersede all prior agreements and
understandings, oral or written, between the parties hereto with respect to the
subject matter hereof and hereof.
<PAGE>
(b) Amendments. This Agreement may not be amended, modified or
supplemented except by written agreement of the parties hereto.
(c) No Waiver. Nothing contained in this Agreement shall cause
the failure of either party to insist upon strict compliance with any covenant,
obligation, condition or agreement contained herein to operate as a waiver of,
or estoppel with respect to, any such covenant, obligation, condition or
agreement by the party entitled to the benefit thereof.
(d) Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(e) Counterparts. This Agreement may be executed in
counterparts each of which shall be deemed to constitute an original and
constitute one and the same instrument.
(f) Severability. If any provisions hereof shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and shall
not affect the validity or effect of any other provision hereof; provided,
however, that the parties shall use reasonable efforts, including, but not
limited to, the amendment of this Agreement, to ensure that this Agreement shall
reflect as closely as practicable the intent of the parties hereto.
(g) Specific Performance. Each of the parties hereto
acknowledges and agrees that the other party hereto would be irreparably damaged
in the event any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Accordingly,
each of the parties hereto agrees that they each shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions thereof in any action instituted in any court of the United States or
any state or jurisdiction having subject matter jurisdiction, in addition to any
other remedy to which such party may be entitled, at law or in equity.
(h) Independent Contractors. Nothing herein contained shall be
construed to place the parties in the relationship of partners or joint
venturers, and neither party shall have any power to obligate or bind the other
in any manner whatsoever, except as otherwise provided for herein.
(i) Schedules. Each of the Schedules attached hereto is fully
incorporated herein and made part hereof.
<PAGE>
IN WITNESS WHEREOF, the duly authorized officers of the parties
hereto have executed this Agreement as of the day and year first written above.
Licensor: PHH HOLDINGS CORPORATION
By:_______________________________________
Name:
Title:
Licensee: AVIS FLEET LEASING AND MANAGEMENT CORPORATION
By:_______________________________________
Name:
Title:
<PAGE>
Exhibit 10.27
TRANSITIONAL LICENSE AGREEMENT
TRANSITIONAL LICENSE AGREEMENT ("Agreement") made as of the 30th day
of June, 1999, between Cendant Corporation, a Delaware corporation ("Licensor"),
and Avis Fleet Leasing and Management Corporation, a Texas corporation
("Licensee"), and a wholly owned subsidiary of Avis Rent A Car, Inc., a Delaware
corporation ("Acquiror").
WITNESSETH:
WHEREAS, Licensor owns the trade names, trademarks, and service
marks set forth in Annex I and Annex II hereto (hereafter referred to
collectively as the "Licensed Marks");
WHEREAS, PHH Corporation ("PHH"), a Maryland corporation and a
wholly owned subsidiary of Licensor, PHH Holdings Corporation, a Texas
corporation and a wholly owned subsidiary of PHH ("Holdings"), Acquiror and
Acquiror Sub, entered into an Agreement and Plan of Merger and Reorganization
dated as of May 22, 1999 ("Merger Agreement"), as amended by the Amendment to
the Agreement and Plan of Merger and Reorganization, dated as of June 30, 1999,
providing for the merger of Acquiror Sub and Holdings (the "Merger") pursuant to
the Texas Business Corporation Act (the "TBCA"), on the terms and subject to the
conditions set forth therein (capitalized terms not otherwise defined herein
shall have the respective meanings assigned to such terms in the Merger
Agreement);
WHEREAS, upon consummation of the Merger, Acquiror Sub shall acquire
the vehicle fleet management and fuel card businesses of Holdings (collectively,
the "Business");
WHEREAS, pursuant to the Merger Agreement, PHH agreed to cause its
parent, Licensor, to grant to Licensee a limited license to use the Licensed
Marks to sell off, deplete, or dispose of, existing inventory of products and
business materials used in connection with the Business;
WHEREAS, Licensee desires to obtain from Licensor the right and
license to use the Licensed Marks to sell off, deplete, or dispose of, existing
inventory of products and business materials used in connection with the
Business; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
1. Grant of License.
(a) Licensor hereby grants to Licensee and its affiliates a limited
license to use the Licensed Marks set forth on Annex I for the sole purpose of
selling off, depleting, or otherwise disposing of, any existing inventory of
products or business materials of the Business in the United Kingdom.
1
<PAGE>
(b) Licensor hereby grants to Licensee and its affiliates a limited
license to use the Licensed Mark set forth on Annex II for the sole purpose of
selling off, depleting, or otherwise disposing of, any existing inventory of
products or business materials of the Business in the United States.
2. Term. This license shall commence as of the date hereof and shall
terminate as soon as practicable, but in no event later than the earlier of: (i)
the depletion or disposal of all existing inventory of products or business
materials using the Licensed Marks or (ii) the first anniversary of the date
hereof.
3. Ownership of Licensed Marks. Licensee acknowledges that Licensor
is the owner of the Licensed Marks, that use of the Licensed Marks by Licensee
shall not create in Licensee's favor any ownership interest therein, and that
all goodwill arising out of Licensee's use of the Licensed Marks shall inure to
the benefit of Licensor.
4. Quality Control.
(a) Licensee acknowledges that the Licensed Marks have established
extremely valuable goodwill and are well recognized in the minds of the relevant
class of customers, and Licensee agrees that the products distributed and
services performed by Licensee under the Licensed Marks shall equal or exceed
the standard of quality heretofore established and maintained by Licensor and
its affiliates in the operation of the Business. Licensor acknowledges and
agrees that the manner in which Licensor and its affiliates conducted the
operation of the Business immediately prior to the effective date of this
Agreement satisfies this requisite standard of quality.
(b) If the quality of any products or services offered by the
Licensee under the Licensed Marks fails to meet the standard of quality set
forth in Section 4(a), then Licensor shall so notify Licensee in writing,
specifying, in reasonable detail, the reason for such disapproval. Licensee will
have thirty (30) days to cure the deficiency and, if such deficiency is not
cured with respect to such products and/or services to Licensor's reasonable
satisfaction, Licensee will not sell or deliver such products and/or services
until the deficiency is cured to Licensor's reasonable satisfaction.
5. Use of Licensed Marks.
(a) Licensee agrees to comply with all laws and regulations relating
to the use of the Licensed Marks including, but not limited to, those laws and
regulations which require Licensee to indicate that it is a Licensee of the
Licensed Marks, that Licensor owns the Licensed Marks, and/or that Licensee is
the source of the products and/or services sold thereunder. Licensee agrees to
apply statutory notice of trademark registration, where desirable.
(b) Licensee shall comply with all applicable international,
federal, state and local laws and regulations, and obtain all foreign and
domestic government approvals, pertaining to the publication, sale,
distribution, provision, advertising and promotion of any products and/or
services under the Licensed Marks.
2
<PAGE>
(c) Licensee shall not, by any act or omission, tarnish, disparage,
degrade or injure the reputation of the Licensed Marks or Licensor, and the
goodwill associated therewith.
(d) Licensee shall use the Licensed Marks only in the form and
manner set forth on Exhibit A, attached hereto.
(e) Licensee shall not use any Licensed Mark except as authorized
hereunder and shall not use any mark confusingly similar to any Licensed Mark.
6. Termination. If either party to this Agreement materially
breaches any of its obligations under this Agreement, then the other party may
terminate this Agreement on fifteen (15) days' written notice to the defaulting
party; provided that such notice of termination shall be of no further force or
effect if the default is cured by the defaulting party to the reasonable
satisfaction of the non-defaulting party within thirty (30) days after receipt
of such notice.
7. Effect of Termination.
(a) Upon the termination of this Agreement, Licensee shall (i) as of
the effective date of the termination, cease all use of the Licensed Marks and
all names, trademarks and service marks that are confusingly similar thereto,
including without limitation all names, trademarks and service marks that
incorporate any Licensed Mark, (ii) do all things reasonably necessary on its
part to remove Licensee's name from any published indication of Licensee's
former right to or actual use of the Licensed Marks and shall consent to the
cancellation of its registration as a registered user of the Licensed Marks, if
any, and (iii) shall furthermore take all necessary and appropriate steps to
comply with the foregoing.
(b) Licensee hereby agrees that, upon the termination of this
Agreement, it will be deemed to have assigned to Licensor any right, equity,
goodwill, title or other rights in and to the Licensed Marks which may have been
vested in Licensee during the term of this Agreement. Licensee agrees to execute
any instruments reasonably requested by Licensor to accomplish the foregoing.
Any such assignment shall be without consideration, other than the mutual
covenants and considerations set forth in this Agreement.
(c) Termination of this Agreement for any reason shall not affect
(i) those obligations which have accrued as of the date of termination and (ii)
those obligations which, from the context thereof, are intended to survive
termination of this Agreement.
8. . All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given, upon receipt, if mailed by
registered or certified mail, postage prepaid, return receipt requested,
overnight delivery, confirmed facsimile transmission or hand delivered, as
follows:
(a) If to Licensor, to:
Cendant Corporation
9 West 57th Street
37th Floor
3
<PAGE>
New York, New York 10019
Attention: General Counsel
Facsimile: (212) 413-1922
With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLC
One Rodney Square
Wilmington, Delaware 19801
Attention: Patricia Moran Chuff
Facsimile: (302) 651-3001
(b) If to Licensees, to:
Avis Rent A Car, Inc.
900 Old County Road
Garden City, New York 11530
Attention: Karen Sclafani, Esq.
Facsimile: (516) 222-6922
With a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: Sean Geary, Esq.
Facsimile: (212) 354-8113
or to such other address as the party to whom notice is given may have
previously furnished to the other party in writing in accordance herewith.
9. Representations, Warranties and Covenants of Licensor. Licensor
represents and warrants to Licensee as follows:
(a) Licensor owns the Licensed Marks and has the right and authority
to grant the licenses and rights it grants hereunder upon the terms and
conditions provided herein; and
(b) The use of the Licensed Marks as permitted herein does not
constitute an unauthorized use or misappropriation of any Intellectual Property
Right or any other property or proprietary right of any Person.
10. Indemnification.
(a) Licensee shall defend, indemnify, and hold Licensor and its
officers, directors, employees, shareholders and affiliates harmless from and
against (i) any third-party claim, demand, suit, loss, liability, or damage,
including, but not limited to, any amounts paid in settlement thereof and
reasonable attorney fees (collectively, "Claims") arising out of or based
4
<PAGE>
upon a material breach of Licensee's representations, warranties or covenants
hereunder, and (ii) any third-party Claim relating to Intellectual Property
Rights arising out of or based upon the operation of the Business or the
products or services offered or sold by Licensee or any subsidiary or permitted
sublicensee thereof, except for such Claims which are based on or derived from
the use of the Licensed Marks, as expressly authorized hereunder.
(b) Licensor shall defend, indemnify, and hold Licensee and its
officers, directors, employees, shareholders and affiliates harmless from and
against any third-party Claim arising out of or based upon (i) a material breach
of Licensor's representations, warranties or covenants hereunder, and (ii)
Licensee's use of the Licensed Marks, as expressly authorized hereunder.
(c) Each party shall give the other prompt notice of any Claim for
which indemnification is sought; shall provide the indemnifying party with
complete control over the defense of such Claim; and shall provide all
reasonable assistance in connection with the defense of such Claim. Neither
party shall be entitled to indemnification for Claims to the extent attributable
to such party's gross negligence or willful misconduct.
11. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York, without
giving effect to the principles of conflict of laws thereof. The parties consent
specifically to the non-exclusive jurisdiction of the federal courts of the
United States sitting in the Southern District of New York and the courts of the
State of New York sitting in the County of New York (and any court to which an
appeal therefrom may be taken) for purposes of all legal proceedings arising out
of or relating to this Agreement, and the parties hereby waive all defenses of
improper venue or that the forum is inconvenient in the Southern District of New
York and New York State courts in the County of New York.
12. Miscellaneous.
(i) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements and
understandings, oral or written, between the parties hereto with respect to the
subject matter hereof.
(ii) Amendments. This Agreement may not be amended, modified or
supplemented except by written agreement of the parties hereto.
(iii) No Waiver. Nothing contained in this Agreement shall cause the
failure of either party to insist upon strict compliance with any covenant,
obligation, condition or agreement contained herein to operate as a waiver of,
or estoppel with respect to, any such covenant, obligation, condition or
agreement by the party entitled to the benefit thereof.
(iv) Headings. The headings contained in this Agreement are for
reference purposes only and shall not control or affect in any way the meaning
or interpretation of any of the terms or provisions of this Agreement.
5
<PAGE>
(v) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
(vi) Severability. If any provisions hereof shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and shall
not affect the validity or effect of any other provision hereof; provided,
however, that the parties shall use reasonable efforts, including, but not
limited to, the amendment of this Agreement, to ensure that this Agreement shall
reflect as closely as practicable the intent of the parties hereto.
(vii) Specific Performance. Each of the parties hereto acknowledges
and agrees that the other party hereto would be irreparably damaged in the event
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. Accordingly, each of the
parties hereto agrees that they each shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions thereof in any
action instituted in any court of the United States or any state or jurisdiction
having subject matter jurisdiction, in addition to any other remedy to which
such party may be entitled, at law or in equity.
(viii) Independent Contractors. Nothing herein contained shall be
construed to place the parties in the relationship of partners or joint
venturers, and neither party shall have any power to obligate or bind the other
in any manner whatsoever, except as otherwise provided for herein.
(ix) Schedules. Each of the Schedules and Annexes attached hereto is
fully incorporated herein and made part hereof.
[SIGNATURE PAGE FOLLOWS]
6
<PAGE>
IN WITNESS WHEREOF, the duly authorized officers of the parties
hereto have executed this Agreement as of the day and year first written above.
Licensor: CENDANT CORPORATION
By:_______________________________________
Name:
Title:
Licensee: AVIS FLEET LEASING AND MANAGEMENT
CORPORATION
By:_______________________________________
Name:
Title:
7
<PAGE>
Exhibit 10.28
UNDERTAKING
THIS UNDERTAKING (this "Undertaking"), executed and delivered on
this 30th day of June, 1999, by Avis Fleet Leasing and Management Corporation
("Acquiror Sub"), a Texas corporation and a wholly owned subsidiary of Avis Rent
A Car, Inc., a Delaware corporation ("Acquiror"), in favor of PHH Corporation, a
Maryland corporation ("Parent"), and PHH Holdings Corporation, a Texas
corporation and wholly owned subsidiary of Parent ("Holdings").
W I T N E S S E T H:
WHEREAS, Acquiror, Acquiror Sub, Parent and Holdings are parties to
the Agreement and Plan of Merger and Reorganization (the "Merger Agreement"),
dated as of May 22, 1999, as amended by the Amendment to the Agreement and Plan
of Merger and Reorganization, dated as of June 30, 1999, providing for the
merger of Acquiror Sub and Holdings (the "Merger") pursuant to the Texas
Business Corporation Act (the "TBCA"), on the terms and subject to the
conditions set forth therein (capitalized terms not otherwise defined herein
shall have the respective meanings assigned to such terms in the Merger
Agreement);
WHEREAS, as a material part of the Merger Consideration, the Merger
Agreement requires that Acquiror Sub undertake to assume and to agree to
perform, pay or discharge or cause to be performed, paid or discharged the
Transferred Liabilities allocated to, assumed by and vested in Acquiror Sub in
the Merger, including, without limitation, the Assumed Obligations (as
hereinafter defined).
NOW, THEREFORE, in consideration of these premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Acquiror Sub agrees as follows:
1. Subject to the terms and conditions contained in Section 517 of
the Merger Agreement, Acquiror Sub hereby undertakes, assumes and agrees to
perform, pay or discharge in accordance with their terms, to the extent not
heretofore
<PAGE>
performed, paid or discharged, all liabilities and obligations of Holdings set
forth on Schedule I hereto (the "Assumed Obligations").
2. From and after the date hereof, at the request of Holdings,
Acquiror shall, and shall cause the Acquiror Sub Surviving Corporation to, take
such action to more effectively assume and vest in the Acquiror Sub Surviving
Corporation the Assumed Obligations, including, without limitation, executing
such documents, instruments and agreements with third parties as may be
reasonably necessary for the Acquiror Sub Surviving Corporation to assume all of
Holdings' obligations under each of the Assumed Obligations; provided, however,
that any such obligations relating to the Holdings Indebtedness shall terminate
upon the repayment in full of the Intercompany Indebtedness.
3. This Undertaking shall be governed by the laws of the State of
New York, without regard to the principles of conflicts of law thereof.
4. This Undertaking shall be enforceable against the successors and
assigns of Acquiror Sub and shall inure to the benefit of the successors and
assigns of Parent and Holdings.
2
<PAGE>
IN WITNESS WHEREOF, this Undertaking has been duly executed and
delivered by the undersigned duly authorized officer of Avis Fleet Leasing and
Management Corporation on the date first above written.
AVIS FLEET LEASING AND MANAGEMENT
CORPORATION
By: __________________________________
Name:
Title:
3
<PAGE>
Exhibit 10.29
INSTRUMENT OF ASSUMPTION
THIS INSTRUMENT OF ASSUMPTION (this "Instrument of Assumption"),
executed and delivered on this 30th day of June, 1999, by Avis Fleet Leasing and
Management Corporation, a Texas corporation ("Acquiror Sub") and a wholly owned
subsidiary of Avis Fleet Rent A Car, Inc., a Delaware corporation ("Acquiror"),
in favor of PHH Holdings Corporation, a Texas corporation ("Holdings") and a
wholly owned subsidiary of PHH Corporation, a Maryland corporation ("Parent").
W I T N E S S E T H:
WHEREAS, Acquiror, Acquiror Sub, Parent and Holdings are parties to
the Agreement and Plan of Merger and Reorganization (the "Merger Agreement"),
dated as of May 22, 1999, as amended by the Amendment to the Agreement and Plan
of Merger and Reorganization, dated as of June 30, 1999, providing for the
merger of Acquiror Sub and Holdings (the "Merger") pursuant to the Texas
Business Corporation Act (the "TBCA"), on the terms and subject to the
conditions set forth therein (capitalized terms not otherwise defined herein
shall have the respective meanings assigned to such terms in the Merger
Agreement);
WHEREAS, as a material part of the Merger Consideration, the Merger
Agreement requires that Acquiror Sub assume and agree to perform, pay or
discharge or cause to be performed, paid or discharged the Transferred
Liabilities allocated to, assumed by and vested in Acquiror Sub in the Merger,
including, without limitation, the Holdings Indebtedness (as hereinafter
defined).
NOW, THEREFORE, in consideration of these premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Acquiror Sub agrees as follows:
1. Subject to the terms and conditions contained in Section 2.2 of
the Merger Agreement, Acquiror Sub hereby undertakes, assumes and agrees to
perform, pay or discharge in accordance with their terms, to the extent not
heretofore
<PAGE>
performed, paid or discharged, all liabilities and obligations of Holdings
arising out of or related to the indebtedness of Holdings to Parent, which, on
the date hereof, shall not exceed an aggregate principal amount of
$1,438,000,000 (the "Holdings Indebtedness") pursuant to the Loan Agreement
dated January 13, 1999 between Holdings and Parent, including, without
limitation, the obligation to repay any and all Loans (as defined in such Loan
Agreement) upon demand in accordance with the terms of the Merger Agreement.
2. From and after the date hereof, until the repayment in full of
the Holdings Indebtedness, at the request of Holdings, Acquiror shall, and shall
cause the Acquiror Sub Surviving Corporation to, take such action to more
effectively assume and vest in the Acquiror Sub Surviving Corporation the
Holdings Indebtedness, including, without limitation, executing such documents,
instruments and agreements with third parties as may be reasonably necessary for
the Acquiror Sub Surviving Corporation to assume all of Holdings' obligations
under the Holdings Indebtedness.
3. This Instrument of Assumption shall be governed by the laws of
the State of New York, without regard to the principles of conflicts of law
thereof.
4. This Instrument of Assumption shall be enforceable against the
successors and assigns of Acquiror Sub and shall inure to the benefit of the
successors and assigns of Holdings.
2
<PAGE>
IN WITNESS WHEREOF, this Instrument of Assumption has been duly
executed and delivered by the undersigned duly authorized officer of Avis
Leasing and Management Corporation on the date first above written.
AVIS FLEET LEASING AND MANAGEMENT
CORPORATION
By: __________________________________
Name:
Title:
3
<PAGE>
EXHIBIT 12.1
AVIS RENT A CAR INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
<TABLE>
<CAPTION>
(PREDECESSOR COMPANIES)
-----------------------------------------
CONSOLIDATED
YEARS ENDED OCTOBER 17, 1996 YEAR ENDED YEARS ENDED
DECEMBER 31, JANUARY 1,1996 (DATE OF DECEMBER 31, DECEMBER 31,
-------------------- TO ACQUISITION) TO ---------------- --------------------
1994 1995 OCTOBER 16, 1996 DECEMBER 31, 1996 1996 1997 1998
--------- --------- ------------------- --------------------- ---------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS
INCOME BEFORE PROVISION
FOR INCOME TAXES..... $ 52,316 $ 60,700 $ 69,799 $ 2,261 $ 72,060 $ 50,323 $ 112,228
FIXED CHARGES.......... 184,436 216,030 186,936 50,071 237,007 248,051 260,881
CAPITALIZED INTEREST... (91) (119) (15) 54 39 (144) (122)
--------- --------- ---------- -------- ---------------- --------- ---------
EARNINGS AS DEFINED.... $ 236,661 $ 276,611 $ 256,720 $ 52,386 $ 309,106 $ 298,230 $ 372,987
--------- --------- ---------- -------- ---------------- --------- ---------
--------- --------- ---------- -------- ---------------- --------- ---------
FIXED CHARGES
INCLUDABLE PORTION OF
RENT IN FIXED
CHARGES.............. $ 47,837 $ 53,667 $ 48,696 $ 11,920 $ 60,616 $ 63,646 $ 59,033
INTEREST EXPENSE
(INCLUDING
AMORTIZATION OF DEBT
ISSUANCE COSTS)...... 136,508 162,244 138,225 38,205 176,430 184,261 201,726
CAPITALIZED INTEREST... 91 119 15 (54) (39) 144 122
--------- --------- ---------- -------- ---------------- --------- ---------
TOTAL FIXED CHARGES.... $ 184,436 $ 216,030 $ 186,936 $ 50,071 $ 237,007 $ 248,051 $ 260,881
--------- --------- ---------- -------- ---------------- --------- ---------
--------- --------- ---------- -------- ---------------- --------- ---------
RATIO OF EARNINGS TO
FIXED CHARGES........ 1.3X 1.3X 1.4X 1.0X 1.3X 1.2X 1.4X
--------- --------- ---------- -------- ---------------- --------- ---------
--------- --------- ---------- -------- ---------------- --------- ---------
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1998 1999
--------- ---------
<S> <C> <C>
EARNINGS
INCOME BEFORE PROVISION
FOR INCOME TAXES..... $ 53,139 $ 74,374
FIXED CHARGES.......... 127,092 133,290
CAPITALIZED INTEREST... (22) (25)
--------- ---------
EARNINGS AS DEFINED.... $ 96,840 $ 104,387
--------- ---------
--------- ---------
FIXED CHARGES
INCLUDABLE PORTION OF
RENT IN FIXED
CHARGES.............. $ 30,252 $ 28,903
INTEREST EXPENSE
(INCLUDING
AMORTIZATION OF DEBT
ISSUANCE COSTS)...... 96,818 104,362
CAPITALIZED INTEREST... 22 25
--------- ---------
TOTAL FIXED CHARGES.... $ 127,092 $ 133,290
--------- ---------
--------- ---------
RATIO OF EARNINGS TO
FIXED CHARGES........ 0.8X 0.8X
--------- ---------
--------- ---------
</TABLE>
<PAGE>
Exhibit 21
AVIS RENT A CAR, INC.
SUBSIDIARIES
(100% Owned unless otherwise indicated)
State or Country
Corporate Name of Organization
- -------------- ---------------
Avis Rent A Car, Inc. f/k/a
Rental Car Holdings, Inc. Delaware
A. Avis Rent A Car System, Inc. Delaware
1. Avis International, Ltd. Delaware
(a) Avis Management Pty. Limited Australia
- We Try Harder Pty. Limited Australia
- Chaconne Pty. Limited Australia
- W.T.H. Pty. Limited Australia
- Auto Accident Consultants Pty. Limited Australia
- W.T.H. Fleet Leasing Pty. Limited Australia
(ownership shared with Chaconne Pty.
Limited)
- Avis Services Pty. Ltd. Australia
(b) Avis Management Services, Ltd. Delaware
(c) Arbitra S.A. Argentina
(d) Avis Caribbean, Limited Delaware
- Avis Rent A Car de Puerto Rico, Inc. Puerto Rico
- Virgin Islands Enterprises, Inc. Virgin Islands
(e) Avis Asia and Pacific, Limited Delaware
- Avis Rent A Car Limited New Zealand
- Altra Auto Rental Limited New Zealand
<PAGE>
State or Country
Corporate Name of Organization
- -------------- ---------------
(f) WTH Canada, Inc. Canada
- Aviscar Inc. Canada
- Avis Services Canada, Inc. Canada
(g) Avis Rent A Car (Hong Kong) Ltd. Hong Kong
(h) West Indies Car Rental Ltd. (49% owned) Jamaica
(i) Avis Automoveis De Aluguel Ltda. Brazil
- Avis Location de Velculos Ltda. Brazil
2. Avis Enterprises, Inc. f/k/a Avis Leasing Corporation Delaware
(a) Avis Service, Inc. Delaware
(b) Avis Lube, Inc. Delaware
3. Pathfinder Insurance Company Colorado
4. PF Claims Management, Ltd. Delaware
5. Avis Leasing Corporation Delaware
6. Zam, Inc. West Virginia
7. Global Excess & Reinsurance Ltd. Bermuda
8. Constellation Reinsurance Company Limited Barbados
9. We Try Harder Japan Co., Ltd. Japan
10. Servicios Avis S.A. Mexico
11. Avis Rent A Car Limited Fiji
12. Avis Rent A Car Sdn. Bhd. Malaysia
13. Avis Rent A Car Sdn. Bhd. Singapore
14. Avis Rent A Car Limited Vanuatu
-2-
<PAGE>
State or Country
Corporate Name of Organization
- -------------- ---------------
15. AESOP Leasing L.P. (99% owned as limited partner) Delaware
16. AESOP Funding II L.L.C. (indirectly 98% owned Delaware
through AESOP Leasing L.P.)
17. Rent-A-Car Company, Incorporated Virginia
18. Motorent, Inc. Tennessee
B. Reserve Claims Management Co. f/k/a Avis Leasing Delaware
International, Ltd. (ownership shared with Bruce Dolin)
C. Avis Fleet Leasing and Management Corp. Texas
1. PHH Canadian Holdings, Inc. Delaware
(a) PHH Vehicle Management Services, Inc. Canada
- Canadian Lease Management Ltd. Canada
- PHH Leasing of Canada Ltd. Canada
2. PHH Vehicle Management Services LLC Delaware
(a) PHH VMS Subsidiary Corporation Delaware
(b) D.L. Peterson Trust (98% owned)
(c) JHH Partnership (99% owned)
(d) PHH/Paymentech, LLC Delaware
3. Cendant Business Answers (Europe) Ltd. United Kingdom
(a) PHH Card Services Ltd. United Kingdom
(b) Allstar Petrol Card Ltd. United Kingdom
(c) PHH Vehicle Management Services Ltd. United Kingdom
- PHH Truck Management Services Ltd. United Kingdom
- PHH Leasing (No. 9) Ltd. United Kingdom
(d) PHH Insurance Broking Services Ltd. United Kingdom
-3-
<PAGE>
State or Country
Corporate Name of Organization
- -------------- ---------------
(e) PHH Investment Services Ltd. United Kingdom
- PHH Financial Services Ltd. United Kingdom
(f) PHH Treasury Services Ltd. United Kingdom
4. PHH Commercial Leasing, Inc. Maryland
5. PHH Corner Leasing, Inc. Maryland
6. PHH Page Leasing, Inc. Maryland
7. PHH St. Paul Leasing, Inc. Maryland
8. PHH Continental Leasing, Inc. Maryland
9. PHH Caribbean Leasing, Inc. Maryland
10. PHH Market Leasing, Inc. Maryland
11. PHH Milford Leasing, Inc. Maryland
12. PHH National Leasing, Inc. Maryland
13. PHH Power Leasing, Inc. Maryland
14. PHH Personalease Corporation Maryland
15. Dealers Holdings, Inc. Maryland
(a) Williamsburg Motors, Inc. Maryland
(b) Edenton Motors, Inc. Maryland
16. PHH Charitable Trust United Kingdom
17. PHH Deutschland, Inc. Maryland
18. Pointeuro Limited United Kingdom
-4-
<PAGE>
State or Country
Corporate Name of Organization
- -------------- ---------------
(a) The Harpur Group Limited United Kingdom
- Harpur UK Limited United Kingdom
-Overdrive Credit Card Limited United Kingdom
-Dialcard Limited United Kingdom
-Harpur Assets Limited United Kingdom
- Overdrive Business Solutions Ltd. United Kingdom
- Overdrive Fleet Information Services Limited
- Dialcard Fleet Services Limited United Kingdom
United Kingdom
19. Wright Express LLC Delaware
(a) Wright Express Financial Services Corporation Utah
(b) Wright Express Canada, Inc. Canada
20. FAH Company, Inc. Delaware
-5-
<PAGE>
Exhibit 23.01
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Avis Rent A Car, Inc.
on Form S-4 of our report dated January 25, 1999 (March 19, 1999 as to Note 21
and August 23, 1999 as to Note 22), appearing in the Prospectus, which is part
of this Registration Statement, and of our report dated January 25, 1999
(March 19, 1999 as to Note 21 and August 23, 1999 as to Note 22) relating to
the financial statement schedule appearing elsewhere in this Registration
Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ DELOITTE & TOUCHE LLP
New York, New York
August 27, 1999
<PAGE>
Exhibit 23.02
INDEPENDENT AUDITORS' CONSENT
We consent to the inclusion in this Registration Statement of Avis Rent A
Car, Inc. on Form S-4 of our report on the combined financial statements of
PHH Vehicle Management Services dated June 18, 1999, June 30, 1999, as to
Note 18, appearing in the Prospectus, which is part of this Registration
Statement and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
August 27, 1999
<PAGE>
Exhibit 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------
AVIS RENT A CAR, INC.
(Exact name of obligor as specified in its charter)
Delaware 11-3347585
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
900 Old Country Road
Garden City, New York 11530
(Address of principal executive offices) (Zip code)
Additional Registrants
Avis Rent A Car System, Inc. Delaware
Avis International, Ltd. Delaware
Avis Management Services, Ltd. Delaware
Avis Caribbean, Limited Delaware
Avis Asia and Pacific, Limited Delaware
Avis Enterprises, Inc. Delaware
Avis Service, Inc. Delaware
Avis Lube, Inc. Delaware
<PAGE>
Avis Leasing Corporation Delaware
Rent-A-Car Company, Incorporated Virginia
[Reserve Claims Management Delaware]
Co.
Avis Fleet Leasing and Texas
Management Corp.
PHH Vehicle Management Delaware
Services LLC
Dealer Holdings, Inc. Maryland
Williamsburg Motors, Inc. Maryland
Edenton, Motors, Inc. Maryland
Wright Express LLC Delaware
PHH Canadian Holdings, Inc. Delaware
PHH Deutschland, Inc. Maryland
PHH/Paymentech LLC Delaware
FAH Company, Inc. Delaware
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11% Senior Subordinated Exchange Notes due 2009
(Title of the indenture securities)
================================================================================
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<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
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Name Address
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Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit
1 to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 30th day of July, 1999.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
------------------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
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<PAGE>
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Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1999,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS In Thousands
Cash and balances due from
depository institutions:
Noninterest-bearing balances and
currency and coin .................................... $ 4,508,742
Interest-bearing balances .............................. 4,425,071
Securities:
Held-to-maturity securities ............................ 836,304
Available-for-sale securities .......................... 4,047,851
Federal funds sold and Securities
purchased under agreements to
resell ................................................. 1,743,269
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ............................................... 39,349,679
LESS: Allowance for loan and
lease losses ......................................... 603,025
LESS: Allocated transfer risk
reserve .............................................. 15,906
Loans and leases, net of unearned
income, allowance, and reserve ....................... 38,730,748
Trading Assets ........................................... 1,571,372
Premises and fixed assets (including
capitalized leases) .................................... 685,674
Other real estate owned .................................. 10,331
Investments in unconsolidated
subsidiaries and associated
companies .............................................. 182,449
Customers' liability to this bank on
acceptances outstanding ................................ 1,184,822
Intangible assets ........................................ 1,129,636
Other assets ............................................. 2,632,309
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Total assets ............................................. $ 61,688,578
============
LIABILITIES
Deposits:
In domestic offices .................................... $ 25,731,036
Noninterest-bearing .................................... 10,252,589
Interest-bearing ....................................... 15,478,447
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ..................... 18,756,302
Noninterest-bearing .................................... 111,386
Interest-bearing ....................................... 18,644,916
Federal funds purchased and
Securities sold under agreements
to repurchase .......................................... 3,276,362
Demand notes issued to the
U.S.Treasury ........................................... 230,671
Trading liabilities ...................................... 1,554,493
Other borrowed money:
With remaining maturity of one
year or less ......................................... 1,154,502
With remaining maturity of more
than one year through three years .................... 465
With remaining maturity of more
than three years ..................................... 31,080
Bank's liability on acceptances
executed and outstanding ............................... 1,185,364
Subordinated notes and debentures ........................ 1,308,000
Other liabilities ........................................ 2,743,590
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Total liabilities ........................................ 55,971,865
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EQUITY CAPITAL
Common stock ............................................. 1,135,284
Surplus .................................................. 764,443
Undivided profits and capital
reserves ............................................... 3,807,697
Net unrealized holding gains
(losses) on available-for-sale
securities ............................................. 44,106
Cumulative foreign currency
translation adjustments ................................ (34,817)
------------
Total equity capital ..................................... 5,716,713
------------
Total liabilities and equity capital ..................... $ 61,688,578
============
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni )
Alan R. Griffith )
Gerald L. Hassell ) Directors
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